Morgan Fox: A Federal Cannabis Policy Update

Morgan Fox is the Media Relations Director for the National Cannabis Industry Association (NCIA), the largest cannabis trade organization in the U.S. Ganjapreneur is a Sponsoring Member of the NCIA and we encourage all businesses operating in the cannabis industry to join and support organizations that lobby for sensible cannabis policy.

Morgan recently joined our podcast host TG Branfalt for a wide-ranging interview covering recent cannabis reform progress in legislatures at both the state and U.S. federal level. In this interview, we hear about the work that the NCIA is doing to benefit cannabis entrepreneurs, what the NCIA’s top priorities are for 2019, what business owners and advocates can do to help support progress on these issues, and more!

Listen via the media player below, or scroll further down to read a full transcript of this podcast episode.

Listen to the interview:

Read the transcript:

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TG Branfalt: Hey there, I’m your host TG Branfalt and you are listening to the Ganjapreneur.com Podcast where we try to bring you actionable information and normalize cannabis through the stories of ganjapreneurs, activists, and industry stakeholders. Today I’m joined by Morgan Fox, who is the media relations director for the National Cannabis Industry Association. How are you doing this afternoon, Morgan?

Morgan Fox: I’m doing well, thanks for having me.

TG Branfalt: Super stoked. I’ve actually been trying to get you guys on line for a while, but you’re doing a lot of stuff, so I know you’re busy today. So let’s get right down to it man. What’s your background and how’d you get involved in the cannabis space?

Morgan Fox: Well I actually started as an intern at Marijuana Policy Project back in 2008 shortly after I got out of college and I’ve been doing it ever since. I just fell in love with the urgency and the complexity of this issue and as a cannabis consumer myself, I was sick of seeing people be criminalized for using something that’s safer than alcohol. So I just dove in headfirst and I’ve been doing it ever since.

TG Branfalt: What’d you get a degree in?

Morgan Fox: Political science.

TG Branfalt: Oh, cool, man. Then you end up doing media relations. So what does the NCIA do? Give me sort of the broad overview of what you guys do over there.

Morgan Fox: The National Cannabis Industry Association is the country’s largest cannabis industry trade organization. We concentrate primarily on federal lobbying for fair treatment of cannabis businesses and the end of cannabis prohibition so that states can determine their own policies and open up their own legal markets. We also develop resources for people working in the industry and put on events in order for people to showcase their innovations and help network with other business professionals.

TG Branfalt: And what were some of the NCIA goals that you guys had in 2018, and what did you accomplish?

Morgan Fox: Beyond just moving the needle quite a bit on a number of these issues, we were able to help get the medical marijuana protections included in the base bill of the appropriations legislation this year, which was the first time that it happened and I think really goes to show that protecting state medical cannabis programs from federal interference is a non-issue in Congress now.

Beyond that, we were able to help push banking protections and 280E and increased veterans acts as an increased research a little bit farther along despite opposition from some key committees in Congress and from some old school obstructionists that we unfortunately still have to deal with some of.

Obviously the initiatives that have passed in the midterms, that was a huge deal. NCIA helped out to varying degrees in all of those campaigns and we’re very happy that they were successful. Even North Dakota, which lost really helped really move the needle there as well and we’re hopeful that state can make another go at it in 2020.

When it comes to Congressional issues, the midterms were huge for us as well and for cannabis policy reform generally. 46 out of the 56 congressional candidates that NCIA PAC donated to won their elections, which is gonna help us pave the way for serious progress in 2019 and the flip in the control of the House with the Democrats means that certain key committees, particularly House rules that blocked all of the cannabis reform amendments and legislation from being heard by the full House is now under Democratic control so we think we’re gonna have a much easier time of getting hearings in the coming Congress. In fact, one small perk of it is now that Democrats are in control of the Washington, DC appropriations committee, DC might finally be able to regulate it’s legal cannabis market.

TG Branfalt: Throughout your time working with NCIA, what has the evolution been? Have you seen a softening? Have you seen a softening from Congress in general or have you flipped the minds of anybody that you’re aware of?

Morgan Fox: Well I’ve only been with NCIA for a year but in the 10 years that I’ve been in the movement it’s obviously been a total sea change. When I started in this issue, I think there were maybe 11 medical cannabis states and no legal states. So we’ve definitely come a long way in the last decade, but just in the last year, I think that we’ve definitely made a lot of progress and the midterm elections were an excellent example of that with cannabis becoming an issue that is not only no longer dangerous for politicians, but actually gonna help people on both sides of the aisle. No matter what party you’re in, supporting legalized cannabis will guarantee to bump your polling a couple of points and that I think is a really big evolution that not only has that been happening, but that politicians are finally starting to realize it, so they’re less afraid of tackling the issue.

TG Branfalt: So let’s talk about your goals and objectives for 2019. What’s the NCIA trying to do for this coming year and this coming legislative session?

Morgan Fox: Well at the very least we’d like to get a hearing on some sort of a comprehensive legalization bill. Whether that takes the form of federal decriminalization or an outright regulation bill, just something that will allow states to determine their own policies without federal interference. It is going to be the major overarching goal. It’s questionable about whether we’ll actually be able to get a vote, but at the very least, we’re confident that we’ll be able to get a hearing, which will be the first time that’s happened in quite a few years. We’re also very confident that we’ll be able to make some progress if not finally pass something along the lines of the Safe Banking Act to allow banks to do business with the cannabis industry and at least push the 280E issue more to the front, and we’re also hoping that we can develop a much larger Cannabis Caucus in the coming years and I think that we’re already getting interest from a lot of people on the hill about this issue, so we’re very hopeful that things are gonna look good for the next Congress.

TG Branfalt: So you mentioned the banking issue and trying to push something through Congress. Are there any potential fixes save for federal changes to address this banking issue, which is a giant problem for every legal cannabis industry operator?

Morgan Fox: Not really. Right now it’s actually legal for banks to do business with the cannabis industry as long as they do a huge list of criteria with regular reporting of every transaction as well as a whole other list of restrictions that make it very difficult for banks to be able to justify it from a business perspective, but also scare away a lot of people in the cannabis industry because they don’t want to have to do regular federal reporting because if there’s a change in the winds in the Department of Justice, they’ll be front and center as a criminal organization doing all this business and all of their information will be right out there for the DOJ just to snap up and go after them. Now that’s very, very unlikely to happen but I can see why cannabis businesses would be nervous about that. But it is possible, but what we really need is a substantive change in the law that provides safe harbor to banks working with businesses that are in compliance with state law.

TG Branfalt: So you mentioned that you don’t anticipate a crack down, federal policy has so far not interfered much with existing programs. Jeff Sessions, he’s out. I know everyone was really nervous while he was head of the DOJ. Congress included hemp legalization in the federal farm bill and I know that that’s not legalized cannabis, but how much of an impact could the hemp legalization have on cannabis policy throughout the US going forward?

Morgan Fox: Hemp was only made illegal because of the reefer madness directed at cannabis and the fact that now the prohibition against hemp has been greatly lessened and stripped out of law and was supported so overwhelmingly by both parties, I think is a sign that reefer madness is starting to dissipate. It’s also really good because it’s sort of a stepping stone for a lot of politicians that might be a little bit nervous about the issue. I think it’s obviously a good sign. It’s also going to be great for innovation in terms of production when the individual states start applying for hemp licenses from the federal government and are able to start setting up farms and setting up production quotas and all these other structures that are necessary under the new farm bill. It’s good practice for the states and good practice for the federal government in developing regulative cannabis systems.

TG Branfalt: And a lot of the sort of headlines after McConnell signs this piece of legislation with his hemp made pen, sort of screened CBD will be legal, there’s a lot of questions. There’s a lot of people claim to have answers, no firm answers. I have sort of my own understanding. What is your understanding about what this federal legalization of hemp will do for CBD?

Morgan Fox: Well the bottom line is that CBD remains a Schedule 1 substance under the controlled substances act and is currently banned by the FDA. The farm bill specifically says that nothing in the bill interferes with the FDA’s ability to regulate CBD. The only carve out that the farm bill provides is that CBD is exempted from the controlled substances act in states with approved programs and that is it.

I’m sorry, I should elaborate on that. So even though it is exempted from the controlled substances act in those states with approved programs, it’s still subject to FDA regulation and the federal government could become involved if there are any sort of sales going on of CBD products. But that’s sort of the problem with any sort of legal cannabis or medical CBD state. It’s still federally illegal and at the whim of the federal government whether or not they want to start processing or investigating those things. Will they? That remains to be seen. But they can, so anybody that’s involved in the industry should definitely consult a lawyer and be very careful about knowing exactly what risks they’re taking.

TG Branfalt: These first couple of years of the Trump Administration, when he was elected, the industry was sort of screaming. It was sort of on edge. Is it surprising to you guys at all that there hasn’t been any sort of major interference in the Trump era?

Morgan Fox: Not really. On the campaign trail, Trump said that he was definitely supportive of medical cannabis and that he thought adult use should be left up to the states. He reiterated that once in office and it’s really not an issue that’s at the forefront of his mind. Very recently he’s said that he would support the States Act, so these are all good signs. I just think that anybody that’s worried about a Trump direct crack down probably shouldn’t worry about that because he’s voiced support, and it’s not a major issue for him.

TG Branfalt: So I want to switch gears a little bit and talk to you about the recent successes the states that are going online, which of the new markets excites you most? Massachusetts just started sales, Maine is inching closer. They’ve had some process problems. Michigan just legalized. So which one’s exciting you guys most?

Morgan Fox: Maine has obviously had a huge problem with implementation and getting the regulations passed and they seem to be inching closer to opening sales, but it’s already been two years. But hopefully they’ll be able to get something going soon. Massachusetts shows signs of being a wonderfully regulated system and is still working on fleshing it out. Michigan obviously hasn’t started regulating yet, but I think that in terms of outlook, Michigan is probably the most exciting for a couple of reason.

One, it’s the first state in the mid west to legalize cannabis for adult use, which is going to be a game changer, and especially in terms of public opinion in somewhat more socially conservative states. It allows for an unlimited number of micro business licenses which will allow hobby farmers and small mom and pop stores and other small businesses to be able to create a niche in the market without having to deal with any of the onerous regulatory licensing fees or having to compete with major businesses for a limited number of licenses. Also it’s just simple population. Michigan is the second most populous legal state behind California, and that’s just huge.

TG Branfalt: And sort of looking ahead to 2019, I know that you guys are more focused on federal policy. There’s been a lot of talk that Rhode Island is on the verge of passing a legislature approved legalization measure. In New Jersey, the legislature recently voted on legalizing cannabis in not a binding vote, but it was pretty overwhelming, and I live in New York and I can tell you that if New Jersey falls, New York is not far behind and lawmakers here along with Governor Cuomo are looking at their own legalization measures.

Have you guys sort of been internally discussing which is gonna be the next domino to fall?

Morgan Fox: A lot of states in the northeast seem to be on the verge. You mentioned New Jersey which has been having serious discussions about the issue. Connecticut and Delaware are also doing so and have been actually considering legislation for the last couple of years now and seem to be right on the cusp. I’ve been hearing a lot of things from Governor Cuomo in New York and a lot of New York legislators who are also very supportive and want to see this get done quickly. I think that New York might take a little bit while longer, but I think really the one to watch is Illinois.

Following the midterm elections and the election of J.B. Pritzker to governor, he is very supportive of legalization and has actually said he wants Illinois to beat Michigan to opening retail stores and has already put together a task force featuring members of the industry including the head of Cresco Labs, Chris Lindsey from the Marijuana Policy Project is on that task force. Things are definitely moving in the right direction. There’s a lot of supportive state legislators in that state as well and I think that with that kind of momentum and that kind of top down motivation to get this done, it might actually beat some of the states in the northeast.

But it’s anybody’s guess as to whether the states like New Jersey, Delaware, or Connecticut are going to go first, or maybe it’ll be something like Vermont actually deciding to regulate their market. Or New Hampshire deciding to take the advice of it’s educational task force and actually move forward with legalization as well. It’s really difficult to tell who’s going to be first, but the fact that all of these states are considering doing so at relatively the same time is indicative of how far this movement has come and how quickly this is becoming the new reality.

TG Branfalt: So we haven’t hit a critical mass by any means yet, and I just want to touch back on this banking issue because it is so important, how much more important is this banking issue becoming as states are going online?

Morgan Fox: It’s obviously an issue that affects every business that directly touches the plant, and as more and more of those businesses come online, it becomes a much bigger problem. It’s not just a problem for those businesses, it’s a problem for everybody involved in their finances and that includes the federal government and the IRS. So we’re already seeing increased interest from banking associations to address this issue. We’re seeing increased interest in Congress to address this issue and because it’s not directly related to cannabis policy in terms of what people are doing with the actual plans and with cannabis products, it’s just basically an economic issue, I think it’s a lot more palatable to a lot of members of Congress.

TG Branfalt: So save for full federal legalization, would you say that the banking issue is probably the sort of the potential game changer on a federal level at this point in the legalization process?

Morgan Fox: It’s definitely up there. It’s one of the two most important non-comprehensive issues that we deal with and would certainly allow banks to profit. It would allow businesses to profit and be able to use financial services much more cheaply than they do when they can do them at all. Just in terms of optics, it would normalize this industry in a way that I think that it hasn’t been up to this point at a federal level.

TG Branfalt: So you mentioned that’s one of your top two issues. What’s your second top issue?

Morgan Fox: Well we’re also working on 280E, which as you know prevents businesses from being able to deduct business expenses when they’re filing federal taxes and that can be incredibly expensive to the point where it makes many businesses nonviable.

TG Branfalt: How hard is that for people to comprehend when they’re entering the space? How many sort of new operators do you try to advise solely on this issue or talk to solely about this issue?

Morgan Fox: There’s so many cannabis focused accountant groups now that the services are there to make sure that people are very aware and one of the things that we do at NCIA is make sure that members are connected with people that provide such services and at least know of their existence so that if they choose, they can decide to, or go after their advice and take advantage of the expertise of people who have been working with cannabis businesses for years now.

I think that it’s pretty common knowledge that this is a problem and that the cannabis industry has been taxed unfairly, but we definitely would like to make sure that people know about the problems that this creates for businesses. Generally when people are becoming NCIA members, they are already involved in the industry, so they already probably know, but we just like to make sure that they know that there are resources out there to make sure that they are in compliance with those and then don’t get some huge bill from the IRS a couple years down the road and potentially have to go to prison over it.

TG Branfalt: You work very closely with a variety of operators in the space. What sort of trends have you seen in terms of during the last year, what business types do you see popping up in the space more so than others?

Morgan Fox: We’re seeing a lot of, just in terms of the actual cannabis market, we’re seeing a lot more people getting involved in extraction and making concentrates, edibles, and the professionalism that’s involved in that has just been exploding as well as the innovation, but the ancillary industries that are deciding to focus on cannabis are really what have been blowing up. I think that only about 40% of our membership actually touch the plant, are involved in the cultivation, extraction, processing and retail. The rest of them are all ancillary businesses that have for one reason or another decided to focus on the cannabis industry and that’s, as I mentioned, accountants, software programmers, security, transportation, everything from general contractors, real estate, even plumbers. People that produce lighting equipment, people that produce nutrients. All of these businesses are taking advantage of the rising tide of the cannabis industry.

TG Branfalt: So you mentioned such trades as plumbers. Are you seeing people who have been plumbing or doing a trade for a long time come into this space or are you seeing sort of younger folks who are just sort of learning or just learned that trade or just getting involved in that trade enter the space?

Morgan Fox: Just anecdotally, earlier this year I was talking to a guy who had a small plumbing business that he was in danger of going under three or four years ago and when the state that he lived in decided to legalize cannabis, he saw his business overnight just basically recover and then double and then triple in revenue to the point where he’s actually hiring people and creating jobs now. We’re hearing those sort of stories all over the place in a number of different ancillary industries.

TG Branfalt: So for someone like a plumber, this is fascinating to me, is it because more straight laced plumbers don’t want to go into these places or are they learning and working on treatment systems? I’m very curious as to what role.

Morgan Fox: We’re seeing traditional straight laced professionals and tradesmen come into this industry and realize what a boom it is. Sometimes it’s a majority of their clientele, sometimes it’s only a portion of their business, but the people that are willing to actively pursue working with cannabis businesses are seeing a real benefit.

TG Branfalt: That’s really, really fascinating stuff to me. I want to talk to you, again, you work with so many different businesses that sort of span the industry, what consumer trends are your members talking about that they’ve noticed in say the last year or so and do they expect those trends to continue into 2019 or what might shift?

Morgan Fox: From what I’ve been able to tell, it seems as if, and this has been happening for the last couple of years, but concentrates are increasingly becoming more popular. Flower is still king, but it’s market share is starting to lessen and I think that might be largely because of both the convenience and discretion and lack of smoke involved with a lot of vaporizable and edible products.

TG Branfalt: And is this something you think you’re gonna continue to see going forward or might it shift to where edibles gets more of a market share?

Morgan Fox: I think it’s really difficult to say, and it also depends a whole lot on consumer education. I think for many years people probably were very interested in edibles because, especially for new consumers, they weren’t comfortable with or weren’t familiar with smoking or they still had some sort of a hangup about it and they were maybe a little bit scared of vaporizers, but eating a brownie or a cookie seemed familiar to them. But then you have the opposite problem where people didn’t have enough education about dosing and things like that, so then they might have had a bad experience, it really does come down to people becoming more familiar with this product as well as by producers making sure that they are following the very strict guidelines laid out in terms of dosage and labeling.

TG Branfalt: So I just want to take another step back to this idea of traditional sort of trades people getting involved and I wonder about staffing. Are your members having any trouble finding qualified employees to work in this space?

Morgan Fox: I have heard that from some areas, but along with all these ancillary industries growing up, we’re also seeing tremendous growth in cannabis industry staffing companies like THC Staffing and Vangst. These are companies that are making sure that people know that just because you don’t necessarily have any experience with cannabis or in the cannabis industry that it is a growth industry and that you can take applicable skills from other areas and apply them in this industry and that’s becoming more and more popular.

TG Branfalt: So just to sort of sum up here, we’ve talked about a lot of different things. We’ve talked about banking, we’ve talked about 280E, are these the most pressing issues for the cannabis industry as a whole heading into 2019?

Morgan Fox: Well I think the most pressing issue is ending cannabis prohibition because that will make it much easier for states to open up new markets, but most importantly it will stop people from getting arrested for using this product. But aside from that I think that banking and 280E are probably the most important issues for the industry at this point.

TG Branfalt: And briefly, you mentioned the criminal justice aspects of it. The federal government, as you probably know, is working on a criminal justice reform bill that while it’s not going to release cannabis prisoners per se, on a federal level, it will make some changes, it will reduce some sentences, let some people out because the federal jails are overcrowded. Is this, to you guys, sort of a step in the right direction towards maybe a federal wipe of cannabis crimes? Is this possible?

Morgan Fox: Well because most cannabis arrests occur at the state level, I don’t think that it’s possible for the federal government to vacate or expunge those state criminal records. However I think that there could be a possibility for doing so at the federal level, which are mostly distribution charges and things like that. But it is a sign that people are actually starting to think about the issues of expungement and trying to undo some of the harms caused by prohibition.

Back when Colorado first was trying to legalize cannabis, the idea of retroactive amnesty or expungement was wildly unpopular, so people didn’t even consider putting it into the law and now as people have gotten more comfortable with legalization, the idea of not only undoing the harms of prohibition, but making sure that people who have been caught up in prohibition and it’s notoriously unfair enforcement still have the ability to work in the cannabis industry and expungement is a really big part of that.

So I think that the federal bill coming close to getting passed will be a big sign that states should start doing the same and we’re already seeing that in legal states such as California and Massachusetts where there is active efforts to expunge past criminal marijuana conviction. So it’s definitely good. Speaking of criminal justice bill, it’s very interesting that you said that it would affect cannabis because it actually might. Senator Cory Gardner is trying to insert language into that bill that would in effect allow states to determine their own cannabis policies and if he’s successful, then that will be a game changer.

TG Branfalt: I didn’t know that he was trying to do that, and Gardner, for people who might not know, was blocking judicial nominees basically asking for the Administration to promise that they wouldn’t enforce federal law. So he’s been sort of an ally. Just to sort of wrap up here, what advice would you have for individuals interested in entering the cannabis space?

Morgan Fox: Education, education, education. Look to the established national groups such as NCIA and learn what’s going on in your state. Do as much networking as possible and make sure that you know the difficulties associated with navigating this really complex regulatory environment. Another is to make sure that you have capital lined up because unfortunately there are still very high barriers of entry and it can be very difficult to get into the industry without access to them. That’s not to say that it’s impossible, but that’s one of the biggest challenges facing cannabis business, or prospective cannabis entrepreneurs right now. But really, yeah, it’s just making sure that you know the ins and outs and there are a number of services that are available to help out with those problems.

TG Branfalt: Well, Morgan, I really appreciate you coming on the show. This has been a great wide ranging conversation. I really appreciate the work that you guys do over there at the NCIA and I hope that we get to touch base again in 2019.

Morgan Fox: Absolutely. Thank you very much for having me.

TG Branfalt: You can find more episodes of the Ganjapreneur.com Podcast in the podcast section of ganjapreneur.com and the Apple iTunes store. On the Ganjapreneur.com website, you will find the latest cannabis news and cannabis jobs updated daily along with transcripts of this podcast. You can also download the Ganjapreneur.com app in iTunes and Google Play. This episode was engineered by Trim Media House. I’ve been your host, TG Branfalt.