California Lowers Cannabis Tax Estimates Due to Coronavirus

6/04/2020

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California Gov. Gavin Newsom (D) is downgrading the state’s cannabis excise tax projections for this year and next year due to the coronavirus pandemic and the looming recession related to the response, which shuttered businesses and has led to near-record unemployment, the Los Angeles Times reports.

Newsom in January estimated that the state would see $479 million in cannabis excise taxes during this fiscal year, but he reduced those expectations to $443 million. For the fiscal year that begins July 1, Newsom has projected $590 million in cannabis excise taxes, but revised that estimate to $435 million.

The budget proposal with the recalculated figures said that while other vice products, such as tobacco and alcohol, “tend to be recession-resistant, the forecast assumes that cannabis businesses will be more negatively impacted by the COVID-19 pandemic.”

“Cannabis businesses have less access to banking services that could provide liquidity, have a younger consumer base likely to be disproportionately affected by the COVID-19 recession, and still must contend with competition from the black market.” – California Executive Budget via the Times

The impact of the virus and the measures put in place to combat its spread had mixed impacts on the cannabis industry which haven’t yet been fully realized. Some states reported a slowdown, while others reported a sales surge; however, cannabis businesses are unable to access federal coronavirus aid due to the federal illegality of cannabis.

California considered cannabis businesses “essential” businesses as part of their response to the virus and the Newsom administration has relaxed some industry regulations, including deferring license renewal fees and extending filing deadlines for first quarter tax returns.

Jerred Kiloh, president of the United Cannabis Business Association called the situation for cannabis companies in California “dire at this point” and said that the illicit market would “have another leg up this year” because people will be looking for the cheapest option.

The governor estimates the state’s unemployment rate would reach 18 percent this year. According to the Economic Roundtable, 60 percent of workers ages 16 to 24 face a high risk of unemployment compared with 42 percent of workers 45 to 54.

Kiloh added that the state has seen a 30 percent drop in tourism, which also negatively impacts cannabis sales.

Josh Drayton, a spokesman for the California Cannabis Industry Association said sales have “leveled out” in the state after an initial sales spike attributed to panic buying.

Last week, the state reported $134.9 million in combined cannabis-derived tax revenues for the first quarter of the year.

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Iowa Senate Passes Medical Cannabis Reforms

6/04/2020

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The Iowa Senate has passed a modest expansion of the state’s medical cannabis program which has already passed the House and has the approval of Republican Gov. Kim Reynolds, the Cherokee Tribune & Ledger News reports. The measure would replace the state’s current 3 percent THC limit with a per-patient limit of 4.5 grams of THC-rich cannabis over 90 days and allows that cap to increase with a physician recommendation or if the patient is terminally ill.

The bill also adds intractable autism and post-traumatic stress disorder to the list of qualifying conditions.

Sen. Joe Bolkcom (D) said during the debate that the measure doesn’t actually improve the program and will ultimately make it weaker than the current regime. Bolkcom also opposed a provision in the law allowing businesses to deny unemployment insurance to former employees who test positive for cannabis. The senator said that rule would have a disparate impact on low-income and minority communities.

“Here we are, five years after passing our original law … and tonight you’re going to make it even worse. Wow. No small task, colleagues.” – Bolkcom, during the debate, via the Tribune & Ledger News

Last year, the Iowa Legislature passed a bill to remove the THC cap and allow patients to access 25 grams of THC over 90 days, along with a host of other program changes, but that measure was vetoed by Reynolds on the grounds that the reforms were opposed by the state medical cannabis board.

Iowa‘s program prohibits smoking, allowing only capsules, extracts, concentrates, lotions, ointments, and tinctures. The measure passed the Senate 32-17 and moves next to Reynolds, who is expected to sign the bill.

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DEA Now Permitted to Investigate Protesters

6/03/2020

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The Drug Enforcement Administration (DEA) has been given temporary power to investigate people participating in the nationwide protests over the police killing of George Floyd, according to an agency memo acquired by BuzzFeed News.

The development allows DEA — which is normally restricted to the investigation and enforcement of only federal drug crimes — “to enforce any federal crime committed as a result of the protests over the death of George Floyd.”

The agency submitted its request for the increased enforcement power last week and on Sunday a high-ranking Justice Department official signed off on the plan.

“In order for DEA to assist to the maximum extent possible in the federal law enforcement response to protests which devolve into violations of federal law, DEA requests that it be designated to enforce any federal crime committed as a result of protests over the death of George Floyd. DEA requests this authority on a nationwide basis for a period of fourteen days.” — Excerpt from DEA memo procured by BuzzFeed News

Attorney General William Barr said over the weekend that federal agencies including the FBI, DEA, U.S. Marshals, and the Bureau of Alcohol, Tobacco, Firearms and Explosives would be “deployed” to support local law enforcement.

“Drug enforcement agents should not be conducting covert surveillance of protests and First Amendment protected speech,” Hugh Handeyside, a senior attorney for the ACLU, told BuzzFeed News.

“That kind of monitoring and information sharing may well constitute unwarranted investigation of people exercising their constitutional rights to seek justice,” Handeyside said. “The executive branch continues to run headlong in the wrong direction.”

The May 25 murder of George Floyd, an unarmed Black man, by a white Minneapolis police officer — on camera and in broad daylight — has sparked outrage and international protests against U.S. police brutality in Floyd’s name. During the chaotic weekend, dozens of cannabis dispensaries were burglarized; many affected business owners, however, said they supported the protests and suspected they had been targeted by opportunistic criminals, not protestors or looters.

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Columbia Care Sued Over Alleged License Interference

6/03/2020

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Florida MCBD, a cannabis company focused on low-THC products, is suing New York-based Columbia Care claiming tortious interference with contract, unjust enrichment, civil conspiracy, aiding and abetting fraud, and aiding and abetting breach of fiduciary duty over Columbia’s cannabis license in Florida, the New York Law Journal reports.

According to lawyers for Florida MCBD, the company has sought a medical cannabis license in Florida since 2015 and entered into a joint venture agreement with Sun Bulb, a Florida-based nursery, to help it meet the state’s medical cannabis dispensary license requirements. While Sun Bulb lacked experience with cannabis, Florida MCBD filed confidential information related to its expertise as part of the license application, according to court documents outlined by the Law Journal. The state Health Department initially denied the application from the joint venture but over the next two years the partners lobbied the state legislature to allow additional licenses, the report says.

In the court filing, Sarmad Khojasteh, a partner at law firm Kasowitz Benson Torres, said during that two-year period, Columbia “feverishly sought to obtain a license” but the company’s first two applications were rejected.

The lawsuit claims that in the summer of 2017 Columbia Care executives allegedly entered into secret negotiations with Sun Bulb, conspired to defraud Florida MCBD and the Department of Health, and that the companies agreed to pay Sun Bulb for Florida MCBD’s ownership claims to the dispensary license.

Sun Bulb described its new relationship with Columbia Care in updates to the Health Department, but Florida MCBD’s lawsuit claims that Sun Bulb presented those updates as supplemental information, not as fundamental changes to the license application, which the plaintiffs’ attorneys claim were “prepared, paid for, and filed by” Florida MCBD. By the end of 2017 the Sun Bulb and Columbia Care partnership received a state cannabis license, the report says.

In the complaint, Khojasteh also accused Columbia Care of “a pattern of racketeering and tortious activity” in other states, including Arizona and Massachusetts.

The case is filed in New York County’s Supreme Court Commercial Division. Arbitration between the companies is ongoing.

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Harborside Appeals Cannabis Tax Ruling in Federal Court

6/03/2020

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California cannabis company Harborside is continuing its legal challenge to federal tax code 280E but is taking a different approach to the case along with a new legal team, MJBizDaily reports. The company argues that 280E is unconstitutional, running afoul of the 16th Amendment, which allows for income taxes, but attorney James Mann of Greenspoon Marder says 280E, “results in a tax that’s not on income, it’s not an income tax, so therefore it’s unconstitutional.”

The arguments come in a May 26 appeal filed by Mann on behalf of Harborside. In short, 280E prevents standard business deductions by companies that deal federally illegal drugs, including cannabis even when state-approved. In 2018, the U.S. Tax Court ruled against Harborside calling the firm “a giant drug trafficker, unentitled to the usual deductions that legitimate businesses can claim” because cannabis remains federally illegal.

Mann told MJBizDaily that decision “is just wrong” and calls the determination by the Tax Court and the Internal Revenue Service that state-legal cannabis businesses aren’t afforded the same cost of goods sold deductions “crazy.”

Former IRS officer William Fowler, now a senior adviser with Nevium Intellectual Property Consultants, told MJBizDaily that Harborside is “dreaming” and “grasping at straws” and that the lawsuit risks further entrenching the IRS’s position on 280E.

“They’re really pushing the industry to have some really tight rulings on this. The IRS is preparing more guidance on this, so (Harborside) should have waited until they got that guidance. To me, those arguments are weak, and it’s not good for everybody else.” – Fowler to MJBizDaily

Mann argues that the legal issues in the case are ripe for appeal and that the 2018 opinion was “ill-considered.”

The case is in the U.S. Court of Appeals for the 9th Circuit in San Francisco and a decision on the matter could take years. The original lawsuit by Harborside was filed in 2016 and a decision wasn’t issued until 2018.

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Maine Cannabis Coalition Files Suit Over Removed Industry Residency Requirements

6/03/2020

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The Maine Cannabis Coalition has filed a lawsuit against the state for its decision to remove residency requirements for cannabis business licenses, the Portland Press Herald reports. The trade association says the decision by the state Department of Administrative and Financial Services violates Maine’s Marijuana Legalization Act.

The decision by the agency was in response to another lawsuit by Wellness Connection of Maine over the residency requirement. The Wellness Connection and Wellness and Pain Management Connection of Delaware, which are financially tied to international cannabis firm Acreage Holdings, filed the lawsuit against the state in April arguing that the residency requirement violated the commerce clause of the U.S. Constitution which forbids restrictive and discriminatory commercial regulations between the states.

The Office of Marijuana Policy, which is housed in the Administrative and Financial Services division, said it wouldn’t enforce the policy after the state Attorney General’s Office said the state was unlikely to beat the lawsuit in court because the state Supreme Court had struck down residency requirements in the past.

“Maine Cannabis Coalition and its members along with many other citizens fought hard for two years to make sure residency protections were included in the law. To have it all be ignored after all the hard work and efforts is extremely aggravating to the citizens and policy makers of Maine who expect no one to be above the law.” – MCC in a statement via the Press Herald

In the lawsuit, Maine Cannabis Coalition claims the decision to revoke the requirement hurts medical cannabis providers such as MCC co-founder Dawson Julia, a caregiver, and Christian Roney, who is seeking a recreational cannabis license, by increasing the number of entities competing for limited market share. Both Julia and Roney claim they relied on the competitive advantages provided by the residency requirement while developing their business plans.

As passed, the Maine law requires every officer, director, and manager of recreational cannabusinesses, and most of its ownership, to have lived and filed taxes in Maine for at least four years. That rule would have expired in June 2021.

The plaintiffs argue that the OMP doesn’t have the authority to abandon parts of the law that have not been struck down by a court or repealed by the Legislature and seeks an injunction preventing officials from awarding any licenses to out-of-state applicants, the report says.

The long-awaited rollout of the state’s adult-use cannabis industry was put on hold amid the state’s coronavirus response. OMP Director Erik Gunderson told the Press Herald that the decision to strike down the residency requirements would not further delay sales.

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Cannabis Firms With Highest-Paid Executives See Underperforming Stocks

6/02/2020

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Cannabis companies with the highest-paid executives saw their stock underperform over the last year, according to a survey by Bedford Consulting Group outlined by Bloomberg.

The report analyzed the compensation of 437 executives and 449 board members at 96 cannabis companies and found that Canadian companies Tilray Inc. Acreage Holdings Inc., and Sunniva Inc. had the highest-paid executives in the industry.

Tilray CEO Brandon Kennedy was the highest-paid executive, according to the report, with total compensation of $27.96 million, 97 percent of which was stock shares and options. Acreage’s Brian Mulroney – who served as Prime Minister of Canada from 1984 to 1993 – was the highest-paid director, earning an all equity-based $10.23 million, the report says.

Sunniva employed the highest-paid non-executive board chair or lead director, as Todd Patrick – who left the firm last January – received $1.32 million, 95 percent in options.

Over the last 12 months, each of those companies underperformed the BI Global Cannabis Competitive Peers index, and Sunniva has fallen 97 percent.

Among cannabis companies, 35 percent experienced CEO turnover last year and another 32 percent had CFO turnover.

According to the survey, just 11 percent of cannabis industry board members were women and only 8 percent of the 437 senior executives were female.

The majority of cannabis companies analyzed – 58 percent – lacked an independent board leader.

The data was collected in October when the average cannabis share price was about a third higher than it is today.

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Report: Leafs By Snoop Most Recognizable Cannabis Brand

6/02/2020

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Leafs By Snoop is the most recognizable cannabis brand, followed by Cheeba Chews and Marley Natural, but none of the brands were recognized by more than 23 percent of consumers, according to a Green Horizons analysis.

Overall, 23 percent of cannabis consumers had heard of Leafs By Snoop – the brand backed by rapper Snoop Dogg (real name Calvin Brodus) – while 22 percent had heard of Cheeba Chews, and 21 percent had heard of Marley Naturals, which bears the namesake of the late reggae legend Bob Marley. The brand is owned by Privateer Holdings and members of the Marley family.

Green Horizons opined that the low recognition numbers highlight the “immense growth opportunity for brands to break out in an increasingly crowded marketplace.”

Among cannabis consumers who purchase from dispensaries, 67 percent said their “main reason” for choosing a dispensary was high-quality products, followed by a convenient location near their house or work (62 percent), consistent selection (61 percent), carry brands they prefer (58 percent), knowledgeable budtenders (55 percent), and the “vibe of the dispensary” (55 percent). Only half said they chose a dispensary for the lowest prices.

Nearly half (47 percent) of respondents said word of mouth was the best way to find a dispensary, followed by Google Maps and Google reviews (34 percent), the advice of a healthcare professional (32 percent), seeing them while driving or walking around (32 percent), Weedmaps (31 percent), and Leafly (21 percent).

Most cannabis consumers (52 percent) with access to dispensaries chose independent dispensaries, while 42 percent made purchases at franchised or chain stores. Still, 51 percent of recreational consumers said they purchase from an individual outside the legal market, compared to 34 percent of medical-only consumers.

Overall, 57 percent of all cannabis users report purchasing cannabis from a physical dispensary, with 39 percent from a chain or franchised dispensary and 34 percent from a local, independent dispensary.

Green Horizons found that 28 percent of those surveyed spent less than $49 per month on cannabis, while about the same figure (27 percent) spent between $50 and $99. Another 16 percent spent between $100 and $149, just 8 percent spent between $150 and $199, and 17 percent spent $200 or more.

According to the survey, smoking is still the method most regularly used to consume cannabis (62 percent of respondents). Nearly a third, though, regularly vape either flower or concentrates, while 28 percent use edibles, 22 percent use topicals – and the same figure use drinks – with 18 percent using tinctures.

Of those surveyed, 40 percent identified as both medical and recreational users, with 35 percent saying they are only recreational users and 24 percent use for medical purposes.

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Washington Regulators Ban Vitamin E Acetate

6/02/2020

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The Washington State Liquor and Cannabis Board (LCB) adopted emergency rules banning the use of vitamin E acetate in cannabis vapor products and requiring more in-depth reporting from licensed cannabis processors.

“[Processors must] submit under oath a complete list of all constituent substances and the amount and sources thereof in each marijuana vapor product, including all additives, thickening agents, preservatives, compounds, and any other substance used in the production and processing of each marijuana vapor product.” — LCB memorandum excerpt

Vitamin E acetate

Following investigations last year by the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), and other government agencies, vitamin E acetate was determined to be the source of lung injury related to “e-cigarettes” and “vaping” that resulted in 68 deaths in 29 states and Washington D.C., including two deaths in Washington state, according to a State Board of Health report.

Unable to pass an outright ban on vitamin E acetate, as was recommended by the State Board of Health and Governor Jay Insley, the Washington State legislature instead passed HB 2826, which gave the LCB authority to ban any substance the Department of Health — “or any other authority the Board deems appropriate” — that “may pose a risk to public health.”

Vitamin E acetate is the first “additive” banned by the LCB under its new regulatory authority.

Pesticides and heavy metal testing

The Board also took action concerning cannabis testing, having resumed the rulemaking process for improving the state’s “Marijuana Quality Assurance testing and Product Requirements.” To be phased in by September 2021, the new regulations will require all cannabis produced in the state to be tested for pesticides and heavy metals.

“This is an impressive body of rule-making,” said Jim MacRae, a Washington state cannabis activist.

“I applaud the Board working to protect cannabis consumers in the state, but they’ve known about the pesticide problem for years and even now with Leaf Data systems not working, test results are ‘faith-based,’ meaning they don’t have a way to reliably attach test results to actual cannabis batches,” said MacRae. “I’m also wondering why it will take a year to implement the new testing rules when they acted on vitamin E acetate so quickly.”

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Health Canada Reinstates CannTrust License for One Facility

6/02/2020

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Embattled Canadian cannabis company CannTrust has had the licenses for its Fenwick Perpetual Harvest Facility reinstated more than three months after it submitted the paperwork to Health Canada.

The company’s federal licenses were suspended last September after Health Canada found the company had grown and sold cannabis in and from unlicensed rooms, built two rooms at one of its facilities without approval, and didn’t maintain documents in a way that allowed it to complete an audit in a timely manner.

The violations at the company’s facilities forced it to put 12,000 kilograms of cannabis “on hold” in July 2019 after Health Canada discovered the unlicensed rooms at the company’s Pelham, Ontario facility. Two days later, Danish company StenoCare quarantined oil derived from the facility.

The following month, the company’s auditor, KPMG, withdrew its financial audits of the company saying they were completed with unreliable information from representatives – namely former Chief Executive Peter Aceto and former President Eric Paul, who were fired after emails emerged showing they knew about the illegal grows.

In a statement, CannTrust said they would “immediately recommence operations” at the Fenwick facility but “cannot provide an exact timeframe for when its products will be available in the market,” which depends on Health Canada’s reinstatement of the Vaughan facility, which was at the center of the company’s non-compliance scandal. CannTrust filed the reinstatement of the Vaughan facility in late April.

The company said it “remains without meaningful revenues and has terminated or laid-off a significant portion of its workforce” since the Health Canada action.

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California Dispensaries Ransacked Amid Protests

6/01/2020

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Many California cannabis dispensaries were robbed amid the weekend’s chaotic and widespread protests against police brutality.

In Los Angeles, people were filmed ransacking Cookies, a cannabis dispensary owned by rapper-turned-entrepreneur Berner. In a video response posted to his Instagram, however, Berner said he supported and stood with the protests despite the collateral damage his business suffered.

“It’s extremely unfortunate what happened to our store tonight on Melrose. But as a human living in the world we’re living in today, I cannot expect anything less until justice is served. See, we can rebuild our store, but you cannot bring someone back to life.” — Berner, in a video statement posted on Instagram

 

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I don’t expect everyone to understand what’s going on in the world 🌎 right now …. but I do ….

A post shared by Berner (@berner415) on

Twitter users filmed multiple MedMen dispensary locations being ransacked throughout Los Angeles, as well.

Dispensaries in the Bay Area experienced a similar fate, KCBS Radio reports. ECO Cannabis in Oakland confirmed its Telegraph Ave location was broken into and burglarized over the weekend, with about 10 looters making off with thousands of dollars worth of cannabis and other merchandise.

Magnolia Wellness, another Oakland-based dispensary, was robbed multiple times over the weekend and reported significant losses. Magnolia’s owner Debby Goldsberry wrote in a Facebook post that the business supported the ongoing protests and that the robbers were “armed criminals,” not protestors or looters.

“There has been an organized crime ring targeting dispensaries for years, and with everything going on, as opportunists, they took advantage of the chaos. We fully stand behind and along side our fellow protesters and want to make the clear distinction between what happened here and at the other dispensaries, and the important movement and protests happening around the country.” — Statement posted by a separate Magnolia Wellness representative

Berkleyside reports that looters on Sunday night patrolled Berkeley in “vehicle caravans” that took advantage of the protests, performing smash-and-grabs at multiple commercial locations. Cannabis Buyers Club Berkeley and Farmacy Berkeley, two cannabis dispensaries, were among Berkeley’s looted businesses.

Protestors have been demonstrating around the U.S. in response to the May 25 police killing of George Floyd, an unarmed Black man in Minneapolis who was being detained by several officers. Bystanders’ video recordings of Floyd’s death show him telling police “I can’t breathe” while a white police officer — who has since been charged with manslaughter and 3rd-degree murder — kneels on his neck and head for nearly nine minutes. There has also been outrage over the recent death of Breonna Taylor, a Black woman who was shot and killed by police in her Louisville, Georgia home during a botched drug raid, and numerous others who have been killed or died in police custody in recent years.

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Hemp Ineligible for USDA Coronavirus Aid Because Prices Haven’t Fallen 5%

6/01/2020

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The president of Vote Hemp said hemp businesses would not be able to argue their case for eligibility under the U.S. Department of Agriculture Coronavirus Food Assistance Program – designed for relief for agriculture businesses affected by the pandemic and state responses to the crisis – because the agency says the sector has not suffered a 5 percent decline from January to April, as required by the program, according to a Hemp Grower report.

Hemp businesses are eligible for aid under the Coronavirus Aid, Relief, and Economic Stability (CARES) Act – a stimulus package aimed at providing relief for individuals and businesses after most states shut down their economies in some form amid the pandemic. However, the agriculture-focused USDA program only provides relief for industries who “believe they’ve suffered a 5 percent or greater price decline between January and April 2020 and … face additional marketing costs due to COVID-19,” the USDA website says.

Vote Hemp President Eric Seenstra said it “doesn’t seem right that they should leave hemp out” of the program, adding that he is “disappointed to see how hemp is being treated by the USDA in this case.”

The program will provide up to $16 billion in direct, one-time payments to farmers and ranchers impacted by the coronavirus based on the commodities they produce. Funding for the payments comes from the CARES Act and the Commodity Credit Corporation Charter Act.

The report notes that tobacco companies may also not be eligible for aid under the USDA rules. Other commodities not automatically eligible include sheep more than two years old, eggs/layers, soft and hard red winter wheat, white wheat, rice, flax, rye, peanuts, feed barley, Extra Long Staple (ELS) cotton, alfalfa, and forage crops.

Hemp producers may submit comments on regulations.gov and the agency will consider those comments by June 22. The USDA is accepting program applications through the Farm Service Agency until August 28.

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Study Finds Arthritic Dogs Benefit from CBD Treatment

6/01/2020

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A recent study by researchers at Baylor College of Medicine in collaboration with Medterra CBD found nine out of 10 dogs with osteoarthritis benefitted from CBD treatment. The study, published in the journal Pain, found the cannabinoid treatment reduced production in both inflammatory molecules and immune cells linked to arthritis, suggesting the study could support future scientific evaluation of CBD for human arthritis.

The researchers also determined that the effect of the CBD was quicker and more effective when it was delivered encapsulated in liposomes than when it was administered “naked.” Liposomes are artificially formed tiny spherical sacs used to deliver drugs and other substances into tissues at higher rates of absorption.

Dr. Matthew Halpert, research faculty in the Department of Pathology and Immunology at Baylor, indicated that the “encouraging results” of the CBD remained for two weeks after the treatment stopped and that it seemed to be safe since they detected no alterations in the measured blood markers.

“We studied dogs because experimental evidence shows that spontaneous models of arthritis, particularly in domesticated canine models, are more appropriate for assessing human arthritis pain treatments than other animal models. The biological characteristics of arthritis in dogs closely resemble those of the human condition.” – Halpert in a statement

After four weeks of daily treatment, owners and veterinarians reported on the condition of the dogs – whether they observed changes in pain levels and changes related to running or gait. The placebo-controlled, double-blind, study enrolled 20 dogs total, 10 of which received a placebo.

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Cannabis Cite-and-Release Law Takes Effect In San Marcos, Texas

6/01/2020

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San Marcos, Texas’ cite-and-release policy is now in effect, which forces police to issue citations for low-level cannabis crimes instead of arrests in the city, according to a KVUE report. San Marcos is the first city in Texas to approve cite-and-release as a binding law and not just a resolution.

Under the new policy, those found in possession of less than four ounces of cannabis will not be arrested “unless a disqualifying circumstance outlined in the policy applies.” Justifiable arrests under the policy include if the person does not live in Hays County, is at risk of causing harm to themselves or others, is unwilling to provide proper identification, demands to be taken before a magistrate, has an outstanding warrant, or is suspected of committing a crime not included in the ordinance.

Hays County-based grassroots organization Mano Amiga, which pushed for the reforms for more than a year, said that in 2013, low-level cannabis possession had accounted for the most arrests in the city.

Interim Police Chief Bob Klett told the Austin American-Statesman that the department has been “complying with the ordinance since the day after the council’s second reading” and that he does not “foresee any issues” with the law and law enforcement in the city.

Other crimes covered under the cite-and-release include Class C misdemeanors other than family violence, assault, or public intoxication; driving with an invalid license; criminal mischief; graffiti; theft of property; and theft of services.

Last month, the city of El Paso approved a similar policy for up to 2 ounces and cannabis-related Class A and Class B misdemeanors. Cannabis remains illegal under Texas state law.

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Study Identifies Likely Cannabis Use at Ancient Israel Site

5/29/2020

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Material found on two altars at the entrance of an ancient Judahite shrine at Beersheba Valley, in Israel’s Tel Arad found in 1963 – described as the “Holy of the Holies” – contained cannabis and frankincense, according to a study published in the Journal of the Institute of Archaeology of Tel Aviv University.

The study authors said it was the first time physical evidence of cannabis has been found in the Ancient Near East.

The researchers concluded that the substance on the smaller altar contained “residues of cannabinoids,” including THC, CBD, and CBN “along with an assortment of terpenes and terpenoids, suggesting that cannabis inflorescences had been burnt on it.” The altar also contained residues attributed to animal dung “suggesting that the cannabis resin had been mixed with dung to enable mild heating,” the study says.

Lead author Eran Arie, curator of Iron Age and Persian Periods archaeology in the Israel Museum, Jerusalem, told CNN that “around the world … many cultures used hallucinogenic materials and ingredients in order to get into some kind of religious ecstasy” but finding cannabis “in an official cult place of Judah says something new about the cult of Judah,” namely “the use of mind-altering substances” as part of the cult rituals.

“As the terpenoids detected are not unique to cannabis and may be found abundantly in many other local plants, it is likely that the cannabis burnt on the altar was not imported for its smell or therapeutic virtues but for its mind-altering abilities, expressed only by heating.” – “Cannabis and Frankincense at the Judahite Shrine of Arad,” May, 28 2020

The site was excavated between 1962−1967 on behalf of the Institute of Archaeology of the Hebrew University of Jerusalem.

In 2019, archaeologists in China discovered evidence of human cannabis use and cultivation dating back to 500 B.C. Those researchers concluded that cannabis appears to have been used during burial rituals. That study suggests “that the ritualistic ‘smoking’ of cannabis was gradually popularized from the elite class to the common people in the eastern Pamirs in China at least 2,500 years ago,” since those buried at the plot do not appear to be of the upper class.

The Israeli researchers note that evidence of cannabis consumption for both medical use and mind-altering experiences is well-documented by anthropologists.

Members of India’s Gaddi tribe of the western Himalayas, for example, smoked cannabis for the hallucinations it induced. In the Buganda kingdom of Africa and the Kanabad village in Pakistan, tribe members smoked cannabis to induce a state of euphoria. The Tenetehara of Brazil also smoked the flowers and the leaves for their psychoactive effects.

In Africa, the Sotho smoked the leaves and other parts of the plant for its pain-relieving qualities. In Morocco, midwives used cannabis smoke to induce abortion in pregnant women wishing to terminate their pregnancy.

In 1993, archeologists in Jerusalem uncovered a cave dating to the 4th century CE and found the remains of a 14-year-old girl who died during childbirth. She was discovered with the skeleton of a 40-week fetus trapped in her pelvis and a juglet with black material in it was retrieved near the skeletons. The analysis of the material revealed the presence of THC and CBD. Researchers concluded that the purpose of feeding the cannabis to the girl (by inhalation) was to increase the force of uterine contractions and to reduce birth pain.

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Red Lake Nation In Minnesota Approves Medical Cannabis Reforms

5/29/2020

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Minnesota’s Red Lake Nation on Wednesday overwhelmingly approved a medical cannabis program that goes beyond the state’s program parameters and allowing flower, Red Lake Nation News reports. The measure passed 1,765 to 425, or 80 percent approval.

Cannabis advocate Kevin Jones, who also organized the Chippewa Cannabis Party, said the tribe would also have about 20 more qualifying conditions than the state program and that the tribal program will allow program access for opioid addiction.

“I hope it helps the opioid crisis, we got hit hard with that. I hope that changes a lot of it and helps families bring parents, aunties and uncles back to where they were before. It won’t bring the ones we lost back but will make a new path for the ones on that journey today.” – Jones to the Red Lake Nation News

Jones noted in an interview with the Duluth Reader that when Minnesota launched its medical cannabis program, they didn’t include tribes in the reforms. Jones said the vote sets the stage for the tribe to go “full recreational” despite Minnesota laws and that the tribe would exercise its sovereignty on the issue.

“If Minnesota can make a program without including native tribes, we can make things here in Red Lake and start practicing our sovereignty. … We’re going to tell them what we’re going to do,” Jones said to the Reader. “This is what we’re going to do, because they left us out so much. I’m tired of them taking a lot of what we had. Now they’re trying to take our sovereignty away. I won’t allow them to do that. I will fight for our sovereignty. I know the council will back us if we run this industry right.”

Jones is next planning to sell hemp and CBD products under the Red Lake Chippewa Hemp label. Jones is also running for a four-year term as Redby representative under the Cannabis Party banner and said that if he and other party members are elected to the council they will push for full recreational legalization within 30 days.

Minnesota’s medical cannabis program only allows oils, pills, liquids, or vaporized forms.

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Eaze Lowers Revenue Projections, Plans Retail Expansion

5/29/2020

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Cannabis delivery and tech company Eaze drastically cut sales predictions and is working to become a vertically integrated retailer – including its own brands – according to the company’s pitch deck outlined by Business Insider.

In 2017, the company estimated it would have sold $1 billion worth of cannabis by 2020, but this year’s pitch deck drops that figure to $190 million, generating $125 million in revenue.

In January, Eaze indicated they would transition to the retail side – raising $35 million a month later from FoundersJT LLC, Rose Capital, and DCM to fund the pivot. The company said the transition would reduce costs and increase working capital. That shift to retail is two-fold, the company outlines in the pitch deck, including “depot consolidation and private-label brand launches.” As part of that effort, Eaze says its “Circles” products and the upcoming “Anarchy” brand would comprise 40 percent of its menu share, giving it bigger margins to work with. Within the first two weeks of launching Circles, the house brand represented about a quarter of its vape and flower categories.

According to the company documents, within four months – from week 1, 2020 to week 16 – Eaze went from owning none of its depots to owning 60 percent, and a spokesperson told Business Insider that figure was closer to 65 percent by mid-May.

Additionally, Eaze anticipates that at $20 million in gross transaction value per month, the company would break even and post a small profit as measured by earnings before interest, taxes, depreciation and amortization (EBITDA), and they expect that break-even to come later this year.

Currently, the company only operates in California but indicated plans to expand into 12 other states once EBITDA positive. According to the pitch deck, the company is eyeing Washington state, Nevada, Arizona, New Mexico, Colorado, Illinois, Ohio, Florida, Michigan, Massachusetts, New Jersey, and New York. Most of those target states only have medical cannabis programs; however, several of those states – namely New York, New Jersey, Arizona, and Florida – are expected to legalize cannabis for adult-use over the next few years.

Last year, Eaze says its gross transaction value increased by 78 percent, totaling $176 million.

End

Morgan Fox: Lobbying for the Future of Cannabis

5/28/2020

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For his second appearance on the Ganjapreneur.com podcast, Morgan joins our host TG Branfalt to discuss federal cannabis policy progress in 2020 and in a post-coronavirus world.

During his first appearance on the show, Morgan hinted at the important work that lay ahead for the NCIA — for his return, Morgan shares where he thinks industry lobbyists have succeeded so far, where more progress is needed, how cannabis businesses can utilize responsible messaging to bolster the industry as a whole, and more.

You can tune in and listen via the media player below, or scroll down to read a full transcript of this week’s podcast interview!

Listen to the podcast:

Read the transcript:

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TG Branfalt: Hey there, I’m your host TG Branfalt, and thank you for 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 am joined for the second time by Morgan Fox, who is the Media Relations Director for the National Cannabis Industry Association, which represents nearly 2000 member businesses and tens of thousands of cannabis professionals. Fox previously served as the director of communications for the Marijuana Policy P6roject, and he is now a friend of the show, I guess, with a second appearance. How are you doing Morgan?

Morgan Fox: I am doing as well as I guess everybody else is, all things considered. Thanks for having me back on.

TG Branfalt: Hey, great to have you. We always look to you for what’s going on at a federal level. Before we get into all of that, why don’t you remind people what you do and how you ended up in the cannabis space.

Morgan Fox: So I’m the Media Relations Director for NCIA, which basically just involves speaking with lovely people like you a lot, and trying to get the message out about NCIAs federal policy work, the resources that we’re bringing to bear on behalf of our members, and the resources that we’re offering them to help them run best practices and really present the best possible face for the industry.

And it’s been a really exciting time, especially this last a year and a half or so in terms of federal policy movement, even though we are not quite exactly where we want to be yet, obviously we’re getting closer and closer to the ultimate goals of de-scheduling and policies that will treat the industry fairly. And I have to say we’re closer than we’ve ever been before. So this is a very exciting time to be involved in cannabis policy.

TG Branfalt: So in the year and a half since you’ve been on the show, you mentioned there’s been some federal stuff that includes the first-ever House hearing on a standalone cannabis-related bill, that being the SAFE Banking Act. So tell us about what has changed and what’s changed for the NCIA in that last year and a half?

Morgan Fox: Well, a Democratic takeover of the House of Representatives definitely went really far. We had been gaining a lot of support among Republicans, but it was just very difficult to get any sort of hearings before the control of the House changed. And we really saw that last year in true forum. There were just hearing after hearing, after hearing on all sorts of issues related to cannabis and all sorts of bills related to cannabis policy.

As you mentioned, we had a major victory with the SAFE Banking Act. It was the first time that any cannabis-related bill had gotten a vote or been approved by the full House of Representatives with overwhelming bipartisan support. And then we also saw a committee hearing, which was the first of its kind to ever approve a bill to end cannabis prohibition. That was the MORE Act in the House Judiciary Committee. So those two things alone were a really a huge sign of where things are going in terms of congressional movement. We’re really getting to the point of getting past whether or not we should legalize and much more talking about how to do so in ways that undo some of the damage caused by prohibition.

TG Branfalt: So last time we were on the show, we were still sort of wondering about how cannabis policy would play out in the next couple of years of the Trump administration. A lot has happened since then. Jeff Sessions was gone, which was sort of a big deal. And then there was sort of what happened in the recent budget where the executive budget actually pulled cannabis protections, enforcement protections. Has the thinking, I guess, of the NCIA sort of, or stakeholders evolved with regard to this administration as there hasn’t been sort of the enforcement that many people anticipated in the early days of the administration?

Morgan Fox: Well, clearly we didn’t see any sort of massive move towards crackdowns when the Cole memo was rescinded, either under Sessions or under the new attorney general, Barr. So that’s definitely a good sign. And the fact that we’re seeing much more discussion in Congress is an excellent sign.

I think that in terms of the administration, cannabis policy remains a pretty low priority. We’re getting kind of mixed signals from both the president, as we saw in some videotaped statements, as well as some really negative statements coming from his campaign manager. So I think that we’re kind of in a position where we have to wait and see until some legislation actually gets to Trump’s desk before we really know exactly what’s going to happen. And since the SAFE Banking Act seems to be the bill that is most likely to reach his desk first, we’re pretty confident would be able to be something that they could support. It’s a supportive of small businesses, it’s supportive of banks and supportive of public safety and transparency.

I think that this is a slam dunk for the administration considering how much support this bill has and how much support cannabis policy reform has overall, and it’s an opportunity for Congress, particularly the Senate to show the American people that they can keep getting work done, despite the fact that there are a lot of distractions and a lot of other issues that they have to deal with.

TG Branfalt: Right now, you and I, we joked before we hit record, just about sort of living this quarantine life. This is being recorded in early March and we’re still in the early stage of this sort of coronavirus outbreak. How much will this pandemic sort of declaration, national emergency declaration, have on sort of legislation such as the Safe Banking Act moving forward? Does it have the potential to really stomp out any sort of success that has been made this session?

Morgan Fox: I think it will slow things down, but not to the point where it’s going to halt any sort of progress. Like I said, Congress is still very eager to show voters that they can continue doing their jobs, despite all the pressures that are being put on them externally. While we might not be able to get a hearing scheduled immediately, it seems fairly likely that this isn’t going to last forever. It might last for eight weeks, it might last for 10 weeks, it might last for 12 weeks. But despite the fact that there’s an election coming up and that there’s a lot of other issues that need to be worked on, we’re pretty confident that we can still continue to see progress, at least getting through some hearings and markups, hopefully. And we know that this is not going to be the end of this issue being discussed in the public sphere as we get closer to November, it’s definitely going to come up more and more.

TG Branfalt: So I want to switch gears a little bit and talk to you about lobbying. Especially as more states have gone online, we have seen sort of this topic rise to the top when people are discussing sort of how bills are being pushed through in the state level. And many advocates are actually anti-lobbying. They say that it gives more power to large corporations and it doesn’t focus on the small businesses. What do you say to those people who are critical of lobbying efforts?

Morgan Fox: Lobbying efforts are absolutely necessary. And it’s important to remember that anyone can lobby. NCIA once a year puts together our annual lobby days, we’ve got our 10th one coming up, although it may be pushed back a little bit because of the current health crisis, where we get over 300 of our members to come out and set up meetings with them with lawmakers. So anybody can do this. NCIA the only cannabis trade association with a full time on the hill, in house lobbying team, that’s representing thousands of businesses and primarily small businesses.

So, if you don’t tell lawmakers what you want, they’re not going to give you what you want. You have to be able to talk to them. I can understand the concerns that some people have with the fact that there are bigger companies putting a lot of money into lobbying right now, but without that, progress is going to be a lot slower than it would be otherwise. And it’s important to recognize that a lot of these companies do have the best interest of consumers and the general public in mind when it comes to the ways in which we end prohibition. And for the ones that don’t, it’s very easy to influence them with the consumer spending dollars.

TG Branfalt: So of all of the bills that are in Congress right now aimed at reforms or broadly ending prohibition, and I think that just sort of off the top of my head, I can count at least three, is there one that the NCIA is supporting, is stronger than the others perhaps?

Morgan Fox: The MORE Act is definitely making a lot more progress than any of the other pieces of legislation. And it very explicitly addresses ways to help undo some of the damage caused by prohibition, specifically expungement, and providing resources for community reinvestment, and allowing the small business administration to be able to provide funds for businesses owned by women and minorities. So, that’s the one that seems to be the strongest bill and have the most political support in the House. That’s the vehicle that is really going to move as we’re going forward.

And we’ve already seen that even though it still has many other … I think it’s got five more committees that it has to get through before it can get to a House vote, we’re starting to see a lot of those committees waive their jurisdiction, most recently, the Small Business Administration Committee, so that we can push this bill a little bit farther down the road during the session, and hopefully, have it come up for a full House vote in 2021. Right now, that bill is not really moving in the Senate, but neither is the States Act, which is significantly weaker in terms of the protections that it creates and the restorative justice arms that it employs.

TG Branfalt: And when you say that they waived their jurisdiction, I know what that means, but for the average listener, could you explain why that’s important or why that is sort of considered a success even though they’re not positively affirming the legislation?

Morgan Fox: Well, yeah. So any bill that’s going through Congress will have to move through several committees based on what the bill actually affects. So in the case of the MORE Act, there were six or seven committees that would have jurisdiction, which means that in order for them to move farther down the road towards a full House vote, that committee would have to hold a markup on that bill and then approve it and move it onto the next committee. So when they waived their jurisdiction, it basically means that they’re trying to push this bill as quickly as possible, and don’t have anything that they really need to say about it or amend to it.

We’re hoping that at some point in this process, we can work with lawmakers to amend the language so that it contains regulatory structure similar to what we laid out in a white paper that we released in October that basically divides cannabis products into four different lanes and then assigns a federal agency to have primary regulatory control over that, whether that’s the FDA or the Alcohol and Tobacco Tax and Trade Bureau. So hopefully, we’ll be able to get that language added to that bill at some point, so that when it does pass, there’s not five to 10 years of regulatory agency infighting, trying to determine who’s going to own this issue and how they’re going to regulate it. They’ll already have the blueprint set as soon as the law goes into effect.

TG Branfalt: That’s really quite interesting. These white papers that you guys make, is this one of the things that the lobbyists that you have go around and put in front of lawmakers?

Morgan Fox: Oh, absolutely. So we develop them with the input from our staff and our allies, as well as our policy council, which is made up of industry and policy expert area leaders. And then once we publish these, then our lobbying team will use those to help add to their general lobbying strategy so that we can provide lawmakers, as well as people in the industry, and state little regulators, and potential future federal regulators with the best information possible.

TG Branfalt: So I wanted to sort of ask you about messaging. I’m a communications professor at a SUNY school, and so one of the things we talk about is crafting messaging. As the communications director, and you’ve been in this industry in communications for a long time, how do you work on crafting messaging to combat the voices of prohibitionists such as Smart Approaches to Marijuana or SAM?

Morgan Fox: Well, one of the lucky things on our side is that we’ve got the facts and science on our side. It’s a lot easier to make your point when you’re reasoning is actually correct and not based on pseudoscience or cherry-picking data to try to scare people. Unfortunately, sometimes those tactics really work well. So particularly when you’re talking to more conservative lawmakers or a more conservative audience, it’s really good to not necessarily bash people over the head with the facts, but frame things in a public safety lens and bring up human stories about the costs of prohibition, as well as human stories about the successes of regulation and how we’re taking money out of the illicit market and basically defunding cartels. That sort of messaging really resonates with people who are either opposing or on the fence on these issues. Public safety is a huge aspect of cannabis policy reform and it’s something that if you focus on can really make a difference for people that think of cannabis and only think of criminality or moral failings,

TG Branfalt: How are your messages received by more mainstream news outlets? And I see you quoted in papers of record and not just sort of cannabis news organizations. Do you find you get a lot of pushback from editors and publishers in your interviews with them and your interactions with them?

Morgan Fox: I think that it really varies depending on the particular media outlet. The way in which reporters are writing about this issue has changed dramatically in the decade-plus that I’ve been doing this. And it’s really wonderful to see that reporters are not only getting assigned to this beat more often, which forces them to learn more about it, but that a lot of people are really going out of their way to figure out the best ways to really write about this story and are focusing much more on advocacy work, and success stories, and the science behind it, instead of just giving it a platform for government agencies or prohibitionists. So that’s definitely been a positive.

Now, of course, there are still some people that want to get the really clickbaity stories and the best way to do that is to either exaggerate negatives or really try to focus on fear tactics, and that I think is probably going to be something that we have to deal with for quite some time, but it’s gotten a lot better, especially in the last couple of years. Really the big problem with all of the interest in this issue is that a lot of times reporters will get assigned to these stories that don’t really know the issue all that well and so it was very easy to fall back on both stigmas and tropes.

TG Branfalt: What is your opinion on how, from the mainstream media, let’s talk about television news media, the CNNs, the MSNBCs, the FOX Newses, what’s your opinion on how they cover cannabis? Do you notice sort of … I mean, you sort of mentioned the cannabias, do you think it’s sort of worse on these sort of television news shows? And if so, do you think the lack of education or some bias within the organization and its employees?

Morgan Fox: I mean, again, I think it’s really across the board. Even within what you’re just talking about CNN, they’ll do … So, you’ll see a CBS story about the potential dangers of increasing potency, which we know doesn’t really have any science behind it, and then you’ll see something like a Sanjay Gupta piece that goes really in-depth and is really, really solid, excellent reporting. You’ll have people joking about the issue in one talking heads show and people screaming about the issue in another. You can just look at some of the covers that Laura Ingraham and Tucker Carlson has done on this issue to see that canna-bias is definitely still there. It’s certainly not anything rational that you see coming out of this, but there’s a lot of good coverage coming out about it. I think that we saw a lot of that during the early presidential debates when candidates were making really, really strong proclamations about ending prohibition and these positions and the discussion surrounding them were really taken seriously.

TG Branfalt: When you started doing this 10 years ago, we were both of legal voting age and can probably remember the debates from 2010 or at least the run-up. Does it surprise you that it has taken such a center stage?

Morgan Fox: I’ve been surprised at the early and extreme attention paid to it by the candidates, even if media wasn’t necessarily covering it as much as they were covering some of their other positions. I think it was really telling about where we are and also about the Democratic Party machine realizing that this is an issue that two thirds of Americans agree on. That’s something that you’re not really going to find in any other issue.

If you want to increase your polling, even if it’s not the number one issue for voters, it’s a real easy way to get a little bit more support because people are sick of prohibition. I think that the surprising thing was that people were actually not only realizing that this is how the electorate feels, but actually going out of their way to address it instead of treating it like a third rail issue.

TG Branfalt: Do you think that in the next Republican primary that occurs, whether it be the next election cycle, it would be actually one way or another, do you think that it’ll take the same sort of early-stage… The focus will be put on it in an early stage, because we’re seeing more and more Republicans in polls support legalization? Or do you think that there’s other issues that are more important to Republicans so that the stance of the candidate on cannabis won’t matter as much?

Morgan Fox: No, I think that’s difficult to tell, but all the most recent polling has shown that a majority of younger Republicans support cannabis policy reform. If they’re interested in activating that voter demographic, then it’s absolutely necessary for them to not only just revisit their positions on this issue, but also to highlight them.

TG Branfalt: I want you to weigh in on this debate. I actually, I joined a podcast a couple months ago, and this was brought up. I’ve had conversations with this with people I’m close to, people who… My students, when we’re talking about messaging and bias, what’s your take on marijuana versus cannabis and messaging?

Morgan Fox: I generally lean more towards cannabis just because it’s a little bit more accurate, and it doesn’t have a lot of the racialism and stigma that is attached to marijuana, in terms of its historical usage. At the same time, I don’t necessarily think that it’s a word that should be constantly avoided at all costs or that it makes you a bad person for using it. I just don’t think that it should be used exclusively, and you should try to use cannabis wherever you possibly can, because it’s more accurate, and it doesn’t carry that that added unfortunate historical weight to it.

That being said, there are some audiences where they don’t know what cannabis means. I think it’s important that you really have to tailor your message so that it will at least to be the most recognizable to your targets.

TG Branfalt: What about slang terms, other slang terms, pot, weed, that whole thing, because when I see it in a headline or something, like I feel automatically it’s clickbait or bias in some form, is that… Am I alone there?

Morgan Fox: I don’t like seeing it, but at the same time, I understand that writers can’t necessarily use the same word over and over again, and they want to shake it up a little bit. I try to be forgiving, but I never use them myself.

TG Branfalt: I prefer trees, but I would never use it in writing. In your opinion, should cannabis businesses big and small have a dedicated communications person? Do you think that that role is overlooked when people start building their company?

Morgan Fox: Well, I think it depends on what the company is trying to do. Messaging, I think, is definitely important. When you’re running a commercial company, you have to also take into account things like branding and how you’re going to be targeting your products. I think that it’s important to incorporate the lessons that are being learned from sort of the broader policy and movement world and incorporate those lessons into branding and marketing at the very least. Whether or not you’re going to have somebody on staff that’s full time, writing press releases and talking to reporters, I think that really depends on what sort of a profile you want your business to have.

From my end though, I actually really like it when a member businesses are interested in talking to the media and presenting a good public face for not only their own business, but the industry at large. They actually do take time to think about the messaging and confer with people in the movements and advocates and lobbyists to see how they can tweak that messaging and make sure that it’s representing the best interests of the industry.

TG Branfalt: The last thing I want to talk to you about is possibly the last cannabis conference that’s going to happen this year. With the rate that things have been postponed, canceled without any sort of makeup date, tell me about February’s NCIA Northeast Cannabis Conference. How was the attendance over last year, vendor interest, just let me know how that went down?

Morgan Fox: Well, I don’t have the exact numbers in front of me, but we actually retooled this particular conference. It used to be called the Seed to Sale Show, which was much more concentrated on B2B work and on a national scale. For this one, we pared it down to be a much more… I wouldn’t say pare it down, but we focused it to be much more of a regional interest show. We are hopefully going to be able to do that for several other events throughout the year if this public health crisis is able to stabilize.

It was a great event. We had hundreds of exhibitors, thousands of attendees throughout the course of the weekend, more than 150 speakers and panelists, had really great keynotes, presented information there from a meeting of law enforcement and industry stakeholders and social justice activists to try to figure out how to deal with the illicit market in creative and humane ways, as opposed to just punitive and arrests. There were all just a lot of opportunities, not only to show off what your business is doing, but learn about what’s going on in terms of business technology, best practices and policy issues.

TG Branfalt: What are you hearing from your member businesses right now with regard to coronavirus? I’ve read a couple of reports that dispensaries are getting a run on them, just like regular businesses are. There’s some concern about are some of these conferences going to be able to occur? The NoCo Hemp Expo, Hash Bash, Michigan’s 49-years running event, what are you hearing from your member businesses with regard to what’s going on with coronavirus?

Morgan Fox: Well, some of the concerns are based on the supply chain with there being quarantines and shipment stoppages happening from overseas. Some of the problems… Luckily though, we’ve seen US-based businesses really step up, and we see the supply chain start to diversify and become a little bit more domestically centered. I think that will probably continue for the foreseeable future.

In terms of actual operations, a lot of the direct-to-plant businesses don’t necessarily require there to be large concentrations of people. It’s usually just a couple of people. But it’s still important for those businesses to follow whatever state, local and federal guidelines there are in terms of making sure to ensure public safety, and make sure that social distancing is taken into consideration until this pandemic is under control. And all the recent estimates that I’ve seen are that it’s looking like eight weeks. So that’s not insignificant by any stretch of the imagination, but it’s not something that we can’t all get through together.

I think that we’re probably going to continue to see brisk business going at cannabis retailers until all storefronts are shut down, which hopefully won’t happen. But as long as those businesses are putting extra safety and sanitary measures in place, hopefully we won’t have a problem with that. And I think that right now we’re just in sort of a holding pattern where we have to just wait and see what’s going to happen. So far we’ve seen delivery services start to see a bump from this right now, which is pretty obvious why. And I think we could see that for the duration as well.

TG Branfalt: Hopefully that leads to states where they don’t have delivery or they have pending delivery bills that they sort of put maybe tag emergency legislation on these things which would allow it meant in many states to sort of take effect immediately.

Morgan Fox: Absolutely. Particularly in some medical states that don’t have any form of delivery. I think that it’s going to be really important to be able to get medicine to people who might not be mobile or immunocompromised.

TG Branfalt: Absolutely. So my last sort of question for you is sort of going back to the messaging thing. What advice would you have for companies, for new companies who aren’t established, with regard to early-stage messaging for their business when it comes to speaking with the press when they open or that sort of thing?

Morgan Fox: Aside from just generally trying to be as professional as possible, really focus on being a good member of the community. And that goes beyond messaging, that actually goes into practice. You have to make efforts to build up other businesses in your area. You have to make efforts to be a model for public safety and for security, and you have to be involved in your community and give back to it and make sure that you’re helping the people in your community who may have been harmed by the war on drugs in at least some fashion. And I think that if you put those plans in place, then you have a great opportunity to be able to craft your messaging and the way in which you communicate with both the media, as well as the rest of the community, in a really positive fashion.

TG Branfalt: So I really appreciate you coming on again, giving us sort of the legislative update, what’s running through legislature and really getting into some details with me on sort of the messaging thing, which, again, I teach it so I’m really sort of passionate about sort of communication and communication techniques. Where can people find out more about the work that the NCIA does?

Morgan Fox: Well, our website is thecannabisindustry.org, and we’re also on Facebook, Twitter, and Instagram. I also highly recommend that all your listeners reach out to their federal senators and ask them to fast-track the House-approved SAFE Banking Act so that we can get this legislation out of the Senate and get it to the president’s desk as swiftly as possible.

TG Branfalt: That’s Morgan Fox, the media relations director for the National Cannabis Industry Association. Thank you so much, Morgan, for being on the show. Hopefully we can get you on not in another year and a half and when this all blows over and it’s business as usual.

Morgan Fox: Yeah, hopefully. I really appreciate it. It’s great talking to you.

TG Branfalt: Thanks. You can find more episodes of the Ganjapreneur.com Podcast in the podcast section of Ganjapreneur.com and in the Apple iTunes store. On the Ganjapreneur.com website, you’ll 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.

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Small Dispensary Wins Trademark Dispute Against Multi-State Operator

5/28/2020

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Conway, Arkansas-based Harvest Cannabis Dispensary has won a preliminary injunction in its trademark dispute against Natural State Wellness Dispensary, LLC and its parent company Natural State Enterprises. The injunction prohibits Natural State from using the word “Harvest” in connection with its Little Rock dispensary and Newport cultivation facility.

Both Natural State facilities are managed by Arizona-based Harvest Health & Recreation, Inc. and were branded “Harvest House of Cannabis” and “Harvest of Newport” at the time of the preliminary injunction decision. Harvest Cannabis Dispensary has used the name since their inception, CEO Elizabeth Barnett said.

Barnett added that the Arizona company’s industry application “touted a long list of prominent Arkansas business leaders and politicians as their owners” but that those individuals “ceded total control of all operations to an out-of-state operator named ‘Harvest Health & Recreation.’”

“We have been open and honest about our intentions and branding since September 2017 when we first came up with the name around the breakfast table and sought a license from the State. We were shocked when the Little Rock store put their sign up on their building after we had been open for months calling themselves ‘Harvest House of Cannabis.’ …  I guess these out of state folks just assumed they could just come in and bully us into submission. This ruling proves that sometimes the little guy wins. This was a huge victory for us.” – Barnett in a statement

Harvest said that their competitor based their case “almost exclusively on federal trademark law and their affiliates’ presence in a few other remote states in support of their claims of nationwide seniority.”

Harvest’s lawyer, Andrew King with Kutak Rock LLP, said the outcome – where a local cannabis dispensary prevailed under state trademark law against a multi-state operator for which federal trademark protection is unavailable – is the “first of its kind” and could provide a roadmap for other, similar, trademark cases in the industry.

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California Nets $134.9M From 1st-Quarter Cannabis Taxes

5/28/2020

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Total cannabis-derived tax revenues in California reached $134.9 million over the first quarter of the year, including $68.3 million in excise taxes, $50.2 million from sales taxes, and $16.4 million in cultivation taxes, the state Department of Tax Fee and Administration announced yesterday.

The agency notes that the reporting period is “unique” due to the state’s coronavirus pandemic response which led to only about half of normally reporting taxpayers filing a quarterly return. Officials said they expect the data to be adjusted once late filers send in their outstanding returns.

During the coronavirus pandemic, California has considered both medical and recreational cannabis businesses “essential” but did provide a grace period for quarterly business tax filings amid the crisis.

The first quarter 2020 revenues are $42.4 million less than the fourth quarter of 2019, when the state reported $177.3 million in cannabis-derived tax revenues – $85.9 million from excise taxes, $67.3 million from sales taxes, and $24.1 million in cultivation taxes.

Since January 2018, total program revenue to date is $1.17 billion, which includes $569.8 million in cannabis excise taxes, $140.2 million in cultivation taxes, and $456.9 million in sales taxes.

Last month, the Governor’s Office of Business and Economic Development disbursed $30 million in grant funding through the Cannabis Equity Grants Program for Local Jurisdictions which is funded by cannabis taxes. The agency indicated that at least $30 million from the fund would be directly allocated to social equity applicants and licensees in the form of low and no-interest loans.

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Louisiana Senate Approves Medical Cannabis Expansions

5/28/2020

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The Louisiana Senate has approved a measure allowing any condition to be treated with medical cannabis as long as use for the condition is approved by a physician, the Monroe News-Star reports. The measure would also allow any medical doctor in good standing to recommend patients to the program.

Once signed by the governor, the new rules would significantly expand patient access to the state’s medical cannabis program.

The bill outlines nine new specific medical conditions that would become eligible for treatment but opens up all conditions, dictating that, “Any condition not otherwise specified in present law or proposed law that a physician, in his medical opinion, considers debilitating to an individual patient and is qualified through his medical education and training to treat.”

Senate Health and Welfare Chairman Fred Mills (R), who championed the first approved medical cannabis bill in the state, told the News-Star earlier this month that while “a lot of good results have happened” because of the program “accessibility has become the big issue.”

The Health and Welfare Committee also advanced two other medical cannabis-related bills on Wednesday, including one which would authorize physicians to make program recommendations for the treatment of certain neurodegenerative diseases and conditions and another that would allow access to the program for the treatment of fibromyalgia pain, according to a KATC report.

The expansion measure passed the House on May 15 77-15. It passed the Senate 28-6. Democratic Gov. John Bel Edwards has twice signed medical cannabis expansion bills, first in 2016 and again in 2018, and is expected to give the recent expansion final approval.

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Neighbor’s Lawsuit Over Stinky Cannabis Dropped in Oregon

5/27/2020

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A Racketeer Influenced and Corrupt Organizations Act (RICO) case brought by an Oregon homeowner against more than 80 cannabis companies and their representatives has been dismissed after the plaintiff asked the court to end the case, according to a Law360 report. The homeowner, Laura Underwood, had sued the companies over the smell of a nearby cannabis farm which she said reduced her property values, led to a worse deal on a home equity loan, and made her property impossible to sell.

The 80-some companies roped into the lawsuit had done some business with the farm.

The defendants had argued in a motion to dismiss the case last month that Underwood’s “manufactured” injury was not plausible because the farm in question had gone out of business. The cannabis farm property owner subsequently applied to re-zone the property, which Underwood opposed, leading the defendants to claim that since she opposed the change “it is not plausible that she wants to sell her property or believes that marijuana is hurting her ability to do so.”

Alex Tinker, of Tonkon Torp LLP, told Law360 that many of the original defendants settled for $1,000 to get rid of the suit and three others took “walk away” deals earlier this month; but the three remaining defendants chose to “stand up to the bully.” Tinker added that the decision to toss the case “certainly feels like a win for the industry.”

According to the report, two similar RICO cases brought against the industry failed in the Ninth Circuit court which determined that cannabis scent is not a compensable injury. The Tenth Circuit, however, ruled against a cannabis farm in a similar suit but that case wound up in a defense verdict.

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Home Grow Supplier Pivots to Sterilization Tents for Essential Workers

5/27/2020

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Year-Round Garden, a home grow supply firm, announced it is selling at-home sterilization tent packages for essential workers during the COVID-19 crisis. The company said the offering is inspired by a customer who purchased a grow tent and set it up as a DIY sterilization tent.

According to YRG’s announcement, the customer — a hospital nurse who has a heightened risk of exposure to the virus — said she was inspired by the use of UVC lights in hospitals and food packaging plants.

“I did some research and discovered UVC lights (especially the spectrum between 240-280 nanometers) is on the list of approved sterilization practices for viral activity,” she wrote. “As I learned through my initial research, UVC light disrupts the DNA of viruses but does not penetrate the dermal layer.”

The nurse, who wished to remain anonymous, said the DIY sterilization tent gave her “peace of mind” upon returning home, knowing that “I have done everything in my power to reduce the risk of bringing the novel coronavirus home with me and spreading it to my family.” Additionally, the nurse said that many hospital coworkers were intrigued by her story and had started purchasing the supplies necessary for creating their own sterilization tents.

YRG said that when their stock of grow tents and UVC lights suddenly dried up, the company rushed to source an additional 450 grow tents and 500 UVC lights from warehouses around the U.S. to meet the new, heightened demand.

“Our business is all about listening to customers and delivering products they desire. So naturally, when a customer asked about UVC lights and grow tents – we were more than happy to answer the call and find a solution that worked for both them and anyone else who might find it valuable.” — Jason Mispagel, Owner/Operator of Year-Round Garden

The all-in-one sterilization tent offering includes a 2×2 ft. mylar-lined grow tent, a 60-watt UVC “corncob” bulb, an aluminum canister light, and a smart switch for timed exposure to the light; the whole package costs $139.00.

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Just 10% of Maryland’s Cannabis Investors are People of Color

5/27/2020

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Just 10 percent of cannabis industry investors in Maryland are people of color, according to Maryland Medical Cannabis Commission data outlined by the Capital News Service. Those investors also usually own small shares in the company; for example, Green Medical Leaf (gLeaf) has 34 Black investors who collectively own about 21 percent of the firm.

Additionally, gLeaf’s 34 Black investors account for about 75 percent of all Black investors in the Maryland cannabis industry.

White men make up two-thirds of all cannabis investors in the state, followed by white women, men of color, and women of color. Of the 26 Maryland companies licensed to cultivate or process cannabis, just four – HMS Health, Seven Points Agro, Kind Therapeutics, and Chesapeake Alternatives – are majority-owned by women or people of color, according to state data. Only Seven Points and HMS Health are entirely owned by people of color. Pro Green Medical is the only other company in the state where more than 30 percent ownership is held by people of color.

There is no sector of the state’s cannabis industry where women of color comprise more than 5 percent of investors.

In 2018, Maryland lawmakers approved a bill to address the lack of minority groups awarded licenses during the first licensing phase. That bill was championed in the House of Delegates by Del. Cheryl D. Glenn (D) who had initially called out the state’s licensing process for excluding minorities and created an additional four grow and 10 processing licenses, requiring that 15 percent of applicants’ scores reflect the racial and gender diversity of the business’ ownership and employees. Those points required that applicants show 51 percent of company ownership is held by racial minorities, women, or so-called economic empowerment applicants – people living in economically distressed areas.

Last October, state cannabis regulators announced they would investigate the cannabis licensing review process and the veracity of information included in applications by high-ranking businesses. The investigation into the high-ranking applicants comes after allegations that some companies gave ownership shares to non-white individuals who would not have a say in how the business was run in order to game the system.

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