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Leafly and Cova Partner to Bring Omnichannel Experience to Cannabis Industry

1/29/2019

VANCOUVER, British Columbia and DENVER, January 24th, 2019 — Retail cannabis point-of-sale software company Cova today announced a partnership with Leafly to provide accurate, real-time pricing and product availability updates to cannabis retailers’ Leafly online capabilities. With this integration, Cova will continue to provide streamlined operations and superior customer experience to its growing list of clients in the U.S. and Canada.

“Today’s consumers are not only more sophisticated than ever, but their expectations are high too,” said Gary Cohen, CEO of Cova. “To compete and meet a cannabis buyer’s needs, it’s critical that retail store owners provide customers with multiple ways to shop and accurate inventory availability.

We have already armed our retail clients with omnichannel features, such as “Reserve Online, Pick Up In-Store”, and “Express Checkout” but with an integration partnership with Leafly we can now automatically sync online menus, creating a complete cannabis retail omnichannel experience.”

By partnering with Leafly, in addition to providing accurate, real-time updates, Cova can help clients eliminate the need for manual menu updates, expand their retail sales channel and increase consumer foot traffic.

“Cova is one of the top POS providers and shares Leafly’s commitment to safety and compliance,” said Paul Barry, Chief Technology Officer at Leafly. “Legal purchasing channels, like stores in Cova’s client network, make it easy to ensure that quality and safety standards are met so we can promote responsible cannabis consumption.”

Integration with Leafly is the first partnership announced by Cova since the software company secured $8 million in initial funding to continue to expand its POS capabilities and features. Retailers and dispensary owners who currently use Cova, now have access to Leafly and may automatically sync inventory and pricing.

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About Cova

Cova is the leading POS solution in the cannabis industry. The Cova team’s relentless pursuit of creating the industry’s first lovable POS has led to solutions that help retailers simplify compliance, reduce operational costs, and increase revenue through automated compliance, inventory management, mobile reporting dashboards, and Cova’s Express Checkout app. With a growing network of cannabis industry partners including Leafly, Baker, I Heart Jane, greenRush, springbig, Enlighten, GeekTek, and Budvue, Cova’s seamless tech ecosystem gives retailers access to the best tools available to run their business. Cova’s offices are located in Denver, CO, Vancouver, BC, and Regina, SK. Learn more at www.covasoftware.com.

About Leafly

As the world’s leading cannabis information resource, Leafly’s mission is to help patients and consumers make informed choices about cannabis and to empower cannabis businesses to attract and retain loyal customers through advertising and technology services. Learn more at www.leafly.com and download the five-star rated Leafly mobile app through Apple’s App Store or Google Play. Visit Leafly.com, Leafly Canada at Leafly.ca, Leafly Germany at Leafly.de, Leafly in Spanish at Leafly.es, and Leafly in French at Fr.Leafly.ca.

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Sweet Leaf Dispensary Owners Sentenced to Prison for Illegal Distribution

1/29/2019

The owners of the former dispensary chain Sweet Leaf — which was subjected to a long dispute with Colorado regulators over violations regarding per-customer cannabis purchasing limits — have been sentenced to a year in prison, The Denver Post reports.

Sweet Leaf — based in Denver, Colorado — was accused of “looping” or allowing customers to return several times per day to buy the maximum allowed amount, which is a violation of the law. It’s assumed that cannabis purchased using this method was diverted to the illicit market.

The sentencing is the final action in a long series of monetary judgements and legal drama.

“I think this was obviously a first case in Colorado. I think it was the first in the nation where a state prosecution office went after a licensed marijuana company. We did not see this scope with anybody else.” — Kenneth Boyd, lead prosecutor, via The Denver Post

Sweet Leaf owners Christian Johnson, Matthew Aiken, and Anthony Sauro all plead guilty to charges of violating the Colorado Organized Crime Act, illegally selling and distributing cannabis and failure to file or pay taxes.

The plea deal that encouraged the owners to plead guilty stipulated that their sentence would be one year in prison, then one year of parole, then one year of probation.

“The vast majority of Denver’s marijuana industry businesses are reputable and responsible and strive to obey our marijuana laws. However, Sweet Leaf is an exception. My office will prosecute those who do not comply with our marijuana laws,” said Denver District Attorney Beth McCann.

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Thailand Invalidates All Cannabis Patents in Response to Public Outcry

1/29/2019

Thailand’s Prime Minister Prayuth Chan-ocha has issued a decree ordering the Department of Intellectual Property to invalidate all patents for any molecule derived from cannabis, according to an ABC News report.

GW Pharmaceuticals and Otsuka Pharmaceutical had applied for patents earlier this month. Despite the fact that patents on natural organisms are explicitly prohibited, the applications were not rejected outright and instead were given a “patent pending” status.

Prime Minister Chan-ocha issued the decree due to concerns over foreign interests using patents to monopolize the Thai marketplace. According to the decree, and previous readings of the law, patents for cannabis products are already in violation of Thai law, which stipulates that plants cannot be patented.

The decree will hold sway on the issue of cannabis patents until such time as the Thai Parliament writes a complete law regulating medical cannabis, which was legalized at the beginning of the year in Thailand. The legalization bill still needs to be signed by King Maha Vajiralongkorn before the next stage of the process can begin.

The government of Thailand, which is a military dictatorship that took power in 2014, allows for sweeping decrees like the one invalidating all cannabis patents.

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AG Nominee Puts ‘No Cannabis Enforcement’ Pledge In Writing

1/29/2019

William Barr, Trump’s nominee for attorney general who previously said he wouldn’t “go after” cannabis companies during his confirmation hearings, has agreed to put that pledge into writing, according to a story by Tom Angell of Forbes.

Barr has put his statement into writing following requests from several senators. “As discussed at my hearing, I do not intend to go after parties who have complied with state law in reliance on the Cole Memorandum,” Barr wrote in his statement.

Barr is not, however, intending to re-instate the Cole Memo, which was a Justice Department memo rescinded by Jeff Sessions that had prevented the federal prosecution of state-legal cannabis industries.

“I have not closely considered or determined whether further administrative guidance would be appropriate following the Cole Memorandum and the January 2018 memorandum from Attorney General Sessions, or what such guidance might look like. If confirmed, I will give the matter careful consideration.” — William Barr responding to Sen. Cory Booker (D-NJ), via Forbes

While he is not in favor of legalizing cannabis federally, Barr made statements about expanding the federal cannabis research program. “I support the expansion of marijuana manufacturers for scientific research consistent with law. If confirmed, I will review the matter and take appropriate steps,” responded Barr to Sen. Charles Grassley (R-IA).

While Barr may not be perfect for the cannabis industry, he’s a huge step up over Sessions. According to Don Murphy, Director of Federal Policies for the Marijuana Policy Project, “William Barr didn’t just wave the white flag, he signed a peace agreement.”

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California’s New Stringent Testing Discovers Lead in Vape Cartridges

1/28/2019

Regulators in California are rejecting a “concerning” number of cannabis oil vape cartridges for lead contamination, according to a Leafly report.

California implemented new, more stringent testing standards starting January 1. Under the new rules, lead limits were lowered to 0.5 parts per million. That’s the strictest standard in the world — Washington’s current limit, for instance, is 1.2 parts per million.

Experts say that lead is a “boogeyman metal.” There is no level of lead that is considered safe, which is why there has been such a strong movement over the last 50 years to remove lead from everything from paint to gasoline.

The majority of vape cartridges are manufactured in China. Lead is added to the other metals used in manufacturing the cartridges in order to make the metal easier to mold. A small bit of added lead can save a manufacturer millions when you consider the scale at which these cartridges are manufactured.

Cannabis oils, however, are what has started failing regulator testing in California. It’s speculated that because cannabis oil is acidic, it’s leaching the lead from the metal of the vape cartridge over time. Once dissolved in the cannabis oil, lead might be vaporized along with the same oil that people are inhaling.

While only about 0.5% of the cartridges since January 1 are failing, many are passing at 0.4 or 0.3 parts per million, just below the legal limit. And the ones that do fail are often doing so at 0.6 or 0.7 parts per million — levels that would be considered safe in Washington. And that’s in the highest quality cartridges made in China.

Vape cartridges used in the illicit market are often the lowest quality, or cheapest, cartridges. It’s unknown what level of contamination might be in those, as unregulated products are not tested.

Many producers are now demanding completely lead-free cartridges. Implementing manufacturing changes, however, as well as clearing previous stock still sitting on shelves, means that there will be no obvious changes until at least later this winter.

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Study: Liberal State Young People Consume More Cannabis, Have Lower Dependency

1/28/2019

Researchers have found that young people in liberal states consume more cannabis but have lower rates of cannabis dependency compared to those in conservative states, according to The Verge.

The study was conducted by Columbia University’s School of Public Health and published in the International Journal of Drug Policy. Researchers did an analysis of data from the National Survey on Drug Use and Health and cross-referenced that data with measurements of a state’s political climate such as gun policy, stance on government assistance programs, abortion, and other political leanings.

The findings were shown to be true whether or not a state had any sort of legal cannabis for people in the 18-25 age bracket. Across the nation, cannabis consumption is rising and rates of “cannabis use disorder” are decreasing; in liberal states, however, the rates of consumption are up even more and the rates of cannabis use disorder are also up more, compared to states ranked more conservative.

Researchers aren’t sure why this pattern is happening and the results are a purely statistical correlation at this time. It’s believed that the differences aren’t attributed to any one political stance or policy, but rather the entire political climate in the state, which can involve many factors.

Study author Morgan Philbin said the next goal is to isolate which policies seem to be making the most impact and creating these outcomes.

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Alaska Appoints Prohibitionist to Marijuana Control Board

1/28/2019

Alaska Gov. Mike Dunleavy (R) has appointed two new regulators to the state Marijuana Control Board, both of whom have shown anti-cannabis leanings and one of which campaigned extensively against cannabis legalization, according to a KTOO report.

Advocates were most concerned by the replacement of Marijuana Control Board Vice Chairman Brandon Emmett, who said he was still getting over the shock. “They said that the Governor thanked me for my service, but that they were going in another direction,” said Emmett.

Emmett will be replaced by long-time anti-cannabis crusader Vivian Stiver. Stiver will take over Emmett’s position on the Board starting next month.

“I see now what the governor means when he said that they were going in another direction, appointing an abject prohibitionist. That is definitely a complete different direction.” — Brandon Emmett, via KTOO

Stiver is a former Fairbanks city council member. She held leadership positions in several anti-cannabis organizations during the run-up to legalizing in Alaska, as well as conducted two different campaigns to ban sales of legal cannabis in Fairbanks and the North Star Borough of Fairbanks.

The other appointee is former Alaska Wildlife Trooper Chris Jaime, who has spoken out against the recent passage of on-site consumption in Alaska.

The concerns are that the two new appointees to the board will slow the development of Alaska’s legal cannabis industry, especially with regard to on-site consumption.

The appointees are still pending confirmation by the legislature in February.

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Colorado Advances Bill to Add Autism as Medical Cannabis Condition

1/25/2019

A bill that would add autism as a qualifying condition for medical cannabis in Colorado has managed to pass committee approval and move to the state House floor for voting, The Denver Post reports.

A similar bill that hoped to add autism as a qualifying condition was vetoed last year by former Gov. John Hickenlooper.

The new bill passed the Colorado House of Representatives Health Committee with a 10-1 vote. The only no vote came from state Rep. Yadira Caraveo, vice chair of the committee, who said that her concerns were that “these decisions are being driven outside the medical home.”

Melissa Atchley, who attended the committee hearing, said she’s not concerned about the lack of medical evidence for cannabis’ effects on autism. “As a mom, I want my child to stop beating his head against a wall,” Atchley said.

The bill now heads to the House floor for a vote.

Colorado has an ongoing study investigating the effects of medical cannabis on autism, established following former Gov. Hickenlooper’s veto.

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Medical Cannabis Company Sues New Mexico Over Cannabis Sales Tax

1/25/2019

Ultra Health, New Mexico’s largest medical cannabis producer, is suing the state of New Mexico’s Taxation and Revenue Department in an attempt to recover $1.5 million in sales taxes, which the company claims were collected illegally, according to the Santa Fe New Mexican.

New Mexico state law exempts prescription drugs from “gross receipts” or sales taxes. Ultra Health is taking the position that medical cannabis, which requires a doctor’s recommendation in New Mexico, is a prescribed drug and thus exempt. However, the company has paid $1,541,088 in taxes between January 1, 2015 and May 31st, 2018.

The company filed a request to have the taxes refunded through the Taxation and Revenue Department, but the request was denied. Ultra Health is now filing suit in order to have the taxes refunded, as well as their lawyer fees and interest on the money.

“Patients already pay 100 percent out of pocket for medical cannabis. If the average cost of medicine for patients is $2300 a quarter, the average [gross receipts tax] burden on medical cannabis is nearly $1,000 per year. This is a huge undue burden on patients with debilitating medical conditions. … It is time that we recognize the tax fairness due medical cannabis patients who are making a healthier and fiscally responsible choice for their well being.” — Duke Rodriguez, CEO of Ultra Health, to the Sante Fe New Mexican

The dispute comes down to the difference between a doctor’s “recommendation” and “prescription.” Ultra Health believes that there is no effective difference — it remains to be seen how the District Court of Sante Fe will rule.

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Private Confirmation of Washington Cannabis Regulators Sparks Outrage

1/24/2019

The Washington CannaBusiness Association and others in the Washington state cannabis industry are frustrated with the private selection and confirmation of state cannabis regulators, The Stranger reports.

Washington’s cannabis industry has been troubled by the state cannabis regulation, which is conducted by the Washington State Liquor and Cannabis Control Board.

“Our members in the regulated cannabis industry are concerned about the culture of the LCB, which is under the purview of an unelected board of directors, and whose enforcement behavior is the catalyst for bipartisan support for compliance reform this session.” — Vicki Christophersen, Executive Director of the Washington CannaBusiness Association, via The Stranger

Three board members are up for confirmation in a private hearing: Jane Rushford, Russell Hauge, and Ollie Garrett. According to state Sen. Karen Keiser, who oversees the committee responsible for the confirmations, Russell Hauge’s term is expiring and he is not up for confirmation and will be replaced.

The Liquor and Cannabis Control Board has been criticized for several decisions in the last year, like the organization’s outright ban on all infused candies, which was later reversed. The LCB has also been criticized for lax enforcement of illegal pesticide use, broken seed-to-sale tracking software, and unfair punishment for cannabis businesses for minor infractions.

Sen. Karen Keiser told The Stranger she wouldn’t open the hearing to the public. According to Keiser, the period for public comment was in the last legislative session. “Confirmation hearings are not for people to come and trash people. If people have a problem with Jane Rushford or Ollie Garret they should let me know. If they have a problem with the entire agency they should let me know,” said Keiser.

Keiser admitted the enforcement issues are a concern but pointed to bills currently being considered by Washington state lawmakers that would fix the issues.

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New Jersey Adds Opioid Addiction to Medical Cannabis Conditions

1/24/2019

On Wednesday, New Jersey Governor Phil Murphy announced that opioid addiction is now a qualifying condition for medical cannabis in the state, according to an NJ.com report.

For years, the death rate from opioid overdoses in New Jersey has been on the rise. In 2018, 3100 residents were estimated to have died from opiate drug overdoses, a fourth straight year in a row to set a new record high. Note that — due to rising population levels — the percentage rise was not quite as high, but opioids remain a serious issue.

The state has developed a multi-tier strategy. Part one is immediately adding opioid addiction as a qualifying medical cannabis condition. State Health Commissioner Shereef Elnahal pointed out two studies from last year that showed convincing evidence for medical cannabis lowering the overdose death rate, as well as the prescription rate.

The additional steps involve clean syringe access programs as well as medication-assisted treatment (MAT) for addiction.

As New Jersey continues to expand its medical cannabis program and move towards legalizing adult-use cannabis, it hopes to lower the rates of death due to overdose and other complications from opiates such as heroin, classic painkillers, and the newer, more potent fentanyl.

Already in 2019, there have been 141 opioid deaths — about seven per day.

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Report: 79% of Massachusetts Cannabis Contracts Are Abuse of Municipal Power

1/24/2019

Cannabis advocates in Massachusetts said that after a review of contracts between cannabis companies and local governments they have determined that 79 percent of the contracts violate state law, The Boston Globe reports.

The agreements between cannabis producers and municipalities are known as “host community agreements.” Law firm Gersten Saltman, however, recently launched an investigation into the deals working alongside The Massachusetts Cannabis Reform Coalition and the Massachusetts Grower Advisory Council. The group reviewed 77 such deal and found that the vast majority of the agreements violate state laws, which set the limit on payments to municipalities from cannabis companies at three percent of the cannabis company’s annual revenue. The agreements’ payments must also be reasonable charges in light of the actual costs to the town or city of hosting the business; such deals cannot last longer than five years at a time.

However, the Massachusetts Cannabis Control Commission declined to review the agreements, claiming it has insufficient authority. The commission has applied to the state government to explicitly give regulators the authority.

“It’s a big problem for smaller or medium-sized businesses because it turns into a barrier to entry. … It’s a pay-to-play situation … It’s really a matter of extortion and bribery in plain sight.” — Peter Bernard, president of the Massachusetts Grower Advisory Council, to The Boston Globe.

The law firm requested a response within 30 days. After that time, Gersten Saltman many file suit against the state.

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Portland Gives Grants to African American Cannabis Entrepreneurs

1/24/2019

The city of Portland, Oregon has issued two grants to cannabis businesses owned by African Americans, The Oregonian reports.

According to Portland city economic development agency Prosper Portland, the grants were awarded for the benefit of people who were harmed most by the many decades of cannabis prohibition. Prosper Portland said Portland is the first municipal government to invest in “communities disproportionately harmed by cannabis criminalization.”

Two grants of $30,000 each will go to two different companies. One is a cannabis delivery service called Green Box available by subscription. The other is a cannabis retailer that offers an apprenticeship program to young African Americans called Green Hop.

The city hopes the grants will help bridge the “racially divided capital gap.”

Adrian Wayman, CEO of Green Box, told reporters that the $30,000 grant will allow his company to “leap forward.”

“As a 100 percent bootstrapped company, limited funding has inhibited our growth,” said Wayman.

Portland, the largest city in Oregon, has positioned itself at the forefront of city cannabis policy since Oregon voted to legalize in 2014. Last year, Portland Mayor Ted Wheeler (D) was one of many mayors from major cities who wrote to federal lawmakers about the need to reform national cannabis laws.

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Website Offers Free Cannabis to Government Workers During Shutdown

1/23/2019

BudTrader.com is offering free cannabis to furloughed government workers while the government is shut down, according to The Hill.

BudTrader is known in some circles as “the Craigslist of weed.” The company will offer free medical cannabis to government workers whose pay has been stopped due to the shutdown, which has entered its second month this week. Over 800,000 federal workers are currently out of work due to a standoff between President Trump, who has demanded money for building a 2,000-mile wall along the U.S. southern border, and the Democrat-controlled House of Representatives.

“I don’t think federal employees are getting enough love and support, in these tough times, we want to extend the offer of a donation of medical cannabis to any federal worker affected by the shutdown.” — BudTrader CEO Brad McLaughlin, in a press release

BudTrader is currently working with an attorney to ensure that the cannabis donations are legal within California’s cannabis laws. All donations will remain confidential. Donation amounts will be given right up to the state’s legal possession limits for cannabis.

Several other companies including Kraft have settled into their own giving campaigns for out-of-work federal employees. BudTrader, however, is so far the only company to make public its furloughed worker cannabis donation program.

It’s unclear how much longer the government shutdown will last — legislation under consideration today has the potential to reopen the federal government — but at least federal worker patients in California will have access to free medicine while it continues.

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Pennsylvania Removes Hemp Restrictions, Industry Left Wide Open

1/23/2019

The state of Pennsylvania has decided to scrap limitations on its industrial hemp pilot program and will allow farmers open access to the hemp industry, The Morning Call reports.

Pennsylvania submitted its updated hemp plan to the U.S. Department of Agriculture. While the 2018 Farm Bill legalized the cultivation of low-THC industrial hemp, the federal government has yet to establish specific cultivation rules. The previous farm bill Bill contained strict guidelines allowing only for industrial hemp pilot programs, which remain in place in many states.

Pennsylvania is scrapping just such a pilot program, which contained limitations that had capped the industry at 84 conditional participants and just 100 acres of plants. The state agriculture department announced in 2018 that it was too late to change course for 2019 but now has reportedly reversed that decision.

Many challenges still remain even after Pennsylvania’s opening of its hemp program. According to spokesperson Shannon Powers, “there’s 80 years of missing information” regarding hemp cultivation, such as common pests and methods of harvesting. Not to mention, there are not currently any large-scale commercial hemp processors in place.

“It’s one more step, but in this case it’s a big step for Pennsylvania farmers who are certainly seeking alternatives in new rotational crops,” said Geoff Whaling, President of the Pennsylvania Hemp Industrial Council.

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New Zealand Company Approved for THC-Rich Cannabis Imports

1/23/2019

Hikurangi Cannabis Company in New Zealand has had its cannabis license adjusted to allow the company to import high-THC cannabis cultivars, according to a Stuff.co.nz report.

The company’s license is the first one to be updated in this way. The New Zealand government previously allowed just low-THC cannabis plants to be used in its medical cannabis program, which was changed last month. Hukurangi was the first cannabis company to finish an application for changing its license.

Hikurangi will be cultivating 16 new strains of cannabis. Five varieties will be THC-rich, four will be CBD-rich with low THC, and the other seven will be similar to the formerly approved low-THC strains.

Hikurangi’s Managing Director Manu Caddie said that the importation of these high-THC medical cannabis varietals has nothing to do with the upcoming 2020 referendum to legalize adult-use cannabis. Caddie said the THC-rich strains will be used to help people in need of pain management, whereas the CBD-heavy strains will be used to help people with seizure disorders like epilepsy.

Caddie said his next project is developing relations with burgeoning cannabis industries in Asia — like Thailand, which recently legalized medical cannabis — in hopes of trading for new seeds and medicines.

“Last week we saw the government in Thailand approve medical cannabis, the Philippines, Malaysia, and South Korea are all shifting quickly and others are following,” he said.

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280E Curveballs and Cannabis Tax Tips for Survival

1/22/2019

Editor’s note: This article was contributed by Cannabis Tax Solutions.

Just when you think you have 280E figured out – BAM! Here comes another curveball. Recent court cases (Alterman and Alpenglow, among them) have empowered the IRS even more, and have seemingly weakened landmark cases like CHAMP.

Attorneys representing clients in audits have told Cannabis Tax Solutions the IRS has now taken the position that if you do not have “enough” non-cannabis revenue from products such as glassware and T-shirts, you will not be able to take related deductions. What is enough? Good question, and one we are still trying to figure out. Another adverse position the IRS is taking: advertising. If you have your brand name or logo on T-shirts, hats, or any non–cannabis item you sell, it can be construed as advertising, which falls directly under 280E. Disallowed deduction.

So, what can you do to protect yourself? In the past, the belief was as long as you accounted for the non–cannabis activities separately — such as different classes in QuickBooks — you would be ok. It doesn’t appear this will fly anymore. The single biggest step you can take now is to set up your non–cannabis activity as a totally separate entity. Completely segregating the businesses will give you a much better path to justifying the revenues and fully legitimate deductible expenses for the non–cannabis activity.

Another crucial factor in determining the success or failure of your cannabis business is choosing which professionals to work with. Cannabis Tax Solutions have had several new clients come to us with tax returns and financials prepared by non-cannabis accountants that bordered on criminal — they were that bad. No 280E recognition, balance sheets not tied out, incorrect codes, no disclosures. If you hire professionals that don’t know 280E (accounting and legal) then you are digging a huge hole for yourself. This industry is filled with very complex accounting, tax, and legal issues; not having the proper people in place will kill your business.

One of the biggest things you can do to help yourself is simply taking time to review your own books and tax returns. Don’t put your complete faith and trust in your accountant/tax preparer — it’s YOUR business, after all. Make sure you know what’s going on inside. Look at the tax return to make sure the proper 280E adjustments are being recorded. Does it pass the common sense test? You would be surprised. You may also want to engage in a 280E analysis by a qualified professional who knows what to look for.

Legal deductions are lost by failing to track and document employees whose work involves production-related activities that qualify as cost of goods sold (COGS) deductions, as well as non-production activities disallowed under 280E. Using technology such as Würk’s cannabis time-tracking and attendance software system to track employee activities can also help produce records that can satisfy the IRS. This is as bulletproof a way as anything to show where employees are working to back up employee-related expenses that may be deductible.

Of course, bookkeeping is always an ongoing issue. And truly, having great bookkeeping practices will help you both in the long and short run. If the books are in order, chances are those deductions in question will have a greater chance of being accepted under audit. If you can’t get banked, don’t worry — creating cash logs and having the proper backup in the way of receipts will go a long way for providing a complete accounting environment.

Speaking of environment, another important consideration is how you are structured as an entity. Should you be taxed as a C corp? S corp? Something else? How do other shareholders and investors fit into this equation? Are there outside states to consider? How will this decision affect exit strategy? There is the potential for tons of moving pieces, so make sure they are all covered.

If you want to keep your doors open, having a perpetual tax planning and projection initiative is imperative. You should always be looking at actual versus budgeted numbers, forecasts, and anything else that will ultimately tilt the (tax) bottom line. Don’t let a million dollar tax bill sneak up on you — be aware! And don’t wait until December to perform this most critical task. Federal and State income, payroll, marijuana-related taxes — including excise and sales tax — all need to be accounted and planned for. Staying current with all tax liabilities is crucial for long term success. If you fall behind, seek immediate help for formulating a plan to catch up. Once you get on the IRS radar, in conjunction with being a federally illegal business, it can be a quick recipe for disaster.

Until Marijuana is removed as a Schedule 1 drug, it will still be the Wild West when it comes to figuring out what you can and can’t do for maximizing your deductions and minimize taxes. Seek out the best representation and you will be on your way to providing your business with the best chance to survive and succeed.

If you would like more information on 280E or other cannabis tax policies please reach out to us at info@cannabistaxsolutions.com or visit our website at CannabisTaxSolutions.com.

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California Highway Patrol Confiscated $250,000 From Licensed Cannabis Transporters

1/22/2019

Two owners of a cannabis transport company are suing the California Highway Patrol (CHP) following the arrest of two delivery drivers and confiscation of $257,000 in cash in late 2018, according to the Sacramento Bee.

In September, California-licensed cannabis business owners Rick Barry and Brian Clemann — who happen to be former CHP officers themselves — were arrested during a traffic stop. While the men were released within hours, the CHP confiscated the $257,000 in cash the men were carrying after having delivered a shipment of cannabis oil. Neither person were charged with a crime. Barry and Clemann both say they had their state cannabis distribution license on them when they were arrested.

Barry and Clemann are now suing the CHP. They’re hoping a judge will issue a directive to state enforcement agencies to stop interfering in the state-legal cannabis industry, as well as provide financial restitution. Just last week, California regulators made it clear that deliveries are legal statewide, even to areas that have prohibited cannabis sales or have not instituted rules at all.

Seizures by the CHP have not gone down since adult-use cannabis was legalized in California. In fact, the amount of cannabis seized in 2018 was double what was seized in 2017.

The issue will now be decided in the San Francisco Superior Court. According to Barry and Clemann’s attorney, “the fundamental issue here is whether the CHP is going to follow the will of the voters of California and the Legislature and stop cooperating with federal authorities in the ongoing federally instigated war on cannabis.”

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CBS Rejects Medical Cannabis Super Bowl Ad

1/22/2019

The CBS network has rejected a potential Super Bowl ad from Acreage Holdings that would have expounded on the benefits of medical cannabis, Bloomberg reports.

Acreage Holdings — a multi-state cannabis corporation which includes several former lawmakers, including former Speaker of the House John Boehner, on the company’s board of directors — said the company’s proposed Super Bowl ad would have explained the plant’s effectiveness for many conditions and called for legalizing medical cannabis. The ad would have portrayed two individuals who have reached relief through cannabis: a child with epilepsy and a U.S. combat veteran.

According to Acreage Holdings President George Allen, the advertisement aimed to “create an advocacy campaign for constituents who are being lost in the dialogue.”

CBS nixed the ad, however, and did not immediately respond to inquiries about the incident.

The Super Bowl is usually the most-watched network television event of the year. Last year, reports indicated that a 30-second advertising slot cost about $5 million. For this reason, many viewers have started anticipating the ads in between plays, as they are usually of notably higher-production than average network television advertisements.

“It’s hard to compete with the amount of attention something gets when it airs during the Super Bowl,” Allen said in an interview with Bloomberg.

Notably, there is increasing pressure on the NFL to allow its players to access medical cannabis as a potential replacement for opiate painkillers; the organization, however, has yet to budge on the issue.

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Federal Judge Rules to Protect Cannabis Company’s Free Speech

1/22/2019

A federal judge in New Mexico has upheld the free speech rights of Ultra Health, the largest cannabis producer in the state, according to a Globe Newswire report.

Ultra Health filed a complaint against the New Mexico State Fair after the Fair attempted to limit their display of images of cannabis plants and processing equipment during the medical cannabis company’s 2017 application process. U.S. District Court Judge James A. Parker ruled that limitation infringed on Ultra Health’s right to free speech.

“The State Fair’s restrictions … as applied to Ultra Health’s 2017 State Fair application were unreasonable in light of the purpose of the forum and the surrounding circumstances and therefore violated Ultra Health’s First Amendment right to free speech.” — Excerpt from Judge Parker’s ruling

There have been other federal decisions supporting the rights of medical cannabis companies; no previous rulings, however, have yet to so explicitly protect the cannabis company’s right of free speech. Many states with adult-use or even medical cannabis legalization have installed strict marketing requirements that make it difficult for cannabis companies to educate or spread the word about their offerings. With this decision, there is at least some minimum level of communication that is protected.

The judge ordered the State Fair to pay Ultra Health’s attorneys fees and other costs.

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U.S. Virgin Islands Legalize Medical Cannabis

1/22/2019

Governor Albert Bryan Jr. has signed a bill to legalize medical cannabis in the Virgin Islands, The St. John’s Source reports.

While the Virgin Islands Medicinal Cannabis Patient Care Act doesn’t legalize full adult-use, the legislation does create a regulated system of provisioning centers across the Virgin Islands. The legislation was originally sponsored by Sen. Positive Nelson of St. Croix, who was in the Governor’s office during the signing of the bill.

“I have approved the Virgin Islands Medicinal Cannabis Care Act because it is a step in the right direction toward assisting Virgin Islanders suffering from autoimmune and other debilitating medical conditions.” — Gov. Bryan in a statement

Medical cannabis was originally endorsed by voters in 2014 via a ballot referendum. There was some delay, however, due to the Virgin Islands’ territory status.

“Since the Referendum, it is clear that marijuana-use policy in the United States has been changing rapidly in favor of medicinal and recreational use and will continue, even potentially on the federal level,” said Gov. Bryan.

Bryan said he expects the legislature to work out the finer details of the system now that it’s become law. Regulatory forms, fees, and procedures have all yet to be determined.

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Connecticut Lawmakers Introduce Legalization Bill

1/21/2019

Lawmakers in Connecticut have introduced the first cannabis legalization bill of the year, according to a Hartford Courant report.

The bill is co-sponsored by more than 40 state Democratic legislators. Connecticut has failed to pass all previous legalization attempts; with widespread legislative and gubernatorial support, however, this year seems likely to be a banner year for cannabis reforms in the state.

The bill would provide for legal sales to all people over 21. The existing medical cannabis program is regulated by the Department of Consumer Protection; the proposed legal marketplace would also be overseen by that department. Companies already holding medical cannabis licenses would be given priority for the new adult-use cannabis licenses.

The bill also contains provisions for the expungement of prior cannabis convictions. The bill would also allow home delivery and the home-growing of up to six cannabis plants.

Intoxicated driving laws would be amended with a provision making it illegal for anyone with more than 5 nanograms of THC per milliliter of blood to operate a vehicle; public consumption would also be illegal.

While there is strong Democratic control of the Connecticut state Assembly and a governor with a favorable stance, the bill’s passage is not yet guaranteed.

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Massachusetts Dispensary Replaces Lines With App

1/21/2019

The eighth Massachusetts dispensary to launch sales will be the first in the state to use an app instead of traditional in-person lines, according to The Boston Globe.

The seven other dispensaries in Massachusetts have all opened to huge lines but Northeast Alternatives in Fall River hopes to circumvent this by using a smartphone app called “QLess.”

QLess is a line-creating and schedule management app. Potential customers can text as soon as an hour before opening to get their place in line. The app will then provide them with an approximate time to arrive at the dispensary and will provide additional updates throughout the day as things develop.

Northeast Alternatives will not use a satellite parking lot — which other dispensaries have relied on, so far — because of the app’s efficiency. In fact, no walk-ins at all will be allowed — all customers of the dispensary are expected to schedule via the app.

This is not the first case of entrepreneurs looking to technological innovation to advance the cannabis industry: there is a multitude of apps including delivery and medical cannabis recommendation services already serving the industry.

Massachusetts adult-use cannabis sales launched in November 2018 after voters passed a legalization initiative in 2016.

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Arkansas Issues First Medical Cannabis Dispensary Licenses

1/21/2019

The Arkansas Department of Finance and Administration issued the state’s first six medical cannabis dispensary licenses on Friday, according to an Associated Press report.

The six recipients were the first among 32 approved applicants to pay the $15,000 licensing fee and post the $100,000 performance bond required for each license. A spokesperson for the department told reporters that officials expect the remaining applicants to pay and post their bonds throughout the next week.

Dispensaries who receive licenses are allowed to construct their retail locations but cannot open for sales until their facilities pass a final inspection.

Arkansas has already licensed multiple medical cannabis cultivators; one cultivator on Friday, however, became the first to receive both cultivation and retail medical cannabis licenses. Medical cannabis products could be ready for store shelves by April, a company representative said.

The Arkansas cannabis licensing process began in early 2018 but was quickly mired in controversy when a judge ruled the state’s first set of cultivator licenses “null and void” after finding that the state Medical Marijuana Commission disregarded licensing rules. Additionally, two members of that commission were found to have had a financial relationship with two people with ownership stakes in approved cultivation centers.

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