Maryland’s first medical cannabis dispensary has been approved by the state Medical Cannabis Commission to open immediately and, although products will not be available for months, the owner of the Wellness Institute of Maryland said the organization will begin seeing patients today and taking pre-orders, the Baltimore Sunreports.
“We are fully equipped to deliver medicine as soon as we have it,” said Wellness Institute owner Michael Kline in the report, adding that the dispensary will operate more like a doctor’s office than a retail store.
Patient consults will take about an hour and they will be asked to keep an electronic diary in order to track their cannabis use and progress. Kline indicated the company has no plans to advertise to the public but do plan to offer home delivery services.
“Many, if not most people, won’t be interested in our model,” Kline said. “They would like to go in like it’s a strip mall or a 7-Eleven.”
Maryland’s first medical cannabis products are expected to be available sometime after Labor Day, but Kline is confident that in the meantime he can get patients enrolled, answer any questions, and complete “all the paperwork that’s doable.”
To date, 9,000 Maryland residents have already signed up to access medical cannabis once available but fewer than 300 doctors have registered to recommend use. The state regime allows reciprocity with other state programs which means producers and dispensaries need to prepare beyond the reported numbers of enrolled patients.
Under regulations passed by the commission last month, dentists, midwives, nurse practitioners, and podiatrists are also permitted to recommend medical cannabis but fewer than 20 of those providers have signed up with the state.
In a statement on ending discrimination in health care settings, the United Nations and World Health Organization appear to call for reviewing and repealing laws for “drug use or possession of drugs for personal use.”
The language is included in a section outlining a position to review and repeal “punitive laws that have been proven to have negative health outcomes and that counter established public health evidence.”
“These include laws that criminalize or otherwise prohibit gender expression, same sex conduct, adultery and other sexual behaviors between consenting adults; adult consensual sex work; drug use or possession of drugs for personal use; sexual and reproductive health care services, including information; and overly broad criminalization of HIV non-disclosure, exposure or transmission,” the statement says.
The proclamation comes as several U.N. states, such as Germany, Mexico, Greece, and Israel (among others) have moved to federally legalize medical cannabis, and other U.N. nations, such as Canada and Uruguay, begin rolling out adult-use regimes.
In 2013, the U.N. issued a statement on cannabis legalization in Colorado and Washington, saying that the programs violate the U.N. Single Convention on Narcotics Drugs of 1961. However, three years later, the U.N. Expert Committee on Drug Dependence moved for a review on possibly rescheduling cannabis under international law. That review is expected 18 months from the Nov. 30, 2016 meeting.
Since the launch of retail cannabis sales in Alaska, the state has collected more than $1.2 million in tax revenue derived from the industry, leading one tax department official to call the preliminary figures for June “ridiculously fantastic.” The department hauled in $272,600 from cannabis sales in May.
“…And rough numbers indicate tax collections [for June] could exceed $500,000!” Kelley Mazzei said in an email to the Juneau Empire.
The state Department of Revenue had predicted it would collect $2 million in cannabis taxes in the fiscal year that ended July 1. It had initially expected $12 million in April 2016, but lowered its estimates to $5 million in December 2016, and to $2 million in April 2017. Sales were stalled by a slower-than-expected regulatory process, lack of available products, and the fact that out-of-state investment is not permitted under the state’s cannabis program.
However, Mazzei indicated that the state’s outdoor growers, which are seasonal but much larger than their indoor counterparts, have not yet harvested their first crops. Once those crops are harvested and available, the tax revenues could climb even higher, she said.
In May, Alaska’s retail dispensaries collectively purchased 289 pounds of cannabis from the state’s cultivators, a new high for commercial sales.
Private citizens in West Virginia can now apply to the state Agriculture commissioner for a license to grow industrial hemp for commercial purposes, according to a Charleston Gazette-Mailreport. Previously, licenses were only available to members of research institutions, such as colleges and universities.
The amended law was signed by Gov. Jim Justice in April. The measure keeps the definition of hemp plants as containing 0.3 percent THC, as defined under the 2014 Federal Farm Bill.
In West Virginia, products containing CBD are perfectly legal for sale but currently none of the products offered in the state are cultivated or produced in the state.
David Hawkins, owner of Mother Earth Foods, said there are some issues with the emerging CBD industry and that the regulations need some time to catch up with the market. He only carries three companies’ products because he’s “picky about the quality” and careful about the standardization of purity and dosages. Hawkins said he usually requires the products he carries to have an independent analysis.
“There are legalities in labeling, which some are better at than others, with the [Food and Drug Administration] and [Federal Trade Commission],” he said in the report. “There’s also the issue of consistency in the product when you’re looking at it from a medical perspective.”
Morgan Leach, president of the West Virginia Hemp Industries Association, said that the CBD industry could be “a new business” for the state in an economy that “is in trouble.”
“…We have this huge budget deficit, we have the decline of coal, all these severance taxes are down, you have counties that are struggling, they’ve lost 30 percent of their job base or more in a year, it’s really hard to rebound from that,” he said in the report. “If we can bring something in like hemp to help produce commodity items like food and these supplements and different things we use everyday, that can really help us climb out of the hole here.”
However, Leach explained that in order for that to happen the cost of planting hemp – as much as $200 per acre – need to be reduced.
“Could it be a multi-million dollar per year business?” Leach said. “Yes, it has the potential to do so.”
Israel’s Health Ministry will introduce a new system of medical cannabis distribution in August and invest NIS 2 million (USD $567,928) into the system in order to hire clerks to speed up the process and reduce waiting times, according to a Jerusalem Postreport. The reforms will also see about 100 physicians able to provide patients access to medical cannabis without the approval from the ministry.
MK Tamar Zandberg, chairman of the Knesset Committee on Drug Abuse, called the news “encouraging” but “not enough.”
“In recent months, the situation in the field of medical cannabis seems to be becoming more complex, with pain clinics preventing treatment, faxes that disappear, long waits on the telephone, and finally the middlemen who enter the field and benefit from the bureaucratic difficulties in the process,” Zandberg said in the report. “Under the guise of ignorance and conservatism, the medical establishment treats patients as drug addicts and doctors as drug dealers, while narcotic drugs that are harmful and addictive are more freely distributed and in increasing doses.”
Zandberg pointed out that under Israel’s medical cannabis system, oncologists are licensed to approve patients but other specialists, such as psychiatrists and orthopedists, are regarded by the ministry as “second-rate” and are required to cut through a lot of red tape to prescribe medical cannabis to patients.
Health Ministry Associate Director-General Itamar Grotto disagreed with Zandberg’s assessment and challenged her to show him another country that “is doing better than Israel in the field of medical cannabis,” although he conceded that the “situation is not perfect.”
“There is a load of patients and the number of people treating them is inadequate. There is an administrative bottleneck in the office that must give approval,” he said in the report. “We have to add more typists, telephone clerks, and we will try to double the number.”
A study published in The Journal of Neuropsychiatry and Clinical Neurosciences reports that cannabis therapies are both effective and well-tolerated for Tourette syndrome patients. The University of Toronto researchers found that in 18 of the 19 study participants who had used cannabis regularly for at least two years, their symptoms were “much improved” and tic scores decreased by 60 percent.
Elia Abi-Jaoude, one of the study’s corresponding authors, said that the topic was brought to the researchers’ attention by the patients.
“Several of my patients with Tourette syndrome had noticed that if they used some marijuana, their tics decreased significantly,” he said in a PsyPostreport, noting that some side effects included sleepiness, anxiety, and decreased concentration. “We began prescribing medical cannabis at our clinic and were struck by the improvements we saw in tics and related symptoms. We eventually decided that we should investigate this topic further.”
Abi-Jaoude cautioned that the study did have some caveats – it was a relatively small study with no placebo control, and there were variabilities in the cannabis strains used by the patients which prevented the researchers from making “reliable conclusions about which cannabis strains or ingredients are most helpful for tics and related symptoms.”
“This was a retrospective study, so there may be a ‘recall bias’ when people try to compare how they are doing now to how they were doing before starting cannabis,” he said.
Abi-Jaoude said that he plans on carrying out a controlled, double-blind study with different strains, but he believes that cannabis “is a promising treatment for tics and related symptoms.”
“We hope that with further research we can get a clearer picture of the potential benefits and risks with using cannabis for tics and related symptoms,” he said.
A decision last week by the 10th U.S. Circuit Court of Appeals may allow plans for the world’s first banking institution dedicated to legal cannabis to move forward, according to a Cannabistreport.
The Fourth Corner Credit Union was first announced in 2014 as a solution to the cannabis industry’s status quo as an all-cash industry. The plan was well-received by cannabis operators and was even greenlit by Colorado officials, though the credit union’s application for a master account with the Federal Reserve was denied by the bank’s Kansas City branch in 2015. Though Fourth Corner appealed that decision, a district court ruling in January 2016 upheld the application’s denial and dismissed the case with prejudice, meaning the credit union itself could not push the issue further.
However, a three-judge panel for the 10th U.S. Circuit Court of Appeals vacated that decision last week, granting the hopeful credit union renewed hope and the ability to resubmit its application for a master account with the Federal Reserve.
Back in 2016, district court judges had dismissed Fourth Corner’s original application due to an assumption that the credit union would be violating federal drug laws by providing banking services to cannabis companies.
“This ruling was erroneous,” wrote U.S. Circuit Judge Robert E. Bacharach in one of three judge opinions on the issue released last week. “The district court should have presumed that Fourth Corner would follow the court’s determination that servicing marijuana-related businesses is illegal. And in the amended complaint, Fourth Corner essentially promised to obey the law that would be set out in the eventual declaratory judgment.”
However, if Fourth Corner resubmits its application — and CEO Deirdra O’Gorman has indicated the credit union intends to do just that — it may need to re-think its desired role in the cannabis industry.
With cannabis still considered an illegal substance under federal law, it is highly unlikely the Federal Reserve would permit the institution to so blatantly serve cannabis companies. If approved, the Fourth Corner Credit Union would instead be allowed to serve cannabis supporters and/or non-profit organizations, but not the “touch-the-plant” industry itself — at least not until serious reforms are made on the federal level.
Nonetheless, “I think that this ruling is an example of the normalization of [cannabis] — that this is about banking, not about the federal-state conflict about marijuana,” Tom Downey, a Denver-based attorney, told the Cannabist.
Montana’s Department of Public Health and Human Services has laid out “temporary emergency rules” for the state’s medical cannabis program as lawmakers work out the program’s permanent details, the Billings Gazette reports.
The temporary rules took effect last Friday and allow the DPHHS to issue licenses for testing lab facilities on a temporary, case-by-case basis, as well as issue temporary licenses for “chemical manufacturers” — companies who can extract cannabinoids and create cannabis concentrates.
The temporary rules will expire after 120 days, though the deadline to have the program fully up and running is April 30, 2018.
Montana Cannabis Industry Association spokesperson Kate Cholewa said that — though this marks a transition period for the industry — “This is not that dramatic of a moment. It’s maybe a benchmark, but there are so many more provisions yet to come online.”
Meanwhile, lawmakers have amended possession limits for program participants following a complaint by the Montana Patients Rights Network; these limits depend on whether or not a patient has a registered provider or if they are cultivating their own medicine. Under the clarification, registered Montana cardholders who have named an official provider are allowed to possess up to one ounce of cannabis. A registered cardholder who has not named a provider, however, may also possess up to four mature cannabis plants and four seedlings.
The state currently imposes a four percent sales tax on medical cannabis products, though this tax will be lowered to two percent starting July 1, 2018.
Montana voters first embraced MMJ reforms in 2004. The program experienced explosive popularity between 2009 and 2011, however, which prompted efforts from lawmakers to repeal and undo the program. Officials finally succeeded in gutting the industry last year, but another successful voter initiative last November overruled lawmakers and renewed the program — this time with more detailed product tracking, a self-sustaining tax system, and a more extensive licensing system.
The launch of Hawaii’s medical cannabis program faces more delays after the Hawaii Employers’ Mutual Insurance Company (HEMIC) announced last week it will stop providing workers compensation insurance to seven of the state’s eight licensed cannabis companies.
According to a KHON2 report, the development came without warning and poses a problem for the companies in question because state law requires cannabis companies to provide workers comp insurance to their employees.
The companies were given 30-day cancellation notices by their provider.
“HEMIC has received two outside legal opinions regarding its role in providing workers’ compensation coverage to Hawaii’s medical marijuana dispensaries. These legal opinions clearly acknowledge that HEMIC and its board of directors have potential exposure for criminal liability,” Marty Welch, HEMIC’s CEO, said in a statement.
“After receiving these legal opinions, the HEMIC board has voted unanimously to discontinue these policies and fully refund all premium payments to any dispensaries currently insured by us,” Welch said.
Hawaii’s Department of Health is investigating what this may mean for the immediate future of the program. In a statement issued by the department, officials admitted, “the next 30 days may be challenging if the affected dispensaries cannot obtain workers compensation coverage from an alternate insurance company.”
Hawaii’s medical cannabis dispensaries have faced a series of delays since the licensees were first announced last year.
Storefronts have yet to open — despite several of the state’s operators having already grown and harvested their first crop — because state officials have not yet issued testing lab licenses, and state law requires that all cannabis sold to patients must first undergo product safety tests.
The opening of Nevada’s recreational cannabis market was marked by green fireworks and long dispensary lines, according to a CNNreport, and the bill’s sponsor state Sen. Tick Segerblom was one of the first people to make a retail cannabis purchase.
Although dispensaries are prohibited from the famed Las Vegas strip – due to federal cannabis and state casino laws – that didn’t stop at least one couple from experiencing a Vegas-style wedding at a cannabis greenhouse. The bride, Anna, carried a bouquet of cannabis leaves, while her new husband, Mark Balfe-Taylor, used a bud as a corsage.
The first customer for adult-use cannabis at the NuLeaf dispensary in Las Vegas, Nevada. Photo Credit: NuLeaf, Inc.
Cannabis consumption is also prohibited in bars, parks, restaurants, at concerts, and on federal property. Public smoking violations carry a $600 fine.
The industry is expected to generate $60 million in tax revenue for the state over the next two years.
“Every time you buy something here, 33-cents is going to taxes,” Segerblom said in the report. “This is the most heavily taxed and regulated industry in the whole state.”
Nathaniel White, a first-time legal cannabis buyer who had experienced legal troubles over the plant, said he was “shocked” when he received a receipt for his cannabis purchase.
Medical cannabis is now legal in Greece following a ministerial decision by the Ministers of Health and Justice, according to a Neos Kosmosreport. The decision moves cannabis from its Table A classification, where it was listed along with heroin, to Table B, which includes cocaine, opium, and methadone.
“From now on, the country is turning its page, as Greece is now included in countries where the delivery of medical cannabis to patients in need is legal,” said Prime Minister Alexis Tsipras in the report.
The announcement did not include a licensing framework, but licensing regulations are expected for cultivation and distribution. Tsipras indicated that once the framework is completed the nation will also likely allow importation of medical cannabis products.
The decision comes less than a year after the Ministry of Health announced that a panel of experts would study the prospect of legalizing medical cannabis use federally. Greece joins Canada, Mexico, Argentina, Australia, New Zealand, Austria, Chile, Colombia, Croatia, Czech Republic, Finland, Germany, Israel, Italy, Jamaica, Macedonia, the Netherlands, Portugal, Romania, Spain, and Uruguay as nations with some national access to medical cannabis.
According to a recent Marijuana Majority poll conducted by Survey USA, 76 percent of Americans support state-legal medical cannabis programs; however, there is little support from federal lawmakers to implement national reforms.
After failing to gain enough support to pass a recreational cannabis measure, Delaware’s legislature has created a “Cannabis Task Force” that will study the legalization issue and recommend a course of action by January, according to a report from NewsWorks.
The legalization measure was sponsored by Rep. Helene Keeley, who argued that taxing and regulating cannabis sales would help the state bridge its $386 million budget gap as her colleagues debate ways to cut spending during a special post-June 30th session. Keeley, a Democrat, said she was just a few votes short in the bid to legalize cannabis for adult use this session and the task force is a compromise.
The task force aims to provide insight into how local authorities and control agencies would deal with any issues related to legalization, including impaired driving, taxation, and substance abuse prevention. Keeley’s bill would model the industry similarly to existing alcohol laws in the state.
According to the report, Democratic Gov. John Carney doesn’t fully back the plan, but previously held a series of town hall meeting for citizens to express their opinions on the issue. Kelley’s bill would allow adults 21-and-old and older to purchase cannabis products and legally possess up to 1 ounce of flower and 5 grams of concentrates.
Keeley has estimated that a legal cannabis market could generate $22 million in revenue during its first year in operation.
An eco-friendly building material company in New York that utilizes hemp in its products has been awarded a $9.1 million contract from the U.S. Department of Defense to create new living building materials, according to a report from NPR-affiliate WAMC. Ecovative Design has been using a variety of products in its building supplies since it was founded 10 years ago, including agricultural waste, fungus, and, more recently, hemp.
The raw material “looks like mulch,” said the company’s Products Development Specialist Kyle Bucklin in the report, “but it’s actually corn and hemp mixed together.” The product also contains mycelium – think the roots of a mushroom – which is activated with water and a little flour to hold the materials together in any shape.
Gavin McIntyre, Ecovative chief scientist, said the company is planning to scale up the production of the building material that would be able to self-repair.
“For instance, if there were an issue, say, a leak in your roof. This material could react to that leak and self-repair as such that you no longer have to worry about that hole in your roof because the material has responded to that naturally,” he said in the report.
The Department of Defense’s interest in the product is likely due to the self-repair features and the compound’s ability to be grown on site, which would reduce the need to import building materials into conflict zones.
Last week, reforms to Washington’s adult-use cannabis program took effect, allowing businesses to apply for trademark protections, making changes to industry advertising rules, and requiring the Liquor and Cannabis Board to study the feasibility of home-grows, which remains illegal in the state.
The measure increases the number of retail locations a licensee can run from three to five and allows permits to be revoked if the approved entity doesn’t open a location within two years. That revocation, however, would not be permitted if the business owner is “incapable of opening a fully operational retail marijuana business due to the actions by the city, town, or county with jurisdiction over the licensee,” according to the bill text.
The new rules also set advertising limits on cannabis operations in an effort to prevent advertising to children. The new advertising rules ban public transit advertising and marketing aimed at out-of-state residents and prohibit cannabis companies from using “toys…inflatables, movie or cartoon characters” in their advertising campaigns, including mascots.
While billboard advertisements are permitted, those are limited to shop name and location only, and bans such advertisements from containing “any depictions of marijuana plants.” Violations of the advertising rules can result in fines of $1,000.
The legislation requires that the Liquor and Cannabis Board provide the legislature with a report on home-grows by Dec. 1.
As officials in Denver, Colorado are preparing to roll out the voter-approved social-use scheme next month, both cannabis and non-cannabis businesses are preparing for the changes. The four-year pilot program will allow companies to apply for social-use licenses – which cost $1,000 – but under the rules, customers must bring their own cannabis products.
Jim Norris, the co-owner of the Mutiny Information Café, a used bookstore and coffee shop, is vying for a permit hoping to turn the shop into a cannabis café once a month, hosting a “dance party-slash-comedy deal.”
“We’re going to have people come in and just smoke weed and hang out. They’re going to buy a book, they’re going to play pinball, they’re going to have some coffee, maybe get a comic or a record.” Norris said in a Buzzfeedreport. “So basically, it’s already the same thing I’ve got going, except we can smoke weed. Caffeine and cannabis is the perfect combination. It inspires talk, it inspires creativity.”
However, some in the cannabis community are not so enthused by the rules. Tim Morgen, community relations specialist for BGood, said that cannabis operators won’t be able to make money off of public consumption.
“The industry, as a whole, has nothing to win on this,” Morgen said. “It’s not worth the fight.”
Nick Armogida, a marketing consultant, took Morgen’s sentiments a bit further and called the rules something “Jeff Sessions’ office” might have come up with.
Alaska’s Marijuana Control Board is currently consideringsocial-use rules for the entire state, but none of their proposals are of the bring-your-own variety. Instead, regulators in Alaska are considering allowing consumption only if the products are purchased on-site, sampling, and allowing on-site consumption of edibles but prohibiting smoking and vaping.
Emmett Reistroffer, campaign director for Denver’s I-300 social-use initiative, called the city ordinance “far from what the voters approved six months ago.”
“I would say 99 percent of the businesses that expressed interest in these permits are no longer eligible or interested because of the burdens,” he said.
One of the first things you learn in high school civics class is that there is federal law, and then there is state law. There are times where these two worlds collide; the collision is particularly bad when it comes to cannabis.
Currently, we have 29 states plus the District of Columbia that have legalized cannabis for medical and/or recreational use. Problems arise because the federal government considers cannabis to be a Schedule 1 drug — the most restrictive category possible — which presents a quagmire for those in the industry when it comes to banking and taxation.
Into the Tax Court, we go
First, let’s tackle taxes. There was a famous U.S. Tax Court Case, Edmonson v. Commissioner in which Jeffrey Edmonson was a drug dealer. He sold amphetamines, cocaine, and marijuana — and for his crimes, he was sent to federal prison in 1974. When he was released, the Internal Revenue Service reconstructed his income and sent him a Notice of Deficiency. Edmonson took the IRS to Court in 1981. He reasoned that if the government was going to treat his drug sales as a business, then they should also consider his business expenses.
Drug dealers didn’t keep records, so by using something called the Cohan Rule, Edmonson testified that he sold his drugs on consignment. He wanted to take expenses for the cost of the drugs. However, he had to travel as well, and he had a dedicated telephone line, all of which the Tax Court considered and gave him credit for those expenses. Congress hated this, so they came up with an amendment to the Internal Revenue Code, Section 280E, which states:
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
Section 280E is still in force today. If you are a cannabis business owner, you are probably aware of this, for even in a state where cannabis is perfectly legal, when you file your taxes, all you can do is take an expense for the cost of the cannabis.
Consider the case of Californians Helping to Alleviate Medical Problems Inc. v. Commissioner in 2007 — a.k.a. CHAMPS. What this company did was sell subscriptions to anyone that had a medical marijuana card. They offered a monthly membership which included cannabis, but it also covered caregiving that would help their patients through the conditions that ailed them. The Court reasoned that there could be two businesses under one roof and it was mathematically easy to figure out how much of the expenses would be billed under caregiving and what would be billed as cannabis.
BINGO! We had found a way around Section 280E — but it’s not actually that simple.
Relying on experts to help you navigate the complicated waters of cannabis business will make your life as an entrepreneur much easier.
Section 280E finds a way
In 2012, a company called the Vapor Room found themselves in Tax Court. The case, Olive v. Commissioner, showed us that we couldn’t just throw two businesses together and deduct expenses to get around Section 280E. In Olive, using the principle of CHAMPS, the Vapor Room was selling medical marijuana, but then just giving away things like movie nights with popcorn and Yoga Classes. But here is the problem: there was no aggressive pursuit of income for that part of the business, so Tax Court quickly disallowed these expenses. And because their tax bill was so high, the Vapor Room went out of business.
I can’t tell you how many Olive-type dispensaries I see in a year. Somewhere along the way, someone who claimed they specialized in cannabis taxation would advise splitting into two businesses by basically just throwing them together and seeing if it would fly. The validity of that tactic couldn’t be less feasible. I’ve seen dispensaries with a setup where they sold cannabis and some T-Shirts and thought that they were operating under CHAMPS. The cannabis business is one of the most audited industries and, if you are in it, you really need a person that specializes in cannabis taxation. Not someone that says they do, but someone with proven experience and the knowledge to back it up.
This story doesn’t end there. Federal law strictly imposes its ‘hands-on’ banking policies for cannabis entrepreneurs as well. Unless you have some connections or lie about the nature of your business, opening a bank account is literally impossible. While it’s legal for banks to open such accounts, banks are not usually willing to engage with the cannabis industry because of the tax and legal ambiguities.
So, you have these businesses that have to operate in all-cash, and with cash comes theft. I’ve been in practice for 23 years and I know that businesses that operate with mostly all cash are going to see employee theft. You have to think about security — and it’s not just the employees that pose a security risk, it’s the general public as well. As a result, most dispensaries require some kind of armed and/or trained security on the premises.
Joining the right team
You have the Tax Code that is against you and you have a business that is all cash, what are you supposed to do?
The easiest thing to do is do your research. Find an accounting firm that actually specializes in cannabis. In the business of marijuana, you need to rethink how you want to enter the marketplace, how you want to handle taxes, and how you want to deal with cash.
An accountant that specializes in cannabis will have connections. For instance, they would have established a “team.” They will have a cannabis attorney (you’ll need one). They will have several banking solutions for you so your cash-use is minimized. They will have solutions to the issues you will undoubtedly encounter.
For instance, because regulations regarding cannabis are generally created by the state legislature, your team will need to know the different nuances of your state. For example, if you are a dispensary in Nevada, all you can do is sell cannabis — so the two-businesses-under-one-roof strategy won’t work for you. You will need another solution to your tax problem.
Depending on your state, there may be some banks and merchant companies that will take you on as a customer. The point is that cannabis is the new gold rush, and just because someone says they specialize in cannabis doesn’t mean they do, so do your homework.
New developments for taxes and banking
For cultivators, Section 280E doesn’t take that big of a bite, taxwise. For instance, the cost of growing cannabis includes most of their expenses. Yet, even hemp farmers are under the control of Section 280E.
There are some new developments on the tax and banking side, however. In the House, they have introduced H.R.1810 – Small Business Tax Equity Act of 2017, which would get rid of Section 280E. The Senate even has a companion bill — but both bills are stuck in committee. In the Senate, they have also introduced S. Rept. 114-280 – Financial Services And General Government Appropriations Bill, 2017, which would end the industry’s banking restrictions.
Until then — before you spend the money on a license to grow, cultivate, or open a dispensary — meet with someone that specializes in cannabis taxation. You may need to go back to the basics.
First, study your state laws. Second, sit down for a consultation with a cannabis tax specialist. Tell them your idea and let them work around it. They should be able to offer you several different options. Together, you can figure out what banking options are available; there are some small banks and even merchants that will work with you, but, for the time being, you will need the right team behind you to help guarantee a cannabis tax and banking workaround.
According to a Marijuana Majority poll conducted by Survey USA, 76 percent of respondents said states should be allowed to enact their own medical cannabis regimes, and the view was shared by all majorities regardless of gender, age, race, or political affiliation. Just 12 percent indicated they would like to see the federal government “arrest [and] prosecute” individuals who are using cannabis legally.
Poll respondents were split on whether professional athletes and journalists should be allowed to use cannabis. Forty-six percent said athletes should be allowed to use cannabis as an alternative pain-killer to opioids and prescription drugs, while 38 percent thought athletes should be suspended if they fail a drug test for cannabis.
Fifty percent of those polled supported allowing journalists to use cannabis, while 35 percent said they should be punished. In their framing of the question, the pollsters pointed out that the New York Times and Washington Post require journalists to submit to drug tests for cannabis, even if it is legal where the individual lives.
Poll respondents were also split about whether or not legal cannabis users should be allowed to purchase firearms, with 48 percent answering that they should, while 37 percent said they should not. In states with legal cannabis regimes, a person can be prevented from purchasing a firearm if they are enrolled in the state’s medical cannabis program. In states with adult-use regimes, an individual can be denied a firearm if they admit on the required background check that they use cannabis.
The pollsters surveyed 1,500 adults via cellphones and landlines.
The Pennsylvania Department of Health has announced the 27 companies approved to operate medical cannabis dispensaries in the state, just over a week after announcing the 12 companies approved for cultivation and processing permits.
According to a Philadelphia Enquirerreport, six dispensaries were approved in Montgomery County, three in Bucks County, and two each in Delaware and Chester Counties.
Four dispensary applications were approved to operate in the City of Brotherly Love, one of which is set to be located near Fishtown’s SugarHouse Casino. However, the approvals did not include locations in Center City, West Philadelphia, Old City, or by the airport.
“There should have been one on Walnut Street. Period,” said Andrew B. Sacks, an attorney and chairman of the medical marijuana and hemp department at Sacks, Weston, Diamond LLC. “This is just asinine.”
The 27 companies awarded licenses will be allowed to operate three locations, and while 81 total dispensaries are allowed by law, many applicants chose not to apply for more than one location leaving 52 total dispensaries to open next year. The operators will be able to apply for their additional allowable dispensaries once their first is up and running.
Under the state law, flower and edible sales are prohibited and dispensaries will only be allowed to sell cannabis oils that can be vaporized or consumed in a solution. All of the state’s applicants were required to pay a $5,000 application fee and post a $30,000 deposit, which is only refundable to the failed bidders. According to the report, the permits are worth about $10 million to $20 million depending on the number of customers and the location.
However, it could take years for operators to see profits in the millions, as some businesses in states that do not allow flower – such as New York and Minnesota – still have yet to turn a profit.
In their 2017 World Drug Report, the United Nations Office on Drugs and Crime found that cannabis is the most used, most cultivated, and most confiscated drug – but has still not caused a single fatal overdose. The report covers worldwide statistics from 2015.
According to the UN report, it’s estimated that between 128 million and 238 million adults used cannabis in 2015, representing an average of about 3.8 percent of the adult population. Cannabis cultivation was reported in 136 countries, compared to 49 who reported opium poppy cultivation and just eight who reported coca bush cultivation – the plant used to make cocaine. Cannabis was seized in 164 of 168 of the world’s nations.
Paraguay led the world in cannabis eradication from 2011 to 2015, destroying 12,122,750 plants. Ukraine eradicated 7,550,000 during that time; while Peru destroyed 6,200,578. The U.S. doesn’t provide statistics on plant counts, but reported it had eradicated 396,620 indoor cultivation operations and 3,904,213 outdoor operations.
The report indicated that overdose deaths have more than tripled between 1999 and 2015, increasing 11.4 percent in the past year alone “to reach the highest level ever recorded.” The agency says those deaths are “mostly driven by opioids.”
“Of the 52,000 total drug-related deaths reported for the United States, those related to opioids accounted for more than 60 percent,” the report states. “In 2015, the death rate from synthetic opioids, increased by 72 percent compared with the previous year, whereas heroin overdose deaths increased by 23 percent over the same period.”
So-called ‘cannabis use disorders’ contributed to 5.3 “healthy years of life lost” – the lowest rate for any of the substances tracked by the UN agency.
In an interview with WGBH’s “Greater Boston,” Massachusetts House Speaker Robert DeLeo indicated that the House might be willing to compromise on the chamber’s proposed 28 percent sales tax on cannabis sales, according to a Greenfield Recorderreport. The Senate had voted to keep the tax rate at 12 percent – the rate approved by voters in the original legislation.
DeLeo was joined on the program by Senate President Stanley Rosenberg who said that Sen. Patricia Jehlen and House Majority Leader Ron Mariano – who are heading up the six-member cannabis conference committee – would “negotiate” and “figure it out.” Rosenberg added that Jehlen’s primary concern is that if the tax rate is set at 29 percent, it would “seed the black market.”
“I suppose there could be some negotiation,” DeLeo said to Rosenberg during the broadcast.
The committee is working on a self-imposed Friday deadline, hoping to get a compromise bill to the desk of Gov. Charlie Baker so the new Cannabis Control Commission would have a full year to roll out the adult-use regime.
DeLeo also defended changes in the law that allow municipal officials to ban cannabis industry operations rather than a town or city-wide referendum. He said that allowing municipal lawmakers to make those decisions are “less expensive” and allows for quicker decision making. Rosenberg disagreed, pointing out that under the current scheme, voters in 39 communities have already taken steps to implement moratoriums or bans and another 120 communities are considering their own action.
DeLeo pulled the House recreational cannabis bill from consideration two weeks ago for a “clean up” after advocates said the proposal would raise cannabis taxes as high as 56 percent.
According to a study conducted by HelloMD and the University of California Berkeley, cannabis can be used as a substitute for opioid and non-opioid based pain medication. The collaboration surveyed nearly 3,000 participants and 97 percent “strongly agreed” or “agreed” that they could decrease their opioid use when using cannabis.
Ninety-two percent of respondents “strongly agreed” or “agreed” that they preferred medical cannabis to treat their medical condition for which they currently use opioid-based drugs; and 81 percent “strongly agreed” or “agreed” that cannabis by itself was more effective than taking cannabis with opioids.
Dr. Perry Solomon, chief medical officer for HelloMD said that the research backs up a recent publication from the National Academy of Sciences that “clearly refuted the ‘gateway drug’ theory” associated with cannabis, “instead finding evidence of cannabis having multiple curative benefits.”
“Hopefully this will awaken the public, medical professionals and legislatures to the fact that cannabis is a safe, non-addictive product, available to help fight the opioid epidemic,” he said in a press release.
Amanda Reiman, PHD, MSW, lecturer at UC Berkeley’s School of Social Welfare and the study’s lead author, said that because the treatment of pain “has become a politicized business” in the U.S., “the result has been the rapidly rising rate of opioid-related overdoses and dependence.”
“Patients have been telling us for decades that this practice is producing better outcomes than the use of opioid based medications,” she said in a statement. “It’s past time for the medical profession to get over their reefer madness and start working with the medical cannabis movement and industry to slow down the destruction being caused by the over prescribing and overuse of opioids.”
The study is just the latest to purport medical cannabis is an effective pain management therapy and could be utilized to combat the opioid crisis in the U.S. – which claims 91 American lives per day.
In May, the National Institute on Drug Abuse, a division of the National Institutes of Health, updated their website to include two NIDA-funded studies which “cumulatively suggest” that medical cannabis products may have a role in reducing the use of opioids to control pain.
Yesterday, Smart Approaches to Marijuana, a Virginia-based cannabis prohibitionist group, sent out a foreboding press release claiming that the Rohrabacher-Farr amendment was eliminated from a key federal spending bill. That amendment is crucial to protecting state-approved medical cannabis programs, preventing the Department of Justice from using federal funds to prosecute legal cannabis businesses and if it were removed from the federal budget, the government could carry out enforcement actions against the industry in every state with legal regimes.
However, according to one of the namesakes of the amendment, it’s just fake news.
In a press release, Representative Earl Blumenaur said “the folks at SAM clearly don’t understand the legislative process” and that the amendment has never been included in the base Commerce, Justice, Science, and Related Agencies (CJS) Subcommittee Appropriations bill – as SAM would have led the audience of its release to believe. In previous years, Congress has amended the base CJS bill to include the medical cannabis protections.
“There is no news here,” Blumenaur said. “We are exactly where we thought we would be in the legislative process and look forward to amending the underlying bill once again this year to make sure medical marijuana programs, and the patients who rely on them, are protected. Voters in states across the country have acted to legalize medical marijuana. Congress should not act against the will of the people who elected us.”
In a statement Kevin Sabet, president and CEO of SAM, said despite the statement from Blumenaur he was confident that cannabis activists are losing in the legalization fight.
“This fight isn’t over, of course,” he said. “Like Big Tobacco, the pot industry and the politicians they pay will keep trying to push pro-drug laws with their deep pockets. Our side—parents, public health professionals, employers, and communities hurt by this generation’s Big Tobacco—will continue to fight for science and evidence over greed.”
Of course, there are also millions of parents, public health professionals, employers, and communities — particularly minority communities — who are against the prohibition of cannabis and that continue to be hurt by Drug War-era policies.
With the industry facing strict and over-reaching regulations, cannabis growers need to put a lot of thought into choosing a location for their commercial grow site. There are tons of things to consider — zoning, neighbors, the climate, local and state laws — and if you don’t know exactly what you’re looking for or exactly where to find it, you could easily find yourself overwhelmed.
So, what is the best way to go about finding the right location for your commercial grow site?
We posed the question to a group of professional cannabis growers who are members of the Growers Network private forum, and we’ve included some of their answers below in this first installment of our latest content series — Ask a Grower.
Cultivation is all about zoning, you need to look to your city first. Make sure you’re within no radius of schools and or other sites that would conflict with your operation, also in one of my experiences we had to spend a lot more money than we projected due to an electrical issue, which involved uprooting the street.
Finding a location for a cannabis cultivation facility depends on many factors. First and foremost, read your state regulations closely, and know what the state requires. Some things to look for:
1. Distances from schools, parks, correctional facilities, etc. How are those distances measured (door-to-door straight line distance or pedestrian route)?
2. Zoning – Check with the local municipality and determine what zoning types allow a cultivation business.
3. Utilities – Find out if the site has three phase commercial electricity available. For an existing building, find out the total ampacity of the service. This information is very important when considering startup costs, as installing or upgrading can be very expensive. Make sure you have a good water source available, and high-speed internet and telephone/cell service. Alarm and camera systems need reliable and fast broadband service. While doing these checks find out the rates. Electric rates can vary dramatically from urban to rural settings. Find out if there are any Time of Use (TOU) rates that apply. Some electric utilities charge a premium during peak hours and a discounted rate during
While doing these checks find out the rates. Electric rates can vary dramatically from urban to rural settings. Find out if there are any Time of Use (TOU) rates that apply. Some electric utilities charge a premium during peak hours and a discounted rate during off-peak hours. Some offer lower rates if you’re a heavy user, so identify what that amount of usage is.
4. Is there a local “Opt out” provision in the regulations that allows cities or counties to opt out of Marijuana/Cannabis businesses? If so, what were the election results? Was it a close decision or a landslide? Know this before investing, as some regulations allow a simple signature petition to bring up a vote to ban cultivation businesses. Get as much information about a particular location as you can before you commit.
5. Neighbors – How close are you to neighboring businesses or residential areas? These can be a huge setback at startup or down the road. It’s very difficult to control smell 100%, especially in very large facilities. The more distance you have from neighbors the better.
Kathy Smith:
In the hospital setting where I work there are rooms that are specifically designed with negative pressure and anteroom attached to the patient’s room. The anteroom is designed for the healthcare personnel to don their PPE and prevent contamination of highly infectious organisms, such as tuberculosis. It is a buffer system that is critical for infection prevention and cross contamination between patients. Also, there are rooms with positive pressure for patients that are extremely immune compromised and can’t risk being exposed to pathogens.
This concept can certainly be applied to cultivation and there are some companies that are selling products for this purpose, such as: http://airstreaminnovations.com. Using anterooms for each grow room within a facility may be an important feature so that cross-contamination between rooms can be minimized. Concepts like positive pressure and anterooms, I believe, are important considerations to weigh when designing. This could assist in keeping the good bugs in and the bad bugs out.
According to a new study from Eaze, a technology company that facilitates medical cannabis deliveries, their consumer base is educated, employed, and have higher-than-average income levels.
According to the Insights study, 91 percent of cannabis consumers are employed full-time and 49 percent reported a household income of $75,000 or more, with 16 percent reporting an income between $100,000 and $149,000. Fifty-one percent reported holding a college degree or postgraduate degree. According to California census data, only 39 percent of adults in the state have completed a bachelor’s degree or higher.
One in five respondents, or 22 percent, indicated they are parents, while 27 percent of cannabis consumers said they were married or in a domestic partnership. Sixty-three percent of those parents use cannabis on a daily basis.
According to the researchers, the modern cannabis consumer spends more on cannabis products ($1,704) annually than the average American spends on alcohol ($454), tobacco ($303), and personal care products ($606) combined. The majority – 58 percent – of respondents reported using cannabis on a daily basis – 59 percent of those daily consumers were women.
Four out of five cannabis consumers said that they had reduced their alcohol consumption because of their cannabis use, but 81 percent still currently consumed some alcohol. Another 13 percent said they had entirely replaced alcohol with cannabis, and 80 percent said they consumed at night, consistent with the time-of-day that many begin drinking.
More than 10,000 people participated in the 32 question survey sent via email over one week.
