According to a Des Moines Register/Mediacom poll, 80 percent of Iowans support legalizing cannabis for medical purposes; yet, just 39 percent indicated support for a recreational market. In a 2013 poll, just 58 percent supported a medical program, with 29 percent in support of a recreational cannabis market.
The poll found strong majorities among age groups and political affiliation with 88 percent of young adults, and 87 percent of Democrats supporting medical cannabis access; along with 66 percent of Republicans, 67 percent of senior citizens, and 87 percent of registered independents. Additionally, 76 percent of Protestants, 79 percent of Catholics, and 91 percent of those claiming no religious affiliation backed medical cannabis legalization. Rural residents were less likely to favor the issue than their city-dwelling counterparts, 73 percent to 82 percent respectively.
Iowa currently has a medical cannabis pilot program, which is set to expire this summer. The limited program allows patients with epilepsy to possess cannabis oils high in CBD with minimal THC content, however, it doesn’t provide for distribution of the oils, which leaves patients without access to their medicine or forces them to break federal law by obtaining it out-of-state.
According to the report, there are at least three bills in the state legislature aimed at the state’s medical cannabis program.
A proposal to seal criminal records of individuals arrested for possession of cannabis in public view in New York has passed the State Assembly 95-38 – if it’s approved by the Senate it could impact more than 800,000 convictions in the state. Citizens charged with possession in public view are often accused of the crime only after being subjected to controversial stop-and-frisk searches.
Assemblymember Crystal Peoples-Stokes, the bill sponsor, said the measure is necessary “because drug laws have created a permanent underclass of people unable to find jobs after a conviction” adding that communities of color have been the most affected by 40 years of “bad drug policies and hyper-criminalization” and are often targeted during stop-and-frisk stops.
“If today’s moment of increased attention to heroin encourages us to center public health in our drug policy, then we need to ensure that we are making amends to communities of color by alleviating the burden bad policies have had on their lives,” she said in a press release. “Sealing low-level marijuana possession convictions is the first step to reintegrating thousands of New Yorkers who are inhibited daily from accessing employment, housing and an education all due to a conviction on their record for simple possession of marijuana.”
Kassandra Frederique, Director of the Drug Policy Alliance, applauded the Assembly vote and said that the measure is “most urgent” under the Administration of President Donald Trump, whose policies have, thus far, been anti-immigrant.
“Comprehensive drug law reform must include legislative and programmatic measures that account for our wrongheaded policies and invest in building healthier and safer communities, from the Bronx to Buffalo, Muslim and Christian, US-born and green card-holding,” she said.
The measure now moves to the state Senate where it is sponsored by Sen. Jamaal Bailey.
Members of Denver, Colorado’s Social Consumption Advisory Committee are set to hold their third meeting next week, continuing to devise rules under which the voter-approved Initiative 300 will operate in the city. During their second meeting, the committee offered rules restricting social-use clubs from operating 1,000 feet “from where children congregate,” proposing application and operation requirements and determining some “unlawful acts” related to storage, processing, quantity limits, advertising, and visible intoxication.
According to an Associated Pressreport, state lawmakers are considering legislation that would allow cannabis “tasting rooms” run by dispensaries, or smoke-friendly clubs akin to hookah lounges or cigar bars. The state-level considerations come as lawmakers on both sides of the aisle are reportedly fed up with seeing cannabis smoked in public spaces and on the street.
Republican state Sen. Chris Holbert said that he has been asked for cannabis by panhandlers by the state capitol.
“It’s a problem we’ve got to address. I mean, look at me. If I’m getting hassled, everyone’s getting hassled,” Holbert said to reporters while pointing to his suit and gray hair.
A bill to treat cannabis clubs like cigar bars is currently being re-written over language that allowed medical cannabis patients to socially consume – which drew the ire of some lawmakers and opponents of the social use measure. Other legislators indicated that they should move slowly on any new regulations because of uncertainty at the federal level.
The Advisory Committee has three more meetings on its agenda for Mar. 10 and 24, and April 6.
Following the 2016 elections, cannabis is now legal in some capacity in 28 states. However, even though it’s legal in certain states, the federal government considers the plant an illegal Class I narcotic, and as a result business owners in the marijuana industry have hit a wall with IRC §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.”
IRC §280E will only cease to apply to cannabis businesses if and when cannabis is no longer classified as a Schedule I or Schedule II controlled substance.
When IRC §280E was enacted in 1982 to overturn the result in the Tax Court case Jeffrey Edmondson v. Commissioner, it held that the taxpayer, who was engaged in an illegal drug dealing business, was entitled to deductions for “telephone, auto, and rental expenses” that he incurred in his business. The Senate report makes clear that IRC §280E was intended to overturn the decision in Edmondson and deny deductions to illegal drug dealing businesses. However, for Constitutional reasons, Congress did not attempt to prevent taxpayers from using cost of goods sold (COGS) to compute gross income. Thus, IRC §280E denies all deductions from gross income in computing taxable income, but illegal drug dealing businesses are permitted to take COGS into account in computing gross income.
IRC §61 defines “gross income” as “all income from whatever source derived.” One category of income listed in IRC §61 is “gross income derived from business.” Reg. §1.61-3 states that “gross income” for manufacturing and merchandising businesses, “means total sales, less the cost of goods sold.” As the Tax Court has observed, “cost of goods sold is an item taken into account in computing gross income and is not an item of deduction.”
Coping strategies for cannabis companies
There are various strategies that those in the marijuana industry have employed. The first approach derived from Californians Helping to Alleviate Medical Problems, Inc. (CHAMP) v. Commissioner. In this Tax Court Case, the California-based marijuana dispensary provided marijuana to its patients, but also provided non-cannabis services, including counseling and caregiving services for its patients. This allowed the company to fully deduct the expenses associated with those practices.
It is perfectly okay to run two separate businesses under one roof. If the business is a medical marijuana dispensary, it could certainly provide other caregiving services under another company. It can also then share employees with the dispensary, paying the employees minimum wage under the dispensary company, and making up the difference with the caregiving company. The dispensary is only allowed to deduct COGS, whereas the caregiving business isn’t held to the same restrictions.
However, not all cannabis businesses have been successful in separating their businesses between dispensary and non-dispensary activities. In the Tax Court Case Olive v. Commissioner, the Court found that the taxpayer’s activities of providing free yoga classes, chess and other board games, movies with popcorn and drinks, chair massages, use of vaporizers, education on medical marijuana and its responsible use, and snacks, did not constitute a business separate from the taxpayer’s dispensary business.
Cannabis companies face some taxing issues that are entirely unique from other industries. Photo Credit: Rory Savatgy
The second approach to minimizing the impact of IRC §280E is to characterize as many costs as possible as COGS rather than operating expenses.
As the Tax Court has observed, “[the concept of COGS] embraces expenditures necessary to acquire, construct or extract a physical product which is to be sold; the seller can have no gain until he recovers the economic investment that he has made directly in the actual item sold.” In other words, the total costs incurred to create a product or service that has been sold. Generally, a taxpayer first determines gross income by subtracting COGS from gross receipts, and then determines taxable income by subtracting expenses from gross income.
The IRS and cannabis
IRC §471 gives broad authority to the Internal Revenue Service (IRS) to force taxpayers to account for inventory in a way that most clearly reflects income. IRS regulations under IRC §471 provide that a producer of property generally is required to treat indirect costs as COGS if they are “incident to and necessary for production” or manufacturing operations. In 1986, Congress enacted IRC §263A, which requires purchasing, handling, and storage expenses, as well as a portion of third party service costs such as accounting or legal fees, to be included in COGS, in addition to the costs covered by the IRC §471 regulations.
Absent an inclusion in COGS, indirect costs for cannabis businesses are subject to IRC §280E, which denies deductions from gross income. It does not impact costs for determining gross income. Increasing COGS decreases gross income and decreases the amount of denied deductions from gross income as a result of IRC § 280E. This creates an incentive for cannabis businesses to maximize their costs included in COGS.
Normally, taxpayers with inventories prefer to treat costs as deductible expenses rather than including them in COGS because expenses are currently deductible, while COGS does not reduce income until the taxpayer sells the inventory items to which the COGS relates. However, because IRC §280E prevents the deduction of many cannabis-related costs as current expenses, taxpayers in the cannabis industry have reversed the normal tax planning objective and prefer to maximize the costs treated as COGS.
A recent IRS pronouncement attempts to limit reliance on IRC §263A to maximize COGS and minimize expenses subject to IRC §280E. Chief Counsel Advice memorandum 201504011 (CCA) takes the position that a taxpayer who traffics a Schedule I or Schedule II controlled substance must determine COGS using the applicable inventory-costing regulations under IRC §471 as that IRC § existed when IRC §280E was enacted. Thus, the IRS is taking the position that IRC §263A does not require — indeed, does not allow — taxpayers to include in COGS cannabis-related costs that would be nondeductible under IRC §280E if they were not capitalized.
The CCA interprets two tax provisions in making its conclusion. First, the CCA interprets language in IRC §263A(a) (2) to limit indirect costs included in COGS to those that are deductible from gross income when calculating taxable income. Stated differently, an indirect cost cannot be included in COGS by reason of IRC §263A for determining gross income if that cost could not be deducted from gross income if it were not included in COGS.
Second, the CCA points to legislative history to interpret IRC §280E. The Senate report notes the adjustment to gross receipts for COGS was not affected to preclude Constitutional challenge. Congress feared that denying COGS to determine gross income might be held unconstitutional.
Interestingly, the CCA concludes that a business trafficking in cannabis “is entitled to determine [COGS] using the applicable [COGS] regulations under IRC §471 as they existed when IRC §280E was enacted.” The CCA does not explain its basis for making this assertion. It is unclear why changes to the IRC §471 regulations subsequent to the enactment of IRC §280E should not apply to businesses trafficking in cannabis.
It appears the IRS is asserting that COGS, as defined by the IRC §471 regulations at the time IRC §280E was enacted, represents COGS that are Constitutionally protected when determining costs for gross income. Further, the IRS interpretation permits costs generally included in COGS to be denied as a cost for determining gross income whenever COGS includes incremental costs from when IRC §280E was enacted. Presumably, the IRS does not find these incremental costs to be Constitutionally protected.
The analysis by the CCA is flawed because:
(1) it provides no support for the position that COGS may be defined differently for certain classes of taxpayers, and;
(2) the fact that IRC § 263A does not apply to indirect costs of a cannabis business does not mean that those costs cannot be capitalized.
Filing taxes in the cannabis industry can be a real headache without a proper plan and lots of preparation. Photo Credit: 401(K) 2012
Cannabis businesses should be entitled to include in COGS all costs that may be included in COGS under all capitalization rules other than IRC §263A. The fact that IRC §263A requires the capitalization of particular costs does not preclude such costs from capitalization under other rules. Capitalization must be decided based on the IRC §471 regulations as currently written, and IRC §280E has no impact on capitalization requirements.
Looking to the future
Under the 16th Amendment, Congress has the ability to tax only gross income, not gross receipts. The determination of what is included in COGS determines gross income. Both IRC §471 and IRC §263A determine whether a cost is included in COGS. The U.S. Supreme Court in New Colonial Ice Co. v. Helvering held that deductions from gross income depend “upon legislative grace,” and a particular deduction can be allowed only if it is clearly provided by the statute.
By enacting IRC § 280E, Congress has denied its legislative grace to deductions from gross income for businesses trafficking in Schedule I or Schedule II controlled substances. However, the IRS provides no evidence that a court has applied the concept of “legislative grace” to the inclusion of costs in COGS. It is therefore unclear whether Congress has the authority to create a separate and narrower definition of COGS for these businesses. If it does not, the Constitution requires that IRC §263A be taken into account in determining COGS for cannabis businesses in the same manner as it is taken into account for other businesses — that is, without regard to IRC §280E.
One case, Alpenglow Botanicals, LLC, Et Al. v. U.S., is challenging the very concept of IRC §280E. On February 3, 2016, plaintiffs Alpenglow Botanicals, LLC, filed a Complaint against defendant The United States of America seeking declaratory, injunctive, and monetary relief so as to overturn the IRS’ decision to deny deductions to income obtained during the course of plaintiffs’ business for the tax years 2010, 2011, and 2012. More specifically, plaintiffs raised the following claims:
The IRS went beyond its jurisdiction in administratively determining that plaintiffs were not entitled to certain deductions pursuant to 26 U.S.C. §280E;
Congress exceeded its power under the Sixteenth Amendment in passing §280E;
The IRS violated the Fifth Amendment in taking evidence from plaintiffs without informing them that they were under investigation for violating the Controlled Substances Act (CSA); and
§280E violates the Eighth Amendment’s prohibition on excessive fines and penalties.
The appellate court ruled in favor of the government, setting up a showdown that could soon take place in the Supreme Court.
One thing is for sure: with marijuana now legal in over half the states in America, §280E may soon be a thing of the past.
Lansing, Michigan’s City Council has set new rules for medical cannabis home-growing which require patients to register with the city if they continuously or intermittently use more than 3,500 kilowatt hours of electricity, the Lansing State Journalreports. It’s unclear whether those who register would need to pay a fee, but failure to register with the city could result in a civil infraction.
Mayor Virg Bernero said the city would be conducting inspections to ensure the new rules are being followed, noting that the ordinance was supported by several neighborhood groups.
“We know that it is legal under state law for medical marijuana patients and caregivers to grow marijuana in their home, but this activity must be done in a safe manner that does not create a nuisance or put their neighbors in harm’s way,” Bernero said in the report. “Protecting the quality of life in our neighborhoods is vitally important. With the new tools this ordinance provides, we can make sure that any hazards or neighborhood nuisances caused by home growing of marijuana can be addressed and resolved.”
T.J. Doyle, a registered patient and caregiver in the capital city, called the move “misguided” and an “overreach.”
“You don’t punish every single person in the program because you have a handful of people doing things poorly,” Doyle said. “The city didn’t have to get draconian with it.”
Officials indicated that the registration records would be maintained by the city and would be protected under both the general privacy exemption of the Freedom of Information Act and the Health Insurance Portability and Accountability Act.
The ordinance was approved unanimously by the City Council.
Jamaica’s Cannabis Licensing Authority has issued its first conditional licenses for medical cannabis cultivators and processors in the island nation, according to a Jamaica Observerreport. The licenses were approved for two small cultivators, and one small processing facility. Another cultivation license was considered – however, the owners could not establish that the venture was “substantially owned or managed by individuals ordinarily resident in Jamaica” as required under the nation’s laws.
According to the report, the CLA had been under pressure from stakeholders to issue licenses – having announced the regulatory scheme in May after passing the reforms in February 2015. The agency said the approvals require extensive verification and that the processes in Colorado and Uruguay initially took about two years.
“At the outset, the authority mapped the application process and noted that the processing of conditional approvals could take up to six months provided all relevant information was supplied,” CLA Chairman Cindy Lightbourne said in the report. “In several instances, information has been requested by the Authority to help verify applications and any delay by applicants in providing this requested information adds to the processing timelines.”
In September, Minister of Tourism Edmund Bartlett estimated cannabis would help the island nation move away from the all-inclusive, mass tourism model, expecting “a full roll-out” of a cannabis-centric health and wellness tourism subsector by the end of this year.
Canadian medical cannabis producer Tilray has received the necessary approvals to export medical cannabis to New Zealand, and will supply Auckland’s Middlemore Hospital with cannabis oils containing both THC and CBD.
The approval by Canadian and New Zealand regulators expands Tilray’s international reach – last year they became the first company to legally export medicinal cannabis products from North America to the European Union and Australia. They were also the first North American medical cannabis producer to be certified under the European Medicines Agency’s Good Manufacturing Practice standards. This year, the company is eyeing export deals with additional European countries and in Latin America.
“We are proud to be able to offer patients in need access to high-quality, pharmaceutical-grade medical cannabis products,” Tilray President Brendan Kennedy said in a press release.
Last June, the company announced a deal to export medical cannabis products to Croatia. Their products are also being used in a New South Wales, Australia government-led study focused on using medical cannabis therapies to treat and prevent vomiting and nausea from chemotherapy; and another trial using Tilray products – focused on Dravet syndrome – conducted by Toronto’s Children’s Hospital is set to begin this year.
The first shipment of Tilray products to New Zealand is expected to arrive by the end of the month.
A measure to legalize CBD oil use for patients 18-years-old and younger has passed the Indiana Senate, which would allow some physicians, nurses, caregivers, and individuals to use the oil to treat intractable epilepsy, allowing pharmacies to dispense it. Under the proposal, the oil must be derived from industrial hemp, as it is required to meet the federal definition of hemp, which is set at .3 percent THC.
The bill (SB.15) would also establish a pilot study registry for physicians to study CBD as an epilepsy treatment. It does not include provisions allowing the cultivation of cannabis; however, Jeff Staker, head of Hoosier Veterans for Medical Cannabis, said the approval “could open the door” for other medical cannabis and hemp-related legislation in the state.
“Obviously we all see this as a huge step here in our state,” Staker said in an interview with Ganjapreneur. “It’s made from the cannabis plant and you got to get a prescription so it’s medical cannabis.”
According to the bill’s fiscal statement, the state Health Department could charge up to a $50 initial registration fee and up to $25 for a renewal. The authors estimate that the fees would top $158,000 during the first year, equating to a patient count of 3,160.
The measure, which passed the Senate 38-12, has been sent to the House.
Two bills have moved their way through separate houses of the New Mexico Legislature that would expand the state’s medical cannabis program, and exempt industrial hemp from New Mexico’s Controlled Substance Act.
The medical cannabis proposal, sponsored by Democratic Sen. Cisco McSorley, was approved by the Senate 29-11but only after an amendment was filed removing a provision which would have allowed all military veterans access to the program regardless of their medical conditions. Opponents argued that the language would have, in essence, legalized recreational cannabis use for veterans.
If approved by the House of Representatives and signed by Republican Gov. Susana Martinez, the measure would allow patients to possess up to 5 ounces of cannabis during a 30-day period, up from three, and allow licensed producers to possess up to 1,000 cannabis plants during a three-month period. The measure would also add “opiate use disorder” to the qualifying conditions list, allowing people undergoing addiction treatment to access the program.
McSorley, who sponsored the medical cannabis legislation enacted in the state in 2007, explained that while the initial bill “had numerous checks and balances” it has “become somewhat outdated” over the last decade.
“This is the first amendment we’ve done in 10 years to the medical cannabis program,” he said in a Santa Fe New Mexicanreport. “And there’s one thing this bill does. It helps the patients.”
The industrial hemp bill, sponsored by Republican Rep. Ricky Little, would allow farmers to cultivate industrial hemp in the state without a special license. Industrial hemp is defined under the 2014 federal Farm Bill as a plant from the cannabis genus that contains less than .3 percent THC. Under the Farm Bill, states are allowed to enact pilot programs, but it does not allow full-scale cultivation. According to the New Mexicanreport, Gov. Martinez vetoed legislation in 2015 that would have created a hemp pilot program in the state.
The medical cannabis expansion bill has been moved to the House but has not yet been moved to a committee. The industrial hemp bill has been sent to the Senate but not yet to a committee.
Arizona’s Senate Committee on Commerce and Public Safety voted 6-1 to approve industrial hemp production, processing, manufacturing, distribution, and commerce by licensed growers and processors in the state, according to a Capitol Media Servicesreport. The measure must be approved by the Senate Appropriations Committee before moving to the full Senate for a vote.
The proposal defines hemp according to the 2014 Farm Bill – as a plant from the cannabis genus that contains less than .3 percent THC. Under the measure, the state Department of Agriculture would issue licenses valid for two years, setting up an Industrial Hemp Trust Fun to fund the implementation and regulation of the program. According to a proposed amendment to the bill, execution of the program would require three new full-time positions in the Department of Agriculture to the tune of $250,000 in fiscal year 2017-2018. The department would also require another $422,000 to set up testing infrastructure.
During his testimony to the committee, Sen. Sonny Borrelli, a Republican and the bill sponsor, said that the state has been “missing out on a multi-billion-dollar industry” due to the prohibition of industrial hemp production.
According to the report, the only opposition came from Arizona attorney Bob Lynch, who represents irrigation districts that would supply the water to farmers.
In an interview with Capital Public Radio, Sacramento, California County Sheriff Scott Jones indicated that he has had conversations with Attorney General Jeff Sessions about cannabis policy which lead him to believe that Sessions will maintain the status quo in states with legal cannabis programs.
“Regarding the prioritization of federal resources to combat marijuana, he didn’t see the federal government getting involved in marijuana use or low-level state, what are traditionally state and local crimes, but, I don’t think he ruled out the possibility of the federal government getting involved in larger-scale operations,” he said.
Those “large-scale operations” would include trafficking by drug cartels, Jones said.
Jones’ take is the latest pointing toward the federal government continuing to take a hands-off approach to the legal cannabis industry despite the confirmation of Sessions – an admitted prohibitionist whose nomination culled unease for industry operators and stakeholders.
During his confirmation hearings, Sessions said he “won’t commit to never enforcing federal law,” explaining that he thought if prohibition was “not desired any longer…Congress should pass a law and change the rule.”
President Donald Trump has said he supports states’ rights and medical cannabis access.
The Drug Enforcement Agency has removed factually inaccurate information about cannabis from its website following public pressure and a legal request filed last year by Americans for Safe Access.
The legal request, filed with the Department of Justice, argued that the DEA website contained more than 25 false statements about cannabis – a violation of the Information Quality Act – 23 of which appeared in a publication titled “Dangers and Consequences of Marijuana.”
Steph Sherer, executive director of Americans for Safe Access, suggested that the removal of the “myths,” which included claims that cannabis was a gateway drug, contributed to lung cancer and psychosis, and caused an irreversible cognitive decline in adults, “could mean the end of the Washington gridlock” over cannabis policy.
“This is a victory for medical cannabis patients across the nation, who rely on cannabis to treat serious illnesses. The federal government now admits that cannabis is not a gateway drug, and doesn’t cause long-term brain damage, or psychosis,” Sherer said in a statement. “While the fight to end stigma around cannabis is far from over, this is a big first step.”
According to a press release, the federal government is already a week past the required deadline to respond to the legal petition over claims that the DEA is still actively spreading false information about cannabis.
Americans for Safe Access has also sent a letter to the DEA urging them to “correct its inaccurate statements” regarding cannabis in light of the confirmation of Attorney General Jeff Sessions, who they claim “has made several statements demonstrating his beliefs that cannabis is a gateway drug and that its psychological effects are permanent.”
“As the top law enforcement official in the nation, Mr. Sessions must have access to accurate information based on current scientific data in order to make informed decisions regarding the enforcement (or non-enforcement) of federal drug laws,” the letter states. “Allowing Mr. Sessions to make law enforcement decisions based on biased, out-of-date information does a tremendous disservice to ASA’s members and the American people at large.”
Legal cannabis customers in Oregon can now order deliveries from recreational dispensaries under a plan adopted by the state Liquor Control Commission, WwKYCreports. The agency has approved 117 retailer delivery permits across the state, including 13 in Portland.
The regulations allow licensed dispensaries to deliver only within the city they are licensed in, requiring the products to be transported in a locked box secured to the delivery vehicle, which can carry no more than $3,000 worth of product at one time. Cannabis can only be delivered between 8 a.m. and 9 p.m. to residential homes, and not to places like dorms, hotels, or campgrounds. Customers must provide proof of age and sign for the delivery.
According to OLCC Spokesman Mark Pettinger the plan had to be postponed until this month so the agency could set up the appropriate infrastructure.
“We needed to make an adaptation to the cannabis tracking system to provide a document that would actually allow for the delivery of recreational marijuana to homes,” he said in the report.
Spencer Krutzler, manager of Portland’s La Cannaisseur, said that since launching the service the company has only had a few online orders so far.
“It’s super exciting,” he said. “I definitely expect to a smile on everyone’s face when we show up to that front door.”
Two patients suffering from chronic pain have been approved for medical cannabis use in Sweden, marking the first time the condition has been deemed eligible to access the nation’s program, according to a report from The Local. The individuals both suffer from severe back injuries and their doctors appealed to the Medical Products Agency on their behalf.
Dr. Fredrik von Kieseritzky, who advised the physicians involved with the patients on the case, called the MPA approval “pragmatic,” indicating that the patients were advised to use an edible delivery method rather than smoking.
“For me personally it is important to keep a watertight distinction between medicinal and recreational cannabis,” he said in the report.
The patients’ cannabis will be supplied by the government, who uses a Dutch company for its supply.
Karl Mikael Kälkner, a representative for the Swedish MPA, said that the decision was “not an approval of the use of cannabis in general” as registration in Sweden’s medical cannabis program is still determined on a case-by-case basis.
“There is clearly some potential for abuse. This is a drug that is illegal to possess and consume. But we have other medicines that are also classed as narcotics,” he said. “If the rules are correctly followed then there is no reason that [cannabis] should not be used as a preparation in a clinical setting.”
West Palm Beach, FL –The first business conference designed for east coast states that have recently adopted medical and recreational marijuana will be held on March 18th and 19th at Harrah’s Resort in Atlantic City. National and regional experts will advise on licensing, regulations, growing, medical recommendations, extracts, edibles, labs, delivery systems, taxes and banking.
Watch highlights from a Meet the Experts conference:
Event producers Rhory Gould and Robert Platshorn brought together a roster of outstanding cannabis professionals to speak, advise, meet and network for two full days. Key Note speakers include award-winning Denver Relief Consulting and Discovery Channel’s Master Grower, Mike Boutin. Attendance is limited to a maximum of 450. All ticket sales benefit The Silver Tour, a non-profit that teaches seniors the benefits of cannabis.
These conferences are common in Colorado and California, but east coast states are relatively new to the industry. According to producer Robert Platshorn, “States from Florida to Maine passed new cannabis laws in 2016. Most are just now writing their regulations or have just announced licensing opportunities. Confusion about who can do what or who can be licensed, is rife. Doctors need guidelines. Growers want information on legal growing. Labs, labeling and packaging are new to many aspiring entrepreneurs. Meet the Experts will focus on this information void.”
This is the fifth Meet the Experts conference. Prior conferences sold out and drew praise from attendees and industry leaders.
Crowd’s view during a presentation from the 2014 Meet the Experts.
“I have to say I’ve been to hundreds of conferences as a psychologist and that was the best, most rich in content, meaningful conference I’ve ever been to. Right up to all the details of the meals, the networking, and discounted accommodations,” said Kelly Sachs of ASA. “Really well done!”
Fun times at the Meet the Experts’ 2014 conference.
According to producer Rhory Gould, “Harrah’s Resort in Atlantic City is the perfect venue for a Business to Business Spring Break. Easy to reach from most cities. Harrah’s has made a hundred rooms available to ticket holders at a deep discount.” Information and tickets are available at http://www.meetexperts.org/.
For photos and interviews contact Robert Platshorn at Meettheexperts@gmx.com, cell # 954-773-6967.
Nevada Department of Taxation officials have proposed a timeline for the implementation of the voter-backed adult-use cannabis industry, expecting it to launch as early as July 1, the Associated Pressreports. The target is well in advance of the Jan. 1, 2018 deadline required under the law.
Tax department Executive Director Deonne Contine said that medical cannabis operators in good standing would be eligible to apply for temporary licenses and should be able to start selling cannabis to adults 21 and older by this summer. The department started crafting the rules and regulations for the program in November and Contine said she expects to have a draft of those regulations by March and begin the licensing process by May.
Contine indicated that Nevada’s rules and regulations borrow heavily from Colorado’s adult-use scheme and from Nevada’s own medical cannabis regime. Retail sales will be taxed 15 percent in the state.
Joe Pollock, deputy administrator of the Nevada Division of Public and Behavioral Health and an overseer of the medical cannabis program, said that the new system must ensure that medical cannabis prices are lower than recreational prices otherwise patients won’t have much incentive to use remain enrolled in the program; just 482 of the 25,000 registered patients in Nevada are under 21. Pollock was also concerned with how the commercial market would impact the informal market because, currently, “the rurals don’t have dispensaries.”
“If anything, I would be worried that the black market would move toward those rural counties because the recreational marijuana will not be available conveniently in those counties,” he said in the report.
Potential canna-business owners who are not currently operators in the state will likely have to wait until at least October 2018 to apply for a license.
A bill that would remove hemp from New Mexico’s controlled substance list has passed through the state’s House Labor and Economic Development Committee, moving it to the House for a full vote, according to a report from the Tenth Amendment Center. If approved, the measure, HB.166 sponsored by Republican Rep. Ricky Little, would allow full-scale commercial hemp farming.
Under than plan, hemp cultivation would not require any special license, treating the crop like any other agricultural product so long as it’s THC content is not more than .3 percent, as defined under the 2014 federal Farm Bill. The bill passed the committee 10 to 1 after passing through the Agriculture and Water Resources Committee 7 to 1 last month.
According to the fiscal impact report accompanying the bill, no government agency reported a positive or negative financial impact in the state, although Little wrote that “there could be some reduction in prosecutions for cultivation, possession or trafficking in this substance.”
If the measure is approved, New Mexico would join California, Massachusetts, Maine, Oregon, Colorado, and Vermont in allowing industrial hemp production within the state.
Little has also introduced HB.154 this session, which would establish an industrial hemp research and development program in the state, which would require licensing. That bill unanimously passed the House Agriculture and Water Resources Committee on Jan. 31.
Alaska’s Alcohol and Marijuana Control Office have seized thousands of dollars’ worth of imported CBD oil from the state’s licensed retail cannabis shops over confusion about their place in the state’s adult-use regulatory structure, the Alaska Journalreports.
Sara Chambers, acting director of the office, said that the agency is “managing this developing situation with the utmost care and concern.”
“Specific details cannot be released at this time because of the ongoing investigation,” she said in the report. “Further details will be released as they become available to ensure that licensees and the public are fully educated and informed as to what the law requires concerning sale of marijuana products.”
According to the report, much of Alaska’s CBD products come from the Alaska Cannabis Exchange and owner Aaron Ralph indicated that they receive their products from industrial hemp pilot program approved in the Lower 48 under the 2014 federal Farm Bill, which are classified as industrial hemp products.
Harriet Milks, legal counsel for the AMCO, said she was aware of potential issues with the products as retail shops started selling them in recent weeks.
“What is this product? We need to find out what it is,” she said. “If it’s a marijuana product under our law I think we have a problem because it doesn’t seem to be packaged or tested or tracked according to Alaska regulations…if it’s not marijuana under our law, that’s a different story.”
Ireland’s Health Products Regulatory Authority working group has released a report outlining its recommendations for medical cannabis access in the country, which include just three qualifying conditions – multiple sclerosis, chemotherapy-related nausea and vomiting, and severe, treatment-resistant epilepsy.
Dr. Lorraine Nolan, HRPA chief executive, said the limited scope of the program is partly due to insufficient clinical data, and the agency’s desire to be able to authorize cannabis as a medicine as soon as it can “meet the same regulatory standards as that of every other medicine on the market.”
“As we are not yet at that point, permitting access to cannabis for medical use is ultimately a societal and policy decision which has to balance the lack of scientific evidence against patient-led demand,” Nolan said in a statement. “As things currently stand, if cannabis products are to be made available through an access program, it will be important that patients and healthcare professionals are aware of the limitations that will apply. The safety, quality and effectiveness of these products cannot be guaranteed or compared with the standards that apply for an authorized medicine.”
The recommendations from Minister for Health Simon Harris also suggest that any cannabis therapies be conducted under the close watch of a physician, and both doctors and pharmacists be facilitated in prescribing and dispensing.
Harris is expected to announce plans for “compassionate access program” in the coming weeks.
The cannabis extraction business is hot. More than 50% of today’s legal marijuana sales are concentrates and infused products, and extracts constitute the fastest growing segment of the marketplace.
With that kind of demand, you can bet that entrepreneurs, investors, and canna-businesses are flocking to get a part of the red-hot market niche. However, compared to many other cannabis-based businesses, starting an extraction operation is a complex proposition.
However, with the proper guidance, you can be producing extracts in record time. In this article, we will discuss the ins and outs of starting a commercial extracts lab in 10 easy to digest steps.
1. Understand your business concept.
A well thought out business concept is vital to developing a successful extraction operation.
What is your niche? What is your product? Who is your customer? What is your material source? How much material do you intend on processing per month? These, and many other inquiries, are all important considerations that should be addressed prior to moving forward with any planning.
According to Nick Tennant, co-founder of Precision Extraction Solutions, “These are often the first questions we ask of new customers. I would say that 8 out of 10 don’t know the exact answers and need guidance, we are happy to help with that.”
While many budding entrepreneurs loathe the thought of putting pen to paper and writing a business plan, it is crucial to providing the key building blocks of your extraction business. Your plan will dictate how large your extraction lab will be, what kind of equipment you choose, the size and layout of the lab, from primary extraction, to post processing and packaging rooms.
Once you have a thorough grasp of your business plan, it’s time to start looking for a legal state and municipality. Different states have different extraction laws, licensing processes, and regulations. Also, some municipalities are extraction friendly, others are not.
Pick a locale that has reasonable access to raw material to process and is geographically convenient for properly executing your business plan.
Photo Credit: Sarah Climaco
3. Prepare your license applications.
Once you identify your preferred locale, you’re ready to make your pitch to the local municipality for what may well be a very lucrative license. The process is usually pretty straight forward via an application process. The municipality may well to see that business plan we discussed before, so it’s good to have it prepared in advance. In any event it’s good to be precise and buttoned up with the application process.
At this stage of the process, you will have to be flexible with what your municipality is requesting. From an applicant’s standpoint, it is always better to have more information so you are well prepared for any questions that might come up. This can come in the form of code standards, engineering documents, and references. Some municipalities may not have a solid grasp of extraction regulations and it may well be up to you to educate them.
You may consider retaining an experienced local attorney to help facilitate the licensing process, not only for their experience and legal acumen, but for their contacts with the local municipality personnel and the credibility an attorney provides.
4. Find your real estate, cautiously.
The single biggest pitfall for aspiring extraction businesses is committing to real estate before thoroughly investigating local zoning and regulations. It is absolutely essential that your property be properly zoned and you have the blessing of your target municipality before financially committing to a property. Whether leasing or buying, consider making your lease or purchase agreement to be contingent upon obtaining licensing.
Photo Credit: Sarah Climaco
5. Build your team.
Now this is where everyone screws up. You will need to have a diverse team of experts to guide you in making your vision a reality. This includes a designer, an architect, multiple engineers, a certified extraction equipment manufacturer and a project manager.
This is not a light decision to make. The extraction industry is so new and specialized that most of these professionals, including architects and engineers, have no clue about the vital intricacies of building a lab that is not only compliant but also meets the unique needs of your business.
Choosing the wrong team, or a wrong team member, can be very costly in terms of both time and money. Even a two-month delay can mean millions in lost revenue and strategic advantage. A lab that has poor workflow or is missing key ingredients can be disastrous to your ongoing business.
Photo Credit: Sarah Climaco
6. Prepare for construction, hire a contractor.
By the time you are ready to build, you should have a full list of equipment and production processes laid out. It is your team’s job to make this vision into a final construction print. Once you have a set of stamped architectural drawings, you will be ready to hire a contractor, obtain final municipal approval and start construction.
With the solid guidance from your professional team, finding a contractor should be one of the easier parts of the process. Like for any commercial build, you should simply find a general contractor with a stellar reputation for quality and timely work.
Photo Credit: Sarah Climaco
7. Select and order your equipment.
With the assistance of your team, you should know beforehand all of the equipment you’ll need to purchase for your lab. You should start ordering your equipment during the lab’s construction.
While there are many viable vendors for the specific gear required by a startup extraction company, entrepreneurs should be careful to consider price, extraction technique, warranty, and a host of other factors when making your final choice. Work with your equipment manufacturer to target lead times, delivery, and installation times.
8. Installation, inspection and field verification.
Prior to final municipal inspections, your equipment will need to be installed. Upon installation, a state licensed engineer qualified to provide a field verification of your equipment and the installation will make a personal inspection. This is a usual municipal requirement and your equipment manufacturer can arrange for the field verification.
Photo Credit: Sarah Climaco
9. Final inspections.
Commonly referred to as Authority Having Jurisdiction (AHJ for short) and depending on your locality, the AHJ may be the local fire marshal or another city inspector. Your AHJ will use your engineer’s field verification of all extraction equipment installations to certify that your lab is safe and regulatory compliant. The AHJ relies on such field verification, as well as its own inspection, for the final sign off on your lab.
Photo Credit: Sarah Climaco
10. Training and workflow.
You’re now ready to go. Training of your extraction staff on basic and advanced extraction methods, workflow, efficiencies and how to produce the highest quality extract destined for your unique product is of tantamount importance. An inefficient, unknowledgeable or sloppy operator can cost you a lot of money. It’s best to get things correct, right out of the gate.
Extract and extract-infused products are anticipated to ultimately be 90% of all marijuana sales. If you’re ready to take the plunge, follow these steps and you’ll be on the way to a lucrative future in the cannabis extraction business.
Republican Jeff Sessions is a staunch prohibitionist who once remarked that he thought the Ku Klux Klan “was okay” until he “found out they smoked pot” and now he’s the nation’s new top cop, confirmed in a 52 to 47 vote mostly along party lines.
The confirmation was expected, and now the cannabis community can only hope that the former Alabama Senator will allow state programs to operate uninhibited from federal interference in accordance with the Tenth Amendment of the U.S. Constitution, realizing that during the election, which saw President Donald Trump emerge victorious, a record number of states enacted legal cannabis initiatives.
Sessions was one of just 16 US Senators to receive a failing grade on NORML’s Congressional Scorecard due to his ‘Just Say No’ views, which the advocacy group’s Political Director Justin Strekal called “out of step with mainstream America.”
“Our elected officials, now more than ever, know that marijuana policy is at the forefront of the minds of American voters and that we are willing and able to mobilize for it,” Strekal said in a statement. “We will never stop fighting for further marijuana reforms at the state level and much needed federal policy changes. With Americans throughout the country organizing and taking action, the fight for cannabis freedom will continue with renewed energy.”
Others in the industry are cautiously optimistic. Aaron Smith, executive director of the National Cannabis Industry Association, said that the cannabis industry plays a key role in the 28 states where it is legal for either medical or adult use generating “billions of dollars in economic activity and [supporting] tens of thousands of good-paying jobs.” He indicated that any rollback or crackdown on legal state programs would just force people back into the informal markets.
“We look forward to Attorney General Sessions maintaining the current federal policy of respect for legal, regulated cannabis programs in the states, and we will work with him to do that,” Smith said in a Forbesreport.
Marijuana Policy Project Director of Federal Policies Robert Capecchi said he believes that Sessions will maintain the current status quo as Trump is on the record as a supporter of states’ rights.
“When asked about his plans for marijuana enforcement, Attorney General Sessions said he ‘echo[es]’ the position taken by Loretta Lynch during her confirmation hearings,” he said. “He repeatedly acknowledged the scarcity of enforcement resources, and he said he would ensure they are used as effectively as possible to stop illicit drugs from being trafficked into the country.”
Adam Eidinger, co-founder of the Washington D.C. advocacy group DCMJ, hopes that President Trump’s support for states’ rights will be enough to keep Sessions in check.
“Sessions is a failed war on drugs zealot who has gone so far as to suggest that marijuana offenders deserve the death penalty,” Eidinger said. “To say he is out of touch with the legalization wave rolling through the United States would be an understatement.”
During his confirmation hearings, Sessions remarked that if cannabis prohibition was “not desired any longer” at the federal level Congress “should pass a law and change the rule.” In his written responses to Senators, Sessions called the enforcement of cannabis in legal states “an emerging issue” and seemed to make a clear distinction between medical and adult-use statutes – which could be catastrophic if he decides to enforce federal law on one sector and not the other. During his hearings and in his written responses, Sessions was evasive in his answers regarding the cannabis industry.
Georgia’s House Medical Cannabis Working Group has endorsed a measure by Republican state Rep. Allen Peake that would expand access to the state’s medical cannabis program by adding eight diagnoses to the qualified condition list, despite the fact that there is still no legal way to obtain the plant in the state, according to a report from The Telegraph.
Under HB.65, patients with intractable pain, HIV/AIDS, post-traumatic stress disorder, Alzheimer’s disease, Tourette’s syndrome, or those in hospice would be able to register with the state program. There are currently about 1,200 patients enrolled in the program, which currently only allows for the use of low-THC, high-CBD oil for diagnoses like seizure disorders; however, there is no infrastructure allowing the cultivation or processing of cannabis in the state.
The working group also recommended allowing people with valid medical cannabis cards from other states be able to possess cannabis liquids in Georgia.
Another measure in the state Senate seeking to expand the program would only add autism to the qualifying condition list, and lower the THC threshold – currently set at 5 percent – for medical cannabis products.
According to patient advocacy group Georgia Cannabis, Georgia’s registered patients are forced to break federal law to obtain their medicine by purchasing it from other states.
Two Minnesota Democrats have introduced legislation to legalize adult cannabis use in the state, according to a WCCOreport. Rep. Jon Applebaum, sponsor of one of the measures, said that to millennials legalizing cannabis is not controversial and the industry would help drive a “Made in Minnesota” economy.
Applebaum’s proposal would permit adults 21 and older to buy, use, and possess up to one ounce of cannabis; regulating cultivation, harvesting, and retail sales. It would take effect in 2019.
“Eventually this is going to happen. And it would be in Minnesota’s best interest if we start talking about it now,” he said in the report. “I envision an economy being created where cannabis products are grown by Minnesota farmers, transported by Minnesota carriers, and sold by Minnesota small businesses.”
The second bill, sponsored by Rep. Tina Liebling, would legalize the industry via a constitutional amendment.
Under current Minnesota law, patients suffering from several debilitating health conditions are allowed to use medical cannabis, however the program does not permit for full plant use. In December, the state Department of Health added post-traumatic stress disorder to the qualifying condition list.
However, due to the limited nature of the program, medical cannabis operators in the state lost more than $5 million in 2015, and the Office of Medical Cannabis has requested more than $500,000 in additional funding over the next two years to cover the costs of the patient database and manufacturer inspections.
New Mexico’s Senate Judiciary Committee has approved a measure that would increase the amount of medical cannabis registered patients could possess and licensed producers could grow. The measure would also remove the THC limits for medical cannabis in the state, but some lawmakers are concerned that a section of the bill would permit military veterans to enroll in the program without a qualifying condition diagnosis, the Santa Fe New Mexicanreports.
The measure, SB.8, was introduced by Democratic state Sen. Cisco McSorley and would raise the personal possession limit to 5 ounces during a 30-day period and allow licensed producers to possess up to 1,000 cannabis plants during any three-month period. The bill also includes a provision allowing people undergoing treatment for addiction to access the program, following recommendations last year to add “opiate use disorder” to the qualifying condition list.
Yet, the veteran’s access recommendations under the plan had some members of the committee concerned — even those that supported the measure. McSorley said the change was necessary because many veterans who suffer from PTSD don’t want to be stigmatized with the diagnoses and suggested that admitting any veteran into the program would help reduce the number of suicides in the state.
Senators Bill Payne and Greg Baca, two veterans who sit on the committee, said they found the provision offensive because it implies that all veterans have PTSD. Another committee member, Sen. Jacob Candelaria, indicated he might “vote differently on the floor” asking whether the measure essentially legalizes recreational cannabis for veterans.
The committee approval allows the bill to be sent to the Senate for a full vote.
