California Regulators Wondering If Interstate Cannabis Commerce Can Happen Without Risk of Federal Crackdown

2/01/2023

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California’s Department of Cannabis Control (DCC) last week asked the state attorney general’s office its opinion on whether allowing interstate cannabis commerce would put the state at “significant risk” of federal enforcement. 

The inquiry, authored by Matthew Lee, general counsel for the DCC, comes after Gov. Gavin Newsom (D) signed legislation to allow cannabis commerce between states that have passed adult-use reforms. The measure took effect January 1.  

“We ask this question against the backdrop of historic legislation recently signed into law by the Governor. Until now (in the absence of that legislation), California state law has flatly prohibited state-licensed cannabis businesses from exporting cannabis outside the state. Now, however, new legislation … has created a pathway to allow California cannabis licensees to engage, for the first time, in commercial cannabis activity with cannabis businesses licensed in other states. Under SB 1326 California may work with other states to negotiate agreements allowing, as a matter of state law, for commercial cannabis activity between California cannabis licensees and licensees in those other states. Such agreements would represent an important step to expand and strengthen California’s state-licensed cannabis market.” — Lee in the letter  

In the seven-page letter, Lee contends that the federal Controlled Substances Act (CSA) “could not constitutionally prohibit California from legalizing and regulating commercial cannabis activity with out-of-state licensees,” arguing that “Under the U.S. Constitution’s anti-commandeering principle, federal statutes may not ‘command state legislatures to enact or refrain from enacting state law.'”

Further, Lee says that the CSA “does not, in fact, criminalize California’s legalization and regulation of commercial cannabis activity with out-of-state licensees” due to the anti-commandeering principle.

“By its terms, the Controlled Substances Act shields state officials from liability in connection with their enforcement of state law. The Act expressly confers immunity upon (as relevant here) ‘any duly authorized officer of any State … who shall be lawfully engaged in the enforcement of any law or municipal ordinance relating to controlled substances,'” Lee writes. “This provision is broad and unqualified: on its face, it would seem to encompass all state laws relating to federal controlled substances, including state laws legalizing and regulating those controlled substances as a matter of state law.” 

In the letter, Lee argues that “Federal law further insulates California from significant risk as to agreements concerning medicinal cannabis,” citing the so-called Rohrabacher-Farr Amendment which, since 2014, has forbid the U.S. Department of Justice from using federal funds to interfere with states’ implementation of their medical cannabis laws.

“We do not rely on the existence of the Rohrabacher-Farr/Blumenauer Amendment as dispositive: in our view, an agreement under SB 1326 would not result in significant legal risk to the State under the Controlled Substances Act even if the Amendment did not exist, for reasons we have already explained,” the letter states. “Nevertheless, the existence of the Rohrabacher-Farr/Blumenauer Amendment further insulates the State from any hypothetical legal· risk as to agreements involving medicinal cannabis, and thus further supports the conclusion that such an agreement presents no “significant” risk to the State.” 

In Lee’s view, the answer as to whether the state would be at risk of federal interference is “no.” 

“Under the U.S. Constitution’s anti-commandeering principle, the Controlled Substances Act could not criminalize the State’s legalization and regulation of commercial cannabis activity (as a matter of state law), including commercial cannabis activity with out-of-state licensees,” Lee argues. “By its terms, the Controlled Substances Act does not criminalize the State’s legalization and regulation of commercial cannabis activity, including commercial cannabis activity with out-of-state licensees.” 

The letter was sent to Mollie Lee, senior assistant attorney general, who has not yet issued a response. 

 

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D.C. Cannabis Delivery Company CEO Pleads Guilty to Federal Money Laundering Charges

2/01/2023

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The head of a Washington, D.C. cannabis delivery company on Tuesday pleaded guilty to laundering about $3.5 million through illegal sales. Connor Pennington, 39, was the CEO of JointVentures, LLC which operates as Joint Delivery, but the company was never licensed in any state or D.C. He was charged with conspiracy to commit money laundering. 

In a press release, the Justice Department said the business generated nearly $1.5 million in 2018 and by the first three quarters of 2021, generated over $2.3 million in revenue. The Justice Department said Pennington “oversaw and approved of a scheme by which he and other representatives of the company deposited cash in denominations less than $10,000 into several bank accounts the company operated, thus allowing JointVentures to avoid scrutiny from the banks and to disguise the source of the cash.” 

Pennington faces a maximum penalty of 20 years in prison, but the agency noted that “actual sentences for federal crimes are typically less than the maximum penalties.” 

The case is in the U.S. District Court for the Eastern District of Virginia.  

In 2020, Joint Delivery and a D.C.-area restaurant had announced a partnership to offer cannabis gifts to delivery customers in the midst of the COVID-19 pandemic; however, the partnership was quickly squashed after the Department of Health, Department of Consumer and Regulatory Affairs, and Maryland police threatened to take action against the restaurant, according to a Washington City Paper report.   

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Pennsylvania Awards $200K for Hemp Industry Projects

1/31/2023

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Pennsylvania officials have awarded $200,000 in grants to three agriculture nonprofits to fund projects aimed at growing fiber and food hemp markets, and are calling for proposals from marketing and promotion nonprofits for an additional $392,000 in grants to be awarded in March.    

Acting Agriculture Secretary Russell Redding said the grants “will boost an industry that was once a staple of Pennsylvania’s economy and is again presenting opportunities for new businesses, farm income, jobs, and climate-friendly, environmentally sound products.” 

“Hemp has offered a rare opportunity to grow a Pennsylvania industry from the ground up, springing from a material with seemingly limitless uses in sustainable construction materials, fiber and food products.” — Redding in a press release 

The state awarded the grants to: 

  • Urban Affairs Coalition and All Together Now Pennsylvania – statewide partnership – $48,000. 
  • Pennsylvania Hemp Now – an innovative program to promote hemp in building materials and textiles. 
  • Pennsylvania Hemp Industry Council – Berks, Chester, Lehigh counties – $150,000. 
  • Project Invest in PA Hemp – represents six companies coming together to attract investment in industrial hemp producers, agribusinesses and entrepreneurs in Pennsylvania to grow supply chains, product development and distribution. 
  • Transition Town Media – Delaware and Schuylkill counties – $2,000. 
  • Promoting Hemp as a Transitional Product to Next Generation Economy – aims to promote benefits of hemp and raise awareness make hemp a household word. 

For new proposals, the Agriculture Department plans to award $392,00 in matching funds to reimburse up to half of project costs, with a minimum grant amount of $1,000. Special consideration will go to projects that leverage other funding and public-private partnerships and eligible projects may include regional or national promotion. 

Qualified organizations may apply for grants through the state Department of Community and Economic Development online application system. The application period closes at 5 p.m. Tuesday, Feb. 28, and recipients will be notified by Friday, March 10.  

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First-Ever Study to Investigate CBD as Chronic Pain Treatment for Spinal Cord Injuries

1/31/2023

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Researchers at Australia’s University of Sydney are conducting the world’s first medical trial researching the efficacy of CBD for spinal cord injury-induced chronic pain. The study is being conducted in partnership with the university’s Lambert Initiative for Cannabinoid Therapeutics and was awarded AUD$1.7 million from NSW Health. 

In a press release announcing the study, the research team said that up to 80% of people with a spinal cord injury develop some degree of persistent pain. In a statement, Professor Luke Henderson, the study’s lead investigator from the university’s Brain and Mind Centre and the School of Medical Sciences, said that “Current treatment options for neuropathic pain are limited and often come with significant side effects that make the condition worse” which highlights “a need for new treatment options.”   

Professor Iain McGregor, from the Lambert Initiative and the study’s co-investigator, said that physicians in Australia are “increasingly prescribing cannabis-based products for neuropathic pain.” 

A study released last month by the National Drug Strategy Household Survey found 2.7% of Australia’s population took up cannabis for medical purposes in 2019. From 2016, when Australia first began allowing medical cannabis use, to 2019 there were 1,011 prescriptions issued for medical cannabis. Since 2020, those figures have increased to 295,515, according to the research. 

“If effective, this trial will provide gold-standard evidence to support the use of CBD for patients with neuropathic pain following spinal cord injury. It can also help to inform and ultimately change policy surrounding the prescription of medicinal cannabis for the treatment of neuropathic pain and improve patient access.” — McGregor in a statement 

The trial will be run at Neuroscience Research Australia (NeuRA) in Randwick, Sydney, a world-leading facility for brain imaging and spinal cord injury research. Participants will trial both CBD and a placebo in random order over two six-week periods and during each treatment period participants will be asked to rate their pain and wear a wrist-worn device to measure their sleep. Before and after each treatment period, participants will attend NeuRA to complete a brain scan, questionnaires, and blood collection. 

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Pennsylvania Bill Would Let Doctors Certify Medical Cannabis Patients for Any Condition

1/31/2023

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A bipartisan bill proposed in Pennsylvania would allow physicians to certify patients for the state’s medical cannabis program for any condition if they believe the patient could benefit from cannabis therapy, according to a Capitol Wire report. The measure would effectively strip the state’s Medical Marijuana Advisory Board of one of its main tasks.

In a cosponsor memo, Sens. Mike Regan, (R) and James Brewster (D) said that “elected officials and bureaucratic staffers should not be deciding what ailment qualifies an individual to use medical marijuana.”  

“Cost is already a hindrance that pushes medical patients to the illicit market, which exposes them to a dangerous product that can be laced with substances such as fentanyl or toxins that can cause further health problems.” — Regan and Brewster in the memo via Capitol Wire 

The legislation would also eliminate the annual renewal fee paid by medical cannabis patients. As of November, there were 423,443 active patients enrolled in the state’s medical cannabis program, while fewer than 2,000 physicians in the state have become approved by the Health Department to issue patients certifications.

The proposal is similar to Oklahoma’s medical cannabis rules and, according to the Marijuana Policy Project, almost 10% of that state’s population are registered medical cannabis patients. If that percentage were repeated in Pennsylvania, there would be about 1.2 million medical cannabis patients.

In the memo, Regan indicated he plans to continue “a conversation on building a responsible adult-use marketplace” but said boosting the medical cannabis program in the meantime makes sense as the state seeks to limit the number of people who cross state lines to buy cannabis legally.    

   

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Massachusetts Total Adult-Use Cannabis Sales Surpass $4B

1/30/2023

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Adult-use sales in Massachusetts on January 12 surpassed $4 billion since the market’s 2018 launch, the state Cannabis Control Commission announced last week. The sales were generated through 265 retail dispensaries and 14 delivery businesses. The state only began allowing delivery in 2021.     

In a statement, commission Executive Director Shawn Collins noted that demand for cannabis in the commonwealth “remains strong.” 

“As new jurisdictions come online, I am confident that licensees in the commonwealth will maintain the competitive edge by demonstrating to peers what it takes to operate a safe, effective, and equitable cannabis industry.” — Collins in a statement 

The agency indicated there has so far been 18 Economic Empowerment Applicant licensees, 29 Social Equity Program Participant licensees, and 50 Disadvantaged Business Enterprises – or state-certified minority-, woman-, or veteran-owned companies – issued to date and that 900 participants have benefitted from the state’s technical assistance and training program for social equity applicants.  

Adult-use cannabis sales in Massachusetts surpassed the $3 billion mark on May 18, 2022.  

In 2022, 71 new cannabis retailers opened for business across the state, along with three Marijuana Couriers and four Marijuana Delivery Operators. In total, they generated $1,483,898,510 in sales for the calendar year. 

The agency said social consumption licenses could be awarded this year. 

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Washington Proposals Would Legalize Home Grows & End Pre-Employment Drug Tests for Cannabis

1/30/2023

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Lawmakers in Washington are considering bills to reform aspects of the state’s cannabis policies, including allowing home cultivation and ending the use of testing for cannabis as a condition for getting hired.  

The home grow bill would allow adults to grow up to six plants and define anyone who possesses homegrown cannabis as an “ultimate user” – one who cannot sell the cannabis they produce and is not required to register with the state, FOX 28 reports.  

Cannabis cultivation would not be allowed in houses used to provide early childhood education and early learning services by a family daycare provider. Growers would also need to keep plants out of public view, the report says. The bill also includes punishments for growers who leave cannabis in an area where they should reasonably expect a person under 21 may gain access to it. 

The measure is set to be heard by the House Regulated Substances & Gaming Committee on February 2.  

The drug testing measure would prevent cannabis testing for pre-employment for jobs but would still allow companies to test workers while they are employed, the Spokesman-Review reports. State Sen. Karen Keiser (D) said she believes requiring individuals to take pre-employment drug tests for cannabis equates to “discrimination at this point.”    

“We really need to open our doors and not close them. It’s both a fairness issue and a workforce issue.” — Keiser via the Spokesman-Review 

Burl Bryson, executive director for The Cannabis Alliance, told the Spokesman-Review that were the “same approach … applied to alcohol, employers would refuse employment to anyone who enjoyed a beer or a glass of wine on the weekend.” 

“We all know that this is not a workable standard,” he said.  

Opponents argue that drug testing is important for employers in maintaining a safe work environment and that the employer is liable for any safety concerns that may result from an employee’s impairment. 

Jim King, with the Independent Business Association, though, described the current test for cannabis as “inadequate” because it doesn’t test for impairment, rather the mere presence of cannabinoids in a person’s system.  

State Sen. John Braun, leader of the Republican caucus, said he thinks the issue is more “technical” and less “legislative.” 

“It seems to me that folks who are in this industry, who participate in the use of the products ought to be very interested in improving their testing so that we can show without a doubt if, just because you legally use cannabis, that you’re not impaired when you come to work,” he told the Spokesman-Review. 

The measure was heard by Washington‘s Senate Labor and Commerce Committee on January 10 but it took no action on the proposal.  

 

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Wyoming House Committee Tables Bill to Ban Synthetic Cannabinoid Sales to Minors

1/30/2023

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Wyoming’s House Education Committee last week tabled a bill that would have imposed penalties for sales to and possession of synthetic cannabis products for individuals under 21 years old, Cowboy State Daily reports. The committee voted unanimously to curb the measure in order to allow further clarification of what defines a synthetic cannabis product. 

The proposal would have imposed fines between $250 and $750 to individuals caught selling the cannabis products to minors and those caught purchasing the products would have faced misdemeanor charges, including a $50 fine or community service. The misdemeanor charge could be expunged once the offender fulfilled those penalties, the report says.

Several individuals asked the committee to change the bill’s definition of “synthetic cannabis,” arguing that, as written, the measure would ban those under 21 from buying CBD products. During his testimony, cannabis researcher Sean Murphy said the bill should ban “synthetic isomers.”  

“What we should be doing is… protecting people and finding bad operators that are selling Delta 8, Delta 9. The term is synthetic isomers; these get you high whereas [CBD] products don’t get you high.” — Murphy via Cowboy State Daily 

The Wyoming Department of Health also backed changing the definitions included in the bill as written.    

Rep. Sandy Newsome (R), the bill’s sponsor, told the committee that the measure, as written, would not ban topical products and that she kept the CBD language in the legislation to “get away from this whack-a-mole theory” in which the Legislature bans new drugs individually rather than all at once.     

The bill could be reconsidered by the committee with or without changes.  

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FDA Will Not Issue CBD Regulations, Plans to Work with Congress Instead

1/27/2023

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The Food and Drug Administration on Thursday denied three petitions to allow the marketing of CBD products as dietary supplements and said that the agency would “work with Congress” on a regulatory pathway for the cannabinoid. 

The statement was issued by Principal Deputy Commissioner Dr. Janet Woodcock. 

“The use of CBD raises various safety concerns, especially with long-term use. Studies have shown the potential for harm to the liver, interactions with certain medications and possible harm to the male reproductive system. CBD exposure is also concerning when it comes to certain vulnerable populations such as children and those who are pregnant.” — Woodcock in a statement 

Woodcock said the decision would allow policymakers to develop “a new regulatory pathway for CBD … that balances individuals’ desire for access to CBD products with the regulatory oversight needed to manage risks.” 

Woodcock also said there are concerns about the potential risk of CBD for animals and that “people could be unknowingly exposed to CBD through meat, milk and eggs from animals fed CBD.”   

“Because it is not apparent how CBD products could meet the safety standard for substances in animal food,” she writes, “we also do not intend to pursue rulemaking allowing the use of CBD in animal food.” 

She added that the agency has “not found adequate evidence to determine how much CBD can be consumed, and for how long, before causing harm” and, therefore, “do not intend to pursue rulemaking allowing the use of CBD in dietary supplements or conventional foods.”   

An FDA report from 2021 noted that the CBD market has grown rapidly in recent years and estimated its worth at $4.6 billion. 

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Minnesota Senate Hears Cannabis Legalization Bill

1/27/2023

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A Minnesota Senate committee this week heard testimony on an adult-use cannabis legalization proposal – the first time any of the chamber’s committees have taken up a legalization measure, KARE11 reports. The bill, proposed by Sen. Lindsey Port (D), would allow retail cannabis sales and includes expungement provisions. 

Similar versions of the bill have passed the state House in the past but have never been taken up by the Senate – both chambers had been under Republican control, but Democrats won majorities in both the House and Senate last November.   

During the Public Safety Committee hearing, Port indicated the bill “will have 18 committee stops” before making it to the floor for a vote. A companion version in the House earlier this month passed the chamber’s Commerce Finance and Policy Committee.  

The measure was opposed during the hearing by the Minnesota Sheriffs’ Association and the Minnesota Trucking Association. Both organizations delivered opposition testimony during other committee hearings on the measure.  

On a voice vote, the committee passed the bill without recommendation, but expects to hear more on the bill in the future as it works its way through the legislative process.  

According to a Marijuana Moment report, the House version this week also passed the House Labor and Industry Finance and Policy Committee – the fourth committee it cleared in the chamber – and the Senate version passed the Commerce and Consumer Protection Committee.

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Northwest Missouri State University Partners with Green Flower for Cannabis Education Program

1/27/2023

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Northwest Missouri State University (NWMSU) is the latest U.S. college or university to partner with cannabis education company Green Flower for a cannabis certificate program, KSHB41 reports. So far, 170 students have enrolled in the program.  

In an interview with KSHB, NWMSU Associate Provost Dr. Jay Johnson, noted that the course “is not an advocacy program to help get people out of prison” and “not an advocacy program for people to use the drug or to take it medicinally,” rather a way to show people how the “plant works.” 

“There’s not a whole lot of education around it, other than the experience of people who have been doing this for years, perhaps in their basements.” — Johnson to KSHB 

The program includes four eight-week courses, including the Business of Cannabis, Cannabis Compliance and Risk Management, Cannabis Healthcare and Medicine, and Cannabis Agriculture and Horticulture. Students do not have to be enrolled in NWMSU to take the course. 

According to the Green Flower website, there are now 20 institutes of higher education offering Green Flower courses. Leafly’s 2021 Jobs Report shows there were 428,000 full-time employees in the U.S. cannabis industry.  

Missouri voters legalized cannabis for adult use during last November’s midterm elections. 

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CannaCon Is Coming to Biloxi, Mississippi

1/26/2023

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On February 24th and 25th, CannaCon, the nation’s leading cannabis conference and expo, will be making its Mississippi debut at the Mississippi Coast Coliseum in Biloxi.

With medical cannabis on track to hit shelves in January of 2023, CannaCon will provide a B2B venue for cannabis businesses, marijuana entrepreneurs, investors and community partners to showcase industry products, people, innovations, and technology. CannaCon will feature some of the world’s best genetics, the latest in growing and extraction products, dispensary displays, POS systems, packaging equipment, and so much more.

You will also have the opportunity to immerse yourself in learning from industry experts in the CannaCon Seminar Series, offering seminars covering cannabis industry operations, technology, and cultivation, as well as Mississippi’s hemp and cannabis laws.

In addition to two full days of seminars, CannaCon has partnered with the Mississippi Cannabis School which will be hosting The Budroom: A Dispensary Training Experience on February 24th where participants will enter a mock dispensary and be engaged in an immersive, hands-on learning experience.⁠

CannaCon will provide Mississippi cannabis businesses and enthusiasts a venue where they can shop directly from the manufacturer on our expo floor, learn from leading industry experts at our seminars, and network with thousands of like-minded individuals.

“CannaCon is the most amazing business-to-business cannabis convention of mainstream America,” said Marc Wasserman of The Pot Brothers at Law.

“The most fun you can have at a cannabis event. The best networking opportunity in the industry – by leaps and bounds,” said Thomas Warinner of MOBIUS.

Contact
Angelle Grelle | angela@cannacon.org

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Study: Cannabis Legalization Does Not Lead to Increased Use of Other Drugs

1/26/2023

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Cannabis legalization had not led to an increase in substance use disorders or increased use of other illicit drugs and should not be considered a “gateway drug,” according to a study by researchers from the University of Colorado. 

The study was published on January 5 in the Psychological Medicine journal.   

“Recreational legalization was associated with increased cannabis use and decreased [alcohol use disorder] symptoms but was not associated with other maladaptations. … Moreover, vulnerabilities to cannabis use were not exacerbated by the legal cannabis environment.” — “Recreational cannabis legalization has had limited effects on a wide range of adult psychiatric and psychosocial outcomes,” Jan. 5, 2023, Psychological Medicine 

The researchers also found no link between cannabis legalization and cognitive, psychological, social, relationship, or financial problems.  

Lead author Stephanie Zellers, who began the research as a graduate student at CU Boulder’s Institute for Behavioral Genetics, told KDVR that the study’s “results are reassuring” from a public policy perspective.  

“We really didn’t find any support for a lot of the harms people worry about with legalization,” she said. 

Researchers from CU Boulder, the University of Colorado Anshutz Medical Campus, and the University of Minnesota used data from the Institute for Behavioral Genetics and the Minnesota Center for Twin Family Research to study 4,000 twins to conduct the research. The twins came from Colorado, which has legalized cannabis for adult use and Minnesota, where it remains illegal. The researchers found that identical twins living in states where cannabis is legal used it 20% more frequently; but when they compared results and looked at cannabis use disorder, use of alcohol and illicit drugs, and psychotic behavior, the research found no correlation to legalization. 

Additionally, the study found that twins who lived in states where cannabis is legal showed fewer symptoms of alcohol use disorder. 

A study published last year in the Journal of Adolescent Health came to a similar conclusion, finding that cannabis legalization did not lead to “dramatic increases in the use of alcohol, cigarettes, and non-prescribed opioids.”

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Medical Cannabis Sales Launch in Mississippi

1/26/2023

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Medical cannabis sales officially launched in Mississippi on Wednesday nearly a year after Gov. Tate Reeves (R) signed the bill enacting the reforms. Voters had approved medical cannabis legalization during the 2020 election but the measure was ultimately struck down by the state Supreme Court which said the state’s ballot initiative process was outdated.  

 The state’s first sale occurred at The Cannabis Company in Brookhaven but did not occur without a hitch as there was a brief problem with seed-to-sale system METRC, according to a WAPT report.  

In order to qualify for the state medical cannabis program, patients must get certified by a participating physician, nurse practitioner, or optometrist and register with the state. Within 60 days of certification, patients must apply to the program using an online form. They will then receive an electronic identification card that can be used at dispensaries. Mississippi’s rules allow patients to purchase 3.5 grams per day, six days a week, or about 3 ounces per month. 

There are 25 qualifying conditions included on the state’s medical cannabis list. 

Currently, there are about 1,700 patients registered as medical cannabis patients in the state, according to Department of Health data outlined by WLOX. 

According to health department data, there have been more than 160 cannabis dispensary licenses issued so far. 

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New York Committee Says Office of Cannabis Management Not Following Open Meetings Law

1/26/2023

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New York’s Committee on Open Government last week issued an advisory opinion outlining concerns that the Office of Cannabis Management (OCM) is not following the state’s open meeting rules. The committee pointed to two OCM meetings for which notice was provided less than a week in advance.  

The opinion was issued at the request of Tim Mitchell, a medical cannabis patient, who was concerned about OCM and Dormitory Authority public meeting practices.  

The opinion was first reported by Syracuse.com. 

One meeting was focused on the OCM’s consideration of a “Limited Partnership Agreement (LPA) to be entered into the New York Social Equity Cannabis Investment Fund L.P” which the agency said, “was a time-sensitive matter.” The other, also scheduled less than a week in advance, was to discuss “recent developments in pending litigation and employee related matters.”     

“Ultimately, whether the circumstances justify a public body scheduling a meeting less than one week in advance and upon less than seventy-two hours of notice is a fact specific determination that can only appropriately be made by the judiciary.” — Committee on Open Government, Jan. 20, 2023 

The committee also points to a December meeting where OCM members entered into an executive session – which allows them to meet out of public view – but no reason was given by OCM members to enter the session. 

“…As such, the motion failed to inform the public that the topic or topics for discussion in such session fell under one of the enumerated grounds for entry into an executive session,” the committee said in the report. 

Mitchell, in an interview with Syracuse.com, described the committee’s response as “good” and that the board “acknowledged that some things didn’t happen the way they probably should have.”  

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Avaans Adds Even More Value to Its Cannabis PR Sprints

1/25/2023

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Avaans Media Celebrates 420 with Two Cannabis Industry Offerings

JANUARY 18, 2023 (Los Angeles) – Avaans Media, one of the country’s leading cannabis PR firms, is once again offering PR Sprints – micro contracts for consumer products – for the spring and early summer months.

The program also includes inclusion into the newly launched Avaans Gift Guide, which is a free marketing listing for the cannabis industry, which will be shared throughout the spring season with cannabis influencers and cannabis journalists.

“420 is more than a day for the cannabis industry, it’s really the kickoff of the summer season, with it’s concerts, beach gatherings, and easy evenings with friends,” said Tara Coomans, CEO of Avaans Media.

PR Sprints are notable for two reasons. First, the contract length is considerably shorter than the typical PR contract and can save brands over 80% on an annual contract. Second, there are a limited number of seats available in each cohort.

“We can offer this unheard-of flexibility during certain times of the year, and only to a select number of clients,” continued Coomans.

Avaans’ PR Sprints are perfect for new-to-market products and regions like the east coast to get on the radar of national journalists.

“This is really an exciting year for cannabis brands – from Los Angeles to Long Island, we’re seeing diversity in cannabis founders like never before, and they’re creating innovative brands from cannabis beverages to D8 products, and everything in between,” said Coomans.

Cannabis consumer products can learn more here: https://avaansmedia.com/contact-us/cannabis-consumer-product-pr-sprint/

About Avaans
Avaans is the blending of Coomans’ digital communications agency and cannabis PR agency, Primo PR. Today Avaans Media offers digitally savvy bespoke PR for emerging industries, including cannabis, from startup through IPO. Avaans clients are highly regarded and ambitious and include consumer tech, CPG or DTC brands. Avaans Media successes, along with award-winning team members has allowed Avaans to become one of the top PR agencies in the country.

Media Contacts
press@avaansmedia.com

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FDA Releases Final Guidance for Cannabis Pharmaceutical Research

1/25/2023

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The federal Food and Drug Administration (FDA) on Tuesday released its proposed final guidance on research related to the development of human drugs containing cannabis or cannabis-derived compounds. The guidance would allow researchers to use hemp products derived from any source if deemed “of adequate quality” by the FDA but would not allow THC-rich cannabis from any source, requiring only products from sources authorized by the Drug Enforcement Administration (DEA). 

Under federal law, hemp products must contain less than 0.3% THC. 

After decades of allowing cannabis for research purposes to be grown at only one site – the University of Mississippi’s National Center for Natural Products Research – the DEA opened up applications for new growers in 2020. In all, there are now seven “Bulk Manufacturer Marihuana Growers” approved by the DEA.  

According to the guidance document, cannabis and cannabis-derived compounds would be held to the “same regulatory standards as any other botanical raw material, botanical drug substance, or botanical drug product” and researchers would have to follow the agency’s 2016 guidance for Botanical Drug Development. 

The FDA notes the guidance “does not address development of fully synthetic versions of substances that occur in cannabis, sometimes known as cannabis-related compounds (e.g., dronabinol), which are regulated like other fully synthetic drugs.” 

The guidance is still in the public comment period and must complete that process before becoming policy.  

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Real Estate Developer Suing Pontiac, Michigan Over Failure to Enact Cannabis Rules

1/25/2023

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The city of Pontiac, Michigan and its clerk are being sued by a real estate developer due to the delays made by officials in enacting cannabis rules, the Oakland Press reports. Rubicon Real Estate Holdings and Joseph Brown, of Brown Design Consultants, are seeking $60 million claiming the city’s delays are responsible for Rubicon’s lender withholding $45 million in loans needed to rehabilitate seven parcels in Pontiac. 

Pontiac voters in 2018 voted to allow cannabis businesses to operate – by a single vote – the Morning Sun reports, but city officials have subsequently dragged out the permitting process.   

As part of the property purchase agreement, Rubicon agreed to submit plans and applications for a cannabis license. To finance the renovations, Rubicon negotiated leases for the new space with several companies, including two cannabis businesses, Family Rootz and Pharmaco. According to the lawsuit outlined by the Press, Pharmaco’s 15-year lease is worth between an estimated $37.5 million in rent while Family Rootz’s lease is worth between $9 million and $12 million over three years for two properties.   

In 2021, Sixth Circuit Judge Yasmine Poles ordered the city to approve all the pending permits related to the redevelopment and allow Rubicon and its tenants to move forward, the report says. Her ruling notes that the case was not considered closed and the recent lawsuit is based on Poles’ opinion. 

The lawsuit also claims that the city acted punitively toward Brown, who had been involved in a separate lawsuit in 2021 that ended in a judgment against the city.  

The attorney for Rubicon and Brown, Cindy Victor, is asking for a jury trial. 

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NYC College Partners With Cannabis Union for Industry Fundamentals Course

1/25/2023

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Manhattan’s LIM College is partnering with the Association of Cannabis Workers (ACW) Local Union 420 to offer a four-week, online Cannabis Industry Fundamentals course for ACW members. LIM College is the first college in the nation to offer Bachelor of Business Administration and Master of Professional Studies degrees in the Business of Cannabis.  

The course is expected to begin in early March and cover the history and current state of the cannabis industry, career paths in cannabis, and marketing cannabis products. The course will also help students to understand consumers, regulations, compliance, and supply chain considerations, the college said in a press release. The program will be taught by Michael Zaytsev, an industry expert and academic director of cannabis degree programs at LIM College. 

“The cannabis industry needs graduates who can hit the ground running with in-depth knowledge of the unique nature of the business. LIM is leading the way in readying students who will have cannabis-specific knowledge and credentials in hand, putting them head and shoulders above others entering the industry. We are very pleased to collaborate with ACW Local 420 to offer this opportunity to its members.” — Zaytsev in a statement 

Course participants will also be invited to on-campus LIM College events and virtual sessions where they can network with potential employers and others who share their interest in the cannabis industry. 

In a statement, ACW Local 420 President Josh Gottlieb described the course as “a great first step on a career path that is expected to provide tremendous opportunities.”  

“LIM College is a pioneer in cannabis education,” he said, “and our decision to collaborate with them will help us ensure that ACW Local 420 members have access to the cannabis industry’s best training, jobs, and wages.” 

Course tuition is $750, and LIM College will provide a certificate of completion for students who complete the course. 

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Working With, Not Against, IRS Revenue Code 280E

1/25/2023

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Editor’s note: This editorial was contributed by Faith Bygd, advisor for Breakaway Bookkeeping & Advising.

Being a legal cannabis company, you are likely familiar with the IRS Tax Code 280E. This tax code sets forth financial hurdles directly related to the amount of tax liability you owe the government at the end of the year.

From cultivators to retail shop owners, medical, or adult-use, 280E places financial struggles on legal businesses. The limitations around what the IRS will allow you to recognize as legitimate business write-offs are unclear and present significant problems to those owning companies in the cannabis industry.

While non-cannabis businesses can write off any expense that goes into the cost of running the company, this is not the case for cannabis businesses. We need to get used to it: this will remain in effect until cannabis is no longer federally classified as a Schedule 1 Illegal Substance. Brass tacks: The federal government still views cannabis as “illegal” and any business that sells it as trafficking — even though individual states have voted to legalize it. The federal government is not in the business of helping to sell illegal substances… but they are in the business of taxation. Cannabis businesses can stay in business — if they play along.

Why is 280E so confusing? For historical context, the reason 280E exists is due to the monumental case of Edmondson v. Commissioner. In 1981, a convicted drug dealer, Jeffery Edmondson, was fined and held liable for back taxes owed on the money he made from illegally selling cocaine, amphetamines, and marijuana. He brilliantly filed returns for the years he was being held accountable for and applied write-offs, including the costs of the drugs themselves, to reduce the amount of tax liability he had, which in turn reduced his interest and fines due. The court determined he was allowed to do so because, as the law was written, that was a legal approach to the tax burden. The IRS quickly reacted with the enactment of Tax Code 280E, passed into law in 1982. The new law would disallow write-offs to be applied to the total revenue if the revenue was created through federally illegal activity.

Currently, cannabis still sits on the list of Schedule 1 Illegal Substances, which is in the same category as harmful substances such as meth, heroin, and ecstasy. Marijuana is the only substance on the list that is legal in 39 states. But until it is recognized as legal by the federal government, 280E’s frustration will remain a daunting reality.

Have no fear! There is a way to work with the 280E instead of against it!

280E allows cannabis companies to deduct expenses that it has to produce the product for sale, just not any cost related to the sale itself. Expenses that are 100% direct in the production of your product are considered COGS, meaning cost-of-goods-sold. COGS are deductible.

How can you put this into practice? Scrutinize your bookkeeping and accounting workflows by creating a tight cannabis-friendly chart of accounts. Be sure to include all acceptable COGS above the gross revenue line. Anything below the gross revenue line will be taxed federally, but your state may allow you to deduct these expenses from your state income tax.

Let’s dive a little deeper into how this breaks down:

Grow equipment/supplies/materials. These expenses are direct and 100% used for the process of creating your product and are considered tax deductible from your total revenue.

Repairs and maintenance directly related to the grow buildings. Contractors that perform services directly related to the grow or production space will count towards the COGS amount.

Wages for cultivation and production. Keep meticulous records of employee hour breakdowns and record payroll on your books by these breakdowns. Make sure your books match the payroll records in case of an audit. Talk to your tax CPA about filing as a S-Corp to include the owner’s wages in the payroll. In most non-cannabis businesses, the owners’ wages are considered admin (below the gross revenue line). However, cannabis owners working directly with the cultivation can possibly apply some of their wages to the allocations of COGS. Discuss this with your tax preparer and bookkeeper to devise a good plan.

Utilities directly related to the grow or production areas. Utilities used in retail or office space are not deductible. Ask your tax CPA about the best workflow to separate out your utility bill. Your monthly bookkeeper should be tracking the bill splits to ensure a constant clear picture of where your financials stand from month to month.

The biggest secret weapon to working with 280E is finding a financial partner who can help you track these expenses as they are incurred. This does not mean scraping together a handful of receipts at the end of the year. A stellar bookkeeper is imperative to your cannabis’s business success. A bookkeeper who knows the importance of breaking down COGS is a necessity.

Currently, the IRS has been lenient about auditing cannabis companies, but that will not be the case for long. If your company is audited, they can go back 3-6 years. Do you have those books in order? Let it be your 2023 New Year’s Resolution to organize your accounting. This will aid in the success and longevity of all of your hard work and efforts and help you work with 280E.

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Report: Cannabis Market Could Grow to $48B by 2027

1/24/2023

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A new report by Emergen Research suggests the global cannabis market could grow to $48.29 billion by 2027, representing a CAGR of 24.6%. Emergen said in 2019, the market was worth $8.26 billion. 

“Proven medical effects of cannabis, legalization, active research genetic development and modification of the plant, and developments in cannabis intellectual property rights have all been recognized as cannabis market drivers. The market is dominated by North America. Because cannabis is widely utilized for therapeutic purposes in the United States, the industry has evolved and matured tremendously. Cannabis, as a psychoactive drug, continues to be popular among recreational and medicinal users in the United States.” — Emergen in a press release 

The report notes that the North American duo of the U.S. and Canada currently “dominates” the market. Cannabis is legal in Canada and individual U.S. states and territories have legalized cannabis for either adult or medical use. Emergen suggests that the Asia Pacific region will account for the fastest growth through 2027 but notes that many European nations have begun to liberalize their cannabis laws; including Germany, which legalized medical cannabis in 2017, and France which legalized medical cannabis use in 2013 and five years later reduced penalties for possession.

Italy also legalized medical cannabis use in 2013 and has effectively decriminalized personal possession, while the United Kingdom legalized some medical cannabis products in 2018. 

Emergen notes that industry market trends include the infusion of both alcoholic and non-alcoholic beverages and “tremendous demand from the therapeutic market.”  

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California Cannabis Company Files RICO Lawsuit Against City and Former Officials

1/24/2023

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A California cannabis company is suing the city of Baldwin Park and several officials under the federal Racketeer Influenced and Corrupt Organizations Act, or RICO, alleging that the city’s rollout of retail cannabis was rigged to benefit the officials and their allies, the San Gabriel Valley Tribune reports. The lawsuit appears to be the first of its kind – a cannabis company suing government officials under RICO. 

The federal lawsuit, filed on January 18 by David Ju, names Baldwin Park, former City Attorney Robert Tafoya, former Deputy City Attorney Anthony Willoughby II, former Councilmember Ricardo Pacheco, former Compton Councilmember Isaac Galvan, former Baldwin Park Mayor Manny Lozano, and former Chief Deputy Cty Clerk Lourdes Morales as defendants. 

In the lawsuit, attorney David Torres-Siegrist alleges the defendants “acted in concert to orchestrate a swindle on an elderly man dying of cancer who poured his life savings into a venture that was destined for failure from the get-go and nothing more than a collusive scheme marred by bribery and corruption.”   

“Plaintiffs allege that the pattern has been one of racketeering activity involving multiple criminal acts, including but not limited to, bribery, kickbacks and other improper relationships throughout the application and granting process, as well as defrauding individuals, such as plaintiffs, through the use and abuse of their positions within the city.” — Torres-Siegrist, in the lawsuit, via the Tribune.   

In 2020, the Federal Bureau of Investigation executed search warrants at Tafoya’s office and at the homes of Galvan and San Bernardino County Planning Commissioner Gabriel Chavez as part of a cannabis-related corruption inquiry. Chavez agreed to a plea deal last October on federal bribery charges and agreed to work with authorities, according to a Pasadena Star News report.  

Pacheco ultimately agreed to a plea deal with federal investigators where he claimed under penalty of perjury that Galvan and Tafoya were involved in his efforts to solicit bribes from cannabis companies looking to operate in Baldwin Park, the Tribune reports. 

Ju’s lawsuit alleges that Willoughby II paid less than $40,000 to obtain the development agreement for cannabis company Tier One and then sold it to Ju for “hundreds of thousands of dollars” and paid Galvan $50,000. Tier One had received approval to operate in the city but was unable to move forward because Baldwin Park’s cannabis ordinance prohibited ownership transfers of cannabis firms.  

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Maryland Gov. Releases Funds Withheld by Predecessor to Help Adult-Use Cannabis Rollout

1/24/2023

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Maryland’s new governor last week, on his first full day in office, released $46.5 million related to the state’s Cannabis Reform Act, which will support its forthcoming adult-use cannabis industry, Maryland Matters reports. The funding had been withheld by the previous administration. 

Gov. Wes Moore (D) said releasing the funds marked “a fundamental shift on how the governor’s office is going to approach the budget and the office’s relationship with the General Assembly.” In all, Moore released $69 million in funds related to a variety of projects that had been withheld by former Gov. Larry Hogan (R). 

Of the $46.5 million in cannabis funds, $40 million is earmarked for a Cannabis Business Assistance Fund in the Department of Commerce to support the rollout of the adult-use cannabis industry, $5 million is set for the Cannabis Public Health Fund in the Department of Health, which could be used to fund research on cannabis legalization or for substance abuse treatment, and $1.5 million is earmarked for the Criminal Justice Information System to comply with provisions of the act, including automatic expungement of prior simple possession cases.   

Maryland’s adult-use cannabis industry could be worth $1 billion in about two years, according to Cannabis Public Policy Consulting data outlined by Maryland Matters. Adult-use cannabis sales in Maryland are expected to commence on July 1.  

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Nevada Regulators Warn of Unapproved Pesticide Use Affecting Hundreds of Products

1/23/2023

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Nevada officials last week issued a bulletin warning about the use of unapproved pesticides on products harvested by Clark Natural Medicinal Solutions between July 23, 2021, and January 5, 2023. 

The affected product list includes 118 edible products, ranging from gummies to chocolate bars, to the brand’s vegan products; 42 infused pre-rolls; and 222 concentrates, including vape cartridges. The products are carried at 105 dispensaries throughout the state, according to Cannabis Compliance Board (CCB) data. Sales of the products occurred between August 31, 2021, through January 9, 2023.  

The CCB is advising customers to avoid the products and noted that the pesticide in question, Ethephon, is not on the list of pesticides that testing facilities must test for, and their test methods are not set up for the detection of Ethephon.       

“There is no reason to believe the cannabis sales facilities or cannabis testing facilities had any knowledge of the use of this unapproved pesticide.” — CCB, Public Health and Safety Bulletin 2023-01 

The notice is the first of 2023 for Nevada regulators. The CCB issued two health and safety bulletins last year; three in 2021, and one in 2020. There have been no adverse effects reported by consumers associated with the Clark products.

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