For this November member spotlight, we catch up with Cody Bass of Tahoe Wellness Cooperative, a patient-run medical cannabis cooperative in South Lake Tahoe, California. Cody talks with us here about his cooperative’s mission and values, his experience being raided earlier this year, and the new legislation in California. Cody currently serves on NCIA’s board of directors.
Cannabis Industry Sector:
Medical Cannabis Providers
NCIA Member Since:
2012
How do you uniquely serve the cannabis industry?
My life’s work is to free the cannabis plant. The perspective from working directly with the plant for nearly two decades has allowed me the vision to create a model that is unique. One thing that is unique about us is we use glass packaging at TWC for almost everything, which has created close to zero waste through our jar reusing program. We take a one dollar deposit on the jar when you purchase medicine and when you bring your jar back, you get your dollar deposit back. We installed a commercial dishwashing station and have virtually eliminated waste from our sales. This is one of many conscious standards and ethics you will find throughout Tahoe Wellness Cooperative.
Tahoe Wellness Cooperative
Why should patients seeking medical cannabis go to Tahoe Wellness Cooperative?
To get the highest quality, pure cannabis in California, in a safe space from a knowledgeable and compassionate crew. Our staff is very knowledgeable about cannabis and will ensure a patient has the understanding to choose the medicine they need. Your contribution is supporting a cooperative that is providing a variety of services to our entire community free-of-charge at our Community Center, which is open to all. TWC’s compassion program provides cannabis for terminally-ill patients at no cost. There is also a safe space for our patients to medicate, as well as a hash bar where we teach our patients how to make solvent-free hash.
Earlier this year in the summer, your cooperative in California was raided by local authorities. Can you tell us more about that experience, and how you’ve moved forward?
On June 1st, we experienced a SWAT-style raid on TWC from the El Dorado County Sheriff’s office. This came as a major surprise to all of our members and broader community. Even our local police department was shocked and unaware. We are licensed by the City of South Lake Tahoe and had gone through the renewal process with the city, with which we have worked cooperatively, hand-in-hand over the past seven years. We work and communicate well together. We operate under a local ordinance which has been effectively removing licensed operators that were operating illegally. When our local police department produced evidence that showed two operators were doing illegal things, both of their licenses were revoked and they were closed. So why would the Sheriff’s office raid a city-licensed dispensary that was current with all tax filings and the local ordinance’s current requirements? At this point we still don’t have all the details, and we are pursuing the District Attorney and Sheriff’s office to get our property and damages for their clearly unlawful action. However, I don’t have any other info at this time because I would only be speculating – better to wait for the facts.
As many know, I have been very opposed to the legislation signed by Governor Jerry Brown two weeks ago. I am not against regulations; in fact, Tahoe Wellness Cooperative has been operating under a local ordinance for over four years and paid all the required taxes. What I am so opposed to is what I see as a licensing scheme because of the distribution license. Having a license is great for producing and dispensing cannabis, but not for the distribution. Here in California, we produce half of the cannabis that America currently consumes. If we don’t create markets that are approachable by the buyer and the farmer, we are only further driving cannabis underground. In California, we must re-create the open market with an initiative in 2016 that allows for farmers’ markets, auction houses, or cooperatives, where distributors could exist, but not be the only choice. The distributor-only legislation is what would destroy the open market of cannabis, the biggest cottage industry that could ever hit America.
Why did you join NCIA?
NCIA was the first organized effort to step outside of the pure advocacy related to cannabis and form a membership of responsible cannabis pioneers that could see the need to change issues on a national level that are crucial to the evolution of cannabis. So really I joined NCIA for a unified effort. Since that time it has been remarkable to witness how many people NCIA has educated on pure cannabis knowledge, best practices, and compliance.
In this month’s edition of NCIA’s video newsletter, meet the entire NCIA team working on your behalf.
(Bonus: canine mascots!)
Not sure you’ll be making it to Vegas just yet? You can still support NCIA’s fifth anniversary by making a generous contribution to our annual fundraising drive today! All proceeds support our work defending the cannabis industry in Washington, D.C.
Welcome to the NEW NCIA Website!
If you’re reading this post, you’ve probably noticed that the NCIA website has gotten quite a face lift!
We hope you like our bright new look. We think it’s cleaner, fresher, and more modern – a positive reflection of the professional, forward-looking businesses we represent.
First of all, the NCIA blog can now be read by anyone, not just members. That means a bigger audience for the guest posts our members submit, and it means you can share those posts with anyone you want. Over the last several months, the blog has been full of valuable information – much of it contributed by you – and we want to give that information its fullest chance to shine.
The other exciting change is that NCIA members can now update your business and contact information right through the website. Did your mailing address change? Want to add your website to your record? Maybe you want to update the email address or phone number we use to contact you about your membership.
Just click the white “Member Login” button at the top right of the NCIA home page and log in with your new Username and Password. (We sent an email to your primary contact email address this week with that information. If you didn’t get it, check your spam folder and then contact us at info@thecannabisindustry.org.)
From there, hold your mouse over the “My Profile” tab at the left, and you’ll see all the options for adjusting your information, including changing your password. With this new function, we can keep your member records more current, improve our online member directory, and give you the convenience of updating your contact information any time you want.
We hope you enjoy the new look and features of our updated website! Please let us know if you run into any problems or have any suggestions for future improvements. And, as always, thank you for supporting your industry’s voice for advocacy, education, and community!
The 5 Critical Pieces of Cannabis Legislation You Need to Know About
by Michelle Rutter, Government Relations Coordinator
As the cannabis industry has continued to thrive and expand, the number of bills in Congress dealing with the issue has done the same. Between the House of Representatives and the Senate, there are well over a dozen bills that address the conflicts between state and federal cannabis policy. NCIA’s lobbying efforts focus primarily on banking access and the unfair taxation caused by Section 280E, but we also advocate for other bills that are crucial for the industry. Below are my choices for “The 5 Critical Pieces of Cannabis Legislation You Need to Know About”:
BANKING H.R.2076: Marijuana Businesses Access to Banking Act of 2015 Introduced by: Rep. Ed Perlmutter (D-CO, 7th District) Last Action: Referred to House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on June 1, 2015. Summary: This bill would provide a safe harbor for depository institutions providing financial services to a cannabis-related business insofar as it prohibits a federal banking regulator from: (1) terminating or limiting the deposit or share insurance of a depository institution solely because it provides financial services to a marijuana-related legitimate business; or (2) prohibiting, penalizing, or otherwise discouraging a depository institution from offering such services.
S.1726: Marijuana Businesses Access to Banking Act of 2015 Introduced by: Sen. Jeff Merkley (D-OR) Last Action: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs on July 9, 2015. Summary: Although the House and Senate cannabis banking bills are companions, the bill introduced by Sen. Merkley is slightly more detailed in its language.
The Senate bill would prevent federal banking regulators from: prohibiting, penalizing or discouraging a bank from providing financial services to a legitimate state-sanctioned and regulated marijuana business; terminating or limiting a bank’s federal deposit insurance solely because the bank is providing services to a state-sanctioned marijuana business; recommending or incentivizing a bank to halt or downgrade providing any kind of banking services to these businesses; or taking any action on a loan to an owner or operator of a marijuana-related business.
The bill also creates a safe harbor from criminal prosecution and liability and asset forfeiture for banks and their officers and employees who provide financial services to legitimate, state-sanctioned marijuana businesses, while maintaining banks’ right to choose not to offer those services. It would also require banks to comply with current Financial Crimes Enforcement Network (FinCEN) guidance, while at the same time allowing FinCEN guidance to be streamlined over time as states and the federal government adapt to legalized medicinal and recreational marijuana policies.
280E H.R.1855: Small Business Tax Equity Act of 2015 Introduced by: Rep. Earl Blumenauer (D-OR, 3rd District) Last Action: Referred to House Committee on Ways and Means on April 16, 2015. Summary: Amends the Internal Revenue Code by adding language at the end of Section 280E that would exempt a trade or business that conducts marijuana sales in compliance with state law from the prohibition against allowing business-related tax credits or deductions for expenditures in connection with trafficking in controlled substances.
S.987: Small Business Tax Equity Act of 2015 Introduced by: Sen. Ron Wyden (D-OR) Last Action: Referred to Senate Committee on Finance on April 16, 2015. Summary: This Senate bill is the companion to the H.R. 1855 described above. As such, the summary is the same.
STATES’ RIGHTS AND RESPONSIBILITIES H.R.1940: Respect State Marijuana Laws Act of 2015 Introduced by: Rep. Dana Rohrabacher (R-CA, 48th District) Last Action: Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on May 15, 2015. Summary: Amends the Controlled Substances Act to provide that the provisions of the Act related to cannabis shall not apply to any person acting in compliance with state laws relating to the production, possession, distribution, dispensation, administration, or delivery of marijuana
CIVIL ASSET FORFEITURE H.R.3518: Stop Civil Asset Forfeiture Funding for Marijuana Suppression Act of 2015 Introduced by: Rep. Ted Lieu (D-CA, 33rd District) Last Action: Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on October 5, 2015. Summary: This bill would prevent the Drug Enforcement Administration (DEA) from using federal forfeiture funds to pay for its Domestic Cannabis Eradication/Suppression Program. Additionally, the bill would ban transferring property to federal, state or local agencies if that property “is used for any purpose pertaining to” the DEA’s marijuana eradication program.
MEDICAL CANNABIS S.683: Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2015 Introduced by: Sen. Cory Booker (D-NJ) Last Action: Referred to Senate Committee on the Judiciary on March 10, 2015. Summary: Amends the Controlled Substances Act (CSA) to provide that control and enforcement provisions of such Act relating to marijuana shall not apply to any person acting in compliance with state law relating to the production, possession, distribution, dispensation, administration, laboratory testing, or delivery of medical marijuana.
Transfers marijuana from schedule I to schedule II of the CSA.
Excludes “cannabidiol” from the definition of “marijuana” and defines it separately as the substance cannabidiol, as derived from marijuana or the synthetic formulation, that contains not greater than 0.3% delta-9-tetrahydrocannabinol on a dry weight basis.
Prohibits a federal banking regulator from: (1) terminating or limiting the deposit insurance of a depository institution solely because it provides or has provided financial services to a marijuana-related legitimate business; or (2) prohibiting, penalizing, or otherwise discouraging a depository institution from providing financial services to a marijuana-related legitimate business.
Provides depository institutions that provide financial services to a marijuana-related legitimate business protection under federal law from federal criminal prosecution or investigation, criminal penalties, and forfeiture of legal interest in collateral solely for providing financial services to such a business.
Directs The Department of Health and Human Services to terminate the Public Health Service interdisciplinary review process described in the guidance entitled “Guidance on Procedures for the Provision of marijuana for Medical Research” (issued on May 21, 1999), and also demands the Drug Enforcement Administration to issue at least three licenses under CSA registration requirements to manufacture marijuana and marijuana-derivatives for research approved by the Food and Drug Administration. Also directs the Department of Veterans Affairs (VA) to authorize VA health care providers to provide veterans with recommendations and opinions regarding participation in state marijuana programs.
H.R.1538: Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2015 Introduced by: Rep. Steve Cohen (D, TN-9) Last Action: Referred to the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations on April 21, 2015. Summary: This House bill is the companion to S. 683 described above. As such, the summary is the same.
In addition to these crucial pieces of legislation, there are other bills relating to cannabis that have been introduced to Congress on issues like CBD, a federal excise tax on cannabis, veterans’ access, and hemp. Cannabis advocates and NCIA members should continue to participate in NCIA’s events and lobbying efforts in addition to contacting their elected officials in order to see cannabis continue to progress in Washington, D.C. and on Capitol Hill.
Guest Post: Raising Money 101 – What’s an Offer and Why Does it Matter?
This is article is the first in a series, which will provide a general overview of the laws that impact raising money in the cannabis industry.
Any business owner planning to raise capital should consider the federal Securities Act of 1933, commonly referred to as the “Securities Act.” In addition to federal law, each state has its own set of laws that regulate securities sales, commonly referred to as the “Blue Sky Laws.” Both the Securities Act and any applicable Blue Sky Laws must be complied with in connection with the sale of securities – a security being proof of ownership or debt that has been assigned a value and may be sold (stocks and bonds are examples). Both the Securities Act and the Blue Sky Laws regulate the sale of securities by prohibiting the offer and sale of unregistered securities (other than pursuant to specified exceptions) and requiring companies to provide investors disclosure of all material facts concerning the securities for sale.
Crucially for business owners, it’s not only the actual documents to raise money that are governed by the Securities Act: so are those initial business plans and executive summaries that might be circulated to gauge interest. Ensuring that your business plans are not violating any securities laws is the focus of this article.
In analyzing whether a transaction or communication is in compliance with the Securities Act and Blue Sky Laws, it’s helpful to think through the following questions:
Does the transaction or communication constitute an offer or sale?
Is the offer or sale of a security (as defined in the Securities Act and the Blue Sky Laws)?
If there is an offer or sale of a security, is the security properly registered with federal and state authorities?
If there is an offer or sale of a security and the security is not registered, does the transaction fall within one or more of the specified exemptions to registration?
As you assess your materials for compliance, begin by asking whether an offer has been made. If a transaction or communication does not constitute an offer, then compliance with state and federal securities law is not a concern. However, if an offer is unintentionally made – a common mistake – it may trigger a violation of securities law since it is unlikely that the unintentional issuer will have taken into account the necessary disclosure items and determined the relevant exemption to registration. Note that in the context of securities law, “issuer” means any company that issues or proposes to issue a security.
What, then, is an offer, from the federal standpoint and from that of the state of Colorado? Section 2(a)(3) of the federal Securities Act defines “offer” as “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” Under the Colorado Securities Act, “offer to sell” includes any attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value and “offer” means an offer to sell or an offer to purchase. What constitutes an offer, furthermore, may be a matter of perceived intent rather than explicit proposal: the SEC has noted that “[t]he publication of information and statements, and publicity efforts, generally, made in advance of a proposed financing, although not couched in terms of an express offer, may in fact contribute to conditioning the public mind or arousing public interest in the issuer or in the securities of an issuer in a manner which raises a serious question whether the publicity is not in fact part of the selling effort.” As a practical matter, these definitions, as well as the SEC’s guidance, mean that many communications that would not be considered offers under contract law may well be considered offers for purposes of state and federal securities law.
From a practical point of view, then, how should an entrepreneur approach an action that might be considered an offer – distributing information about a new company, for example? To mitigate risk of a securities violation, consider the following factors before circulating information about your business:
Include Appropriate Disclaimers: If you do proceed with distribution, any documentation provided to potential investors should contain disclaimers that clearly indicate that the provided information is not an offer or a solicitation of an offer to buy securities. Note that such disclaimers do not necessarily mean the document will not be considered an offer.
Require Further Information: Any documentation should also state explicitly that further information about a purchaser will be required before an offer can be made.
Minimize Details: Generally speaking, the fewer details provided about a potential security, the better. Even high-level details can result in a document being considered an offer.
Ensure Accuracy: Make absolutely sure that any information provided is correct and not misleading (i.e., do not claim that cannabis is legal in the United States, note that it remains illegal at the federal level). Avoid selective disclosure and be prepared to stand behind any claims made.
Follow Best Practices: Every communication should adhere to best practices regarding offerings in general (e.g., avoiding general solicitations, keeping track of distributed documents, etc.)
Seek Legal Counsel: When in doubt, speak to a qualified securities attorney. It’s always easier to do things right the first time, whereas it may not be possible to fix certain mistakes.
This information is educational only and shall not be construed as legal advice. Please consult your attorney prior to relying on any information in this article.
Charlie Alovisetti, Vicente Sederberg LLC
Charlie Alovisetti is a senior associate at Vicente Sederberg LLC. Prior to joining Vicente Sederberg, Charlie worked as an associate in the New York offices of Latham & Watkins and Goodwin Procter where his practice focused on representing private equity sponsors and their portfolio companies, as well as public companies, in a range of corporate transactions, including mergers, stock and asset acquisitions and divestitures, growth equity investments, venture capital investments, and debt financings. In addition, Charlie has experience counseling portfolio and emerging growth companies with respect to general corporate and commercial matters and all aspects of compensation arrangements, including executive employment and consulting agreements, stock option plans, restricted stock plans, bonus plans, and other management incentive arrangements. Charlie has experience in both U.S. and cross-border transactions, and has advised clients across a range of industries including technology, manufacturing, software, digital media, energy and clean tech, healthcare, and biotech. He holds a Bachelor of Arts, with honors, from McGill University and a law degree from Columbia Law School, where he was a Harlan Fiske Stone Scholar.
*Currently only admitted in New York
Guest Post: Legislation, Rule-Making, and the Necessity to Be a Unified Industry
In the 2015 legislative session, much changed in Washington State cannabis law. As with any change in cannabis law in any state, there is much drama that happens after such a change. Usually there is much bickering, finger-pointing, rumors, and misinformation in general. People seem to come out of the woodwork with often nonsensical interpretations of the new law. This often makes me wonder where they were during the legislative session when they may have been able to change the details that seem to trouble them now.
The fact is that all laws passed are imperfect. They are going to need to be fixed and those fixes are going to need to be fixed. There is not just one person that writes what is passed as law. There is a plethora of authors that include industry, interest groups, law enforcement, localities, citizen groups, and many others. Omnibus laws are going to advance some things and create problems elsewhere. This is to be expected.
The thing about law is, once it has passed and been signed by the Governor, it is what it is until the next session. This is not the time for bickering for those that are serious about making positive change. This becomes a time to work together. Once a bill becomes law, the legislative verbiage is put through a process called “rule-making.” In this rule-making, things can be steered within the framework of the law. In addition, the time before the next legislative session is a perfect time to solicit consensus and to author and shop legislative verbiage to potential bill sponsors.
After passage, no matter whether you like the law or not, it needs to be studied. It should be done dispassionately. It should be done section by section. You should ask yourself:
What does this section say?
What is the legislative intent of the section?
What is the synopsis of the section?
What rule-making does this section call for and by which agency?
Are there things in this section that need to be changed in subsequent legislative sessions?
You should write your answers to these questions down so that you can refer to them later. This is the way that you can be most effective at influencing rule-making and achieving success in subsequent legislative sessions. Really, how are you to influence rule-making when you don’t know what rule-making is going to happen with which agency? How are you going to achieve consensus enough to get changes in a legislative session when you don’t know specifically what needs to change?
We in the cannabis industry need to stop the self-destructive habit of thinking of legislative changes as “good” or “bad.” During session we need to do our best to be influential to produce the best results possible. After a law is passed we must come together to produce the best possible results in rule-making and plan for the next legislative session. To do this we need to stop finger-pointing and work together. Divisiveness and name-calling poisons the well for consensus-building.
Approaching a rule-making body or legislature as one person or organization is not going to be very influential.
Approaching the same as an industry with a common voice is powerful and will be extremely helpful in creating positive change.
We must put aside the pettiness and ego and work together for the betterment of the industry and the movement. Those that are willing to work together need to be finding the others that are willing to work together. We need to be focused on listening to others in the industry to understand what their ideas and concerns are. We need to include the end users and to consider their points of view. We need to have patience with each other. We need to put in the work to build consensus on the changes that need to be made. We need to be willing to compromise for the greater good. We need to accept that what happens in the end will not be perfect. We need to, in short, be an industry.
Prohibition is the enemy, not each other. To that end, we have been working to bring together the various industry groups in Washington State to form a super organization that is allied in its purpose. The Coalition for Cannabis Standards and Ethics, CAUSE-M, WAMJA, WMA and Northwest Producers, Processors, and Retailers have formed a Steering Committee to bring these organizations under a common banner. These groups represent the full spectrum of the industry, consisting of producers, processors, retailers, and ancillary businesses. It is my belief that there needs to be industry consensus even when there may be differences in perspective. Retailers and producers working against each other in a lobby effort really just has the effect of negating both. We are looking forward to merging together and ultimately forming a commission that is state-recognized.
Together we will move into the future.
John Davis, Northwest Patient Resource Center
John Davis, an entrepreneur and drug policy activist in Seattle, is founder of Northwest Patient Resource Center. After managing the oldest and longest running medical cannabis dispensary in the state, Compassion In Action, John founded Northwest Patient Resource Center, where he currently serves as the organization’s Chief Executive Officer. John is a founder of the Coalition for Cannabis Standards and Ethics (CCSE) and currently serves as the Executive Director of the industry group. He also chairs the CCSE Access Point Subcommittee. John is on the Board of Directors of the National Cannabis Industry Association (NCIA) and the Cannabis Defense Coalition (CDC), and is on the Advisory Board for Blue Sage Microbes and Life Sense Technologies.
You’re Invited: Celebrating NCIA’s 5th Year Anniversary
By Brooke Gilbert, Director of Events & Education
As the close of 2015 approaches, and along with it NCIA’s 5th year of successful operation, we are very excited to be gearing up to celebrate this momentous occasion with all our members and supporters! Much has changed since NCIA formed back in 2010, and there can be no denying the monumental strides achieved since then by the cannabis industry.
To celebrate these successes, we will be holding a refined retrospective-themed banquet the evening of November 11 at a breathtaking location, The Vortex, in Las Vegas. At the entrance of The LINQ promenade, The Vortex feels like a work of art, with a name inspired by its 7,000-square-foot, color-changing canopy vortex of lights. The Vortex is one of Vegas’ premier outdoor event venues and features a second-story observation deck beneath its LED canopy, situated in a prime location overlooking The Strip.
As in years past, we will be honoring elected officials throughout the evening who have been champions of our issues. We have nominated Senator Ron Wyden (D-OR), Senator Jeff Merkley (D-OR), Representative Barbara Lee (D-CA 13th District), Representative Jared Polis (D-CO 2nd District), and Representative Barbara McClintock (R-CA 4th District) as the “Honorary Legislative Leaders” of 2015. During the banquet, we will be awarding one of these elected officials our coveted “Cannabis Industry Legislative Leadership” award distinguishing them as our industry’s champion this past year.
In addition to the awards ceremony, included in each $250 admission is a three-course meal, an open bar, musical entertainment by Erothyme, and a special gift bag filled with mementos to commemorate the occasion. You will also have the chance to explore our photo gallery offering an industry retrospective of the past five years of growth while making your own memories along our red carpet. In addition, you can take part in our silent auction where we’ll be offering up lots of unique cannabis and cultural memorabilia along with a few once-in-a-lifetime travel packages.
A huge thank you to our generous sponsors for making this event possible!
Premier Sponsor:
Silver Sponsors: Bronze Sponsor:
P.S. – Looking for more ways to support our 5th anniversary celebration? There are still a few high-level sponsorship opportunities available, as well as the opportunity to become a “Friend of the Industry” through a $500 donation.
If you would like to showcase your brand while publicly supporting NCIA’s work during one of the most important evenings of the year, contact us at events@thecannabisindustry.org or (888) 683-5650 today.
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By John Davis, 
At the entrance of The LINQ promenade, The Vortex feels like a work of art, with a name inspired by its 7,000-square-foot, color-changing canopy vortex of lights. The Vortex is one of Vegas’ premier outdoor event venues and features a second-story observation deck beneath its LED canopy, situated in a prime location overlooking The Strip.
