by Michelle Rutter, NCIA’s Government Relations Coordinator
In November, five states will vote on legalizing adult-use cannabis for individuals over 21 – Arizona, California, Maine, Massachusetts, and Nevada – while an additional four states will vote on medicinal cannabis reform – Arkansas, Florida, Montana, and North Dakota. All nine initiatives differ slightly from one another and each has its own unique language.
Below are NCIA’s quick summaries of each of the initiatives. Read up, then visit the campaign sites for more information and how you can help make 2016 another success in the fight to end marijuana prohibition.
ADULT-USE
ARIZONA
The Campaign to Regulate Marijuana Like Alcohol (Proposition 205) legalizes the possession and consumption of marijuana by persons who are over 21 and levies a 15% tax on the sale of cannabis, which would then be allocated to education and healthcare in the state. This would create an estimated $113 million in new tax revenue.
– Allows local governments to regulate and limit cannabis businesses
– If passed, Arizona’s cannabis market is projected to surpass $1 billion within three years
The Adult-Use of Marijuana Act (AUMA) (Proposition 64) legalizes the possession and consumption of marijuana by persons who are over 21 and enacts a 15% sales tax, as well as a cultivation tax of $9.25 per ounce of flowers and $2.75 per ounce for leaves.
– Estimated $1.4 billion in revenues within the first year of a fully operational market
– Written to prevent licenses for corporate or large-scale cannabis businesses for five years, which is in order to deter “unreasonable restraints on competition by creation or maintenance of unlawful monopoly power”
California has the largest state cannabis market (medical or adult-use) in the country, estimated at $2.7 billion in 2016.
The Campaign to Regulate Marijuana Like Alcohol (Question 1) legalizes the possession and consumption of marijuana by persons who are over 21 and enacts a 10% sales tax in addition to the state’s 5.5% sales tax. The first $30 million in tax revenue from cannabis sales would be used for school construction, with any additional revenue allocated to the General Fund.
– Medical cannabis will not be subjected to the 10% sales tax
– Caps the number of cannabis stores and cultivators until 2019 and 2022, respectively
The Campaign to Regulate Marijuana Like Alcohol (Question 4) legalizes the possession and consumption of marijuana by persons who are over 21 and creates a Cannabis Control Commission of three members appointed by the state Treasurer, which would generally administer the law governing cannabis use and distribution, promulgate regulations, and be responsible for the licensing of commercial cannabis establishments. It also creates a Cannabis Advisory Board of 15 members appointed by the Governor.
– Enacts an excise tax of 3.75%, in addition to the state sales tax
– A city or town could impose a separate tax of up to 2%
The Campaign to Regulate Marijuana Like Alcohol (Question 2) legalizes the possession and consumption of marijuana by persons who are over 21 and designates the Nevada Department of Taxation to issue licenses to cannabis retailers, suppliers, testing facilities, and distributors.
– Gives local governments control over cannabis business locations, and forbids businesses to operate near schools, childcare facilities, houses of worship, and certain community facilities.
– Enacts a 15% excise tax on wholesale sales of cannabis, in addition to the existing sales tax which would apply to the retail sale of cannabis
– Revenue generated from these taxes would be used to support K-12 education
There are two competing initiatives on the 2016 ballot: the Arkansas Medical Cannabis Act (AMCA) and Arkansas Medical Marijuana Amendment of 2016 (AMMA), known as Issue 7 and Issue 6, respectively. The main differences lie in patient card fee limits, the organizations that would implement the program, the distribution of sales tax revenue, and whether certain patients could cultivate their own medicine. As of October 2016, Issue 7, the Arkansas Medical Cannabis Act (AMCA) was struck from the ballot. The initiative will still appear on the ballot, but the results will not be counted.
Arkansas Medical Cannabis Act (AMCA):
– Sets a cap on the fees required to get dispensary and cultivation licenses and the fees required for patient cards
– Assigns the Arkansas Department of Health to set rules for patient cards, medical conditions that qualify a patient for medical marijuana use, and operating rules for dispensaries and cultivators
– Requires that all sales tax revenue goes back into the medical marijuana program
– Permits qualified cardholders to purchase medical cannabis from non-profit compassion centers
– Allows patients and their caregivers to cultivate up to 10 cannabis plants at home provided they take steps to ensure it is secure
Arkansas Medical Marijuana Amendment (AMMA):
– Sets a cap on the fee required to acquire a dispensary or cultivation license, but no limit on the cost for patient card fees;
– Assigns the Arkansas Department of Health to set rules for patient cards and medical conditions that qualify a patient for medical marijuana use, and the Arkansas Alcoholic Beverage Control to establish operating rules for dispensaries and cultivators;
– Divides sales tax revenue, assigning 10% to the medical marijuana program, 10% to the Skills Development Fund, 30% to the state’s General Fund, and 50% to the state’s Vocational and Technical Training Special Revenue Fund
The Florida Right to Medical Marijuana Initiative (Amendment 2) allows medical use of cannabis for individuals with debilitating medical conditions as determined by a licensed Florida physician and allows caregivers to assist patients’ use of medical cannabis.
– Mandates that the Department of Health shall register and regulate centers that produce and distribute cannabis for medical purposes shall issue identification cards to patients and caregivers.
– Constitutional amendments on the ballot in Florida must garner at least 60% in order to pass. This is why the medical cannabis amendment on the ballot in 2014 failed, despite receiving 58% of the vote.
Montana is voting to amend their dysfunctional medical cannabis program that has basically been regulated out of existence. The initiative amends the Montana Marijuana Act of 2011 and renames it the “Montana Medical Marijuana Act” (I-182).
– Allows providers to hire employees to cultivate, dispense, and transport medical cannabis, and repeals the limit of three patients for each licensed provider.
– Repeals the requirement that physicians who provide certifications for 25 or more patients annually be referred to the Board of Medical Examiners.
– Removes the authority of law enforcement to conduct unannounced inspections of medical marijuana facilities and requires annual inspections by the State
The North Dakota Medical Marijuana Initiative will be Initiated Statutory Measure 5 on the ballot and is also known as the North Dakota Compassionate Care Act, which creates a state-regulated medical marijuana program for patients with specified debilitating conditions and written certifications from their doctors. Registered patients could obtain medical cannabis from a licensed non-profit compassion center, and if the patient lives 40+ miles away, they are permitted to cultivate a limited amount of cannabis for their medical use.
This year it’s more important than ever to make sure you’re registered to vote and get to the ballot box on November 8th. If you live in one of the nine states with a ballot initiative, cast your vote for ending prohibition or allowing patients access to medicine. Otherwise, don’t forget to cast your ballot for candidates at the local, state, and federal level who support cannabis reform to ensure that 2017 is the industry’s biggest year yet!
Member Spotlight: Rocky Mountain Business Products
In October’s monthly member spotlight, we touch base with Jay Tittman of Rocky Mountain Business Products, a long-time member of NCIA based in Colorado. Rocky Mountain Business Products (RMBP) is a story about a mainstream business that started 40 years ago, and over time evolved to meet the needs of the newly legal cannabis industry. We’re happy to have Jay as an active member of the cannabis industry and community.
Cannabis Industry Sector: Packaging and Labeling, Office Supplies
NCIA Member Since:
May 2012
Why did you open the Cannabis Business Division of Rocky Mountain Business Products?
Jay TIttman (center), with Denver Relief Consulting’s Ean Seeb (L) and Nick Hice (R) at NCIA’s 5th Anniversary Banquet
Rocky Mountain Business Products was started in 1977 as an independent office products dealer specializing in office supplies, janitorial, custom printing, and promotional products. We are still a family-owned local business devoted to serving our customers in the Rocky Mountain Region and throughout the country. Beginning with the passage of Colorado Amendment 20, allowing the medical use of marijuana in Colorado, Rocky Mountain Business Products began supplying hardware and compliance supplies to the medical marijuana industry. Then with the passage of Colorado Amendment 64, we began to see an increase in the number of customers requiring our services. This explosive growth in the industry led us to devote an entire division of our company to the cannabis industry. The Cannabis Business Division was started in 2009 and is solely devoted to the support of the cannabis industry throughout the United States and abroad.
How does RMBP provide unique value to cannabis consumers?
Unlike cannabis producers and providers, we primarily provide our services to those companies that serve those consumers. Throughout the years, we have provided products and services to more than 400 producers and retail locations throughout the United States, Canada, Puerto Rico, and Jamaica. We provide products and services that make it easy for a retailer, grower/producer, or product developer to serve their customers. It is important to make it easy to provide the best consumer experience possible, and we facilitate these transactions though compliance products, labeling, and hardware support. We pride ourselves in being a one-stop shop for retailers and producers. In addition to our 70,000 office supplies, janitorial/cleaning products, and technology products, we also offer dispensary supplies, CBD products, unique vapor products, hemp wick lighters, and over a million promotional products.
Why is supporting the industry so important to you?
Jay Tittman, Rocky Mountain Business Products
During our nearly 40 years serving our customers, we have seen a massive change in buying habits. Beginning with the office products superstores and continuing though the current trend of online buying, we have remained an independent supplier focusing on community and providing unparalleled service in our industries. We understand that our customers can purchase the same products from other vendors; however, many of these vendors do not have the best in mind for our industry. In fact many of them provide support to causes antithetical to the cannabis industry. Not only do we provide superior service and knowledge to our customers, but we also actively participate in the cannabis industry though our memberships with organizations like NCIA, and support activism within the industry. This is not only our business; it is a passion and we know that it can only get better by supporting independent business and individuals with like-minded goals.
Why did you join NCIA? What is the best part about being a member?
The work NCIA does in this industry is vital to its success. We joined to become a part of a community devoted to the success of business and individuals that are just as passionate about this as we are. Without organizations like NCIA providing guidance to our industry, we would struggle to unify around common goals and ideals.
Also, we enjoy working with like-minded individuals engaged in building awareness for this industry. It is vital to the success of our industry to not only provide great products and services, but also to educate and inform the public of the amazing benefits of cannabis.
Over 2,100 businesses, organizations, election officials, schools and civic groups are joining together to celebrate National Voter Registration Day across America, and the GREEN TEAM is excited to be an official 2016 partner for the event. In part, the GREEN TEAM is asking all sponsor businesses and volunteers to participate by signing up as a participating voter registration location or as an individual volunteer. Over 600 voter registration events will be hosted nationwide as part of this year’s National Voter Registration Day, and we would like to increase that number significantly by signing up additional cannabis dispensaries.
The GREEN TEAM and New Era Colorado will provide the volunteers and materials needed for the voter registration drive. This nonpartisan event is an easy way for your business to support civic engagement. Simply sign up your business’s location, and let us know which dates/times work for you, and we will take it from there!
CLICK HERE to sign up as a participating voter registration location!
Participating Locations Details:
The GREEN TEAM and New Era Colorado are searching for more locations for the 2016 voter registration drive volunteers. We are not asking your staff to take on any of the responsibilities, as we will supply the volunteers and materials needed as long you can provide us with access to your waiting room or front doorway area. The form above allows you to select the dates and times that work best for your business.
Our volunteers will hit the streets beginning Tuesday, September 27th, to register new voters, help current voters update their addresses, and provide information about mail-in ballot deadlines and polling locations.
(Volunteer training is provided)
We are beginning the voter registration drive on National Voter Registration Day, Tuesday, September 27th, and continuing the drive until Tuesday, October 11th.
National Voter Registration Day Details:
The day was founded in 2012 in response to over six million Americans reporting that they didn’t vote as a result of missing the registration deadline or not knowing how to register. On August 6, 2016, President Obama announced the White House’s official support of NVRD during a speech marking the 50th Anniversary of the Voting Rights Act, joining with state election officials of the nonpartisan National Association of Secretaries of State (NASS) that has been championing the holiday since 2012.
NVRD is led by a diverse, non-partisan group including the Bipartisan Policy Center, League of Women Voters, Bus Federation, Rock the Vote, Vote Latino, Asian Pacific American Labor Alliance (APALA), Fair Elections Legal Network, Nonprofit VOTE, and National Association of Secretaries of State represented by Secretary of State John Merrill (R- AL) and Secretary of State Steve Simon (D -MN). Also lending their support of the day include iHeartRadio, Tumblr, Univision Contigo, Pandora, Americans for Tax Reform, Headcount, and The Skimm. The National Voter Registration Day is a nonpartisan event.
State Campaigns: Proposition 64 (CA) – More Than Industry, Justice
*Editor’s Note: As we enter the homestretch of the critical 2016 campaign season, NCIA has invited the state campaigns on marijuana policy to submit blog posts about the important work they’re doing. These campaigns need the support of the industry and the movement as they approach the finish line. If you haven’t already, please consider making donations of money or time to one or more of the state campaigns that are working to end the failed policies of marijuana prohibition.**
They say there are moments that define an industry. A point where the creators and innovators look around and realize that things will never be the same. For the cannabis industry, that moment is November 8, 2016. It is that moment when the industry stands poised to enter the sixth largest economy in the world, the state of California.
On November 8th, Californians will vote on Proposition 64. Like the states that have gone before it, this initiative would legalize the personal possession and cultivation of cannabis for adults 21 and over in California, and like other states, it establishes a regulatory system for the cultivation, manufacturing, testing and distribution of cannabis products throughout the state. But, aside from the basics, there are several aspects of Prop. 64 that the cannabis industry should be particularly aware of.
First, Prop. 64 allows for, but does not require vertical integration. This means that businesses have the opportunity to perform more than one cannabis-related function, but they are not required to. Limits on vertical integration increase as the size of the business increases. For example, the smallest cultivator under the microbusiness license (less than 10,000 square feet), can vertically integrate under one license, whereas the largest Tier V cultivator, which will not be licensed until 2023, cannot vertically integrate at all. There is a flexibility in California’s regulations designed to accommodate the large variety of business types already operating in the state.
Secondly, Prop. 64 does not deny a license to an individual simply due to a previous drug felony. The first state to put this in the initiative language, California has an industry that has, for the most part, been operating in a gray/illicit market for the past two decades, despite the fact that California has allowed medical cannabis since 1996. For many of these folks, an arrest is par for the course, and these experiences should not exclude a person from participating in the legal market. This is especially true for people of color, who run a greater risk of arrest and felony charges for marijuana than white people.
Additionally, it’s not all about the plant. Although a lot of attention is paid to the growing of marijuana, creation of marijuana edibles, and the sales of marijuana, most of the new industry will revolve around ancillary products and services that do not touch the plant. This is especially relevant in California, which has a legacy of innovation, not just in tech, but also in agriculture and tourism. The infrastructure needed to support the legal market, especially given the high levels of regulation, still needs to be constructed in California, and should Prop. 64 pass, there will be an additional 39 million people living under these new rules.
Finally, and perhaps most importantly, passing Prop. 64 will create opportunities for partnerships between the cannabis industry and the communities who have been most impacted by the war on drugs. Marijuana prohibition has caused immeasurable harm to vulnerable communities in California. And, while these communities exist in the current legal states as well, none of the legal states are as heterogeneous and have as much income and quality-of-life disparity as California. With a billion dollars a year of potential tax revenue on the table, and with 50 million dollars of that revenue promised to communities most impacted by the drug war, passing Prop. 64 is more a social justice issue than a regulatory one.
The cannabis industry has a lot to be excited about concerning legalization in California – the jobs and opportunities created and the innovation that can finally come out of the shadows. But it’s so much more than that. Legalization is about more than creating an industry; it is about civil rights, reducing mass incarceration, and advancing restorative justice. Passing Proposition 64 in California will be a powerful blow to the war on drugs, but we must know we must stay vigilant to the over-criminalization of people of color that will continue in America.
Amanda Reiman is Manager of Marijuana Law and Policy at the Drug Policy Alliance, where she works to develop DPA’s marijuana reform work as it relates to litigation, legislative and initiative drafting, campaign strategy, policy advocacy, media relations, fundraising, and public education in the local, state, federal, and international jurisdictions in which DPA is active. Reiman joined DPA in 2012 after working with Berkeley Patients Group, a renowned medical marijuana dispensary, as director of research and patient services. Reiman is currently a lecturer in the School of Social Welfare at the University of California, Berkeley, where she teaches Drug and Alcohol Policy, Substance Abuse Treatment, and Sexuality and Social Work.
State Campaigns: Yes on 1 to Regulate Maine
**Editor’s Note: As we enter the homestretch of the critical 2016 campaign season, NCIA has invited the state campaigns on marijuana policy to submit blog posts about the important work they’re doing. These campaigns need the support of the industry and the movement as they approach the finish line. If you haven’t already, please consider making donations of money or time to one or more of the state campaigns that are working to end the failed policies of marijuana prohibition.**
The Maine campaign to make marijuana legal is on track for victory on November 8! Yes on 1: Regulate and Tax Marijuana has held a double-digit lead in the polls since the beginning of this year. Mainers have a long history of cannabis reform, starting back in 1976 with the decriminalization of marijuana. Maine’s largest city, Portland, passed a local ordinance legalizing marijuana in 2013, and South Portland did the same in 2015. Over 100,000 Mainers signed our petition, and we are optimistic that the majority of Mainers agree.
Our messages are simple: regulating marijuana will generate tax revenue for our state, free up law enforcement’s precious resources, and give access to patients who don’t qualify for medical marijuana currently.
We are grateful to our supporters who stepped up to speak out in favor of Yes on 1 — supporters like Mark Dion, the former sheriff of Maine’s largest county, and Carey Clark, a registered nurse and university professor.
Soon, our advertisements, featuring these supporters, will be on TV and online. In the meantime, please take a moment to watch our latest campaign video:
To support the campaign financially or to get involved on the ground, please visit: www.RegulateMaine.org
Video Newsletter: We’ve Got Your Number(s)
In this month’s video newsletter, NCIA Membership Manager Jeremy DePasquale introduces you to our valuable data analytics member benefit, provided in partnership with BDS Analytics.
Since 2013, I have provided professional commercial real estate and business brokerage services to the licensed cannabis industry. Over the years, I have had the pleasure of working with some of the most outstanding cannabis business owners on dozens of projects throughout the United States. However, despite one’s cannabis business experience, acumen, and industry understanding, real estate issues come up that can make or break your business. Whether you’re a business owner, real estate investor, or other cannabis business that is real estate reliant, considering these simple dynamics should save you money, time, and effort.
Municipalities
Selecting the right municipality is of utmost importance and the first factor to consider. Does the municipality you are considering allow cannabis business and issue licenses? If not, what is the prospect of them changing their position in the future? What is the cultural and political climate? If the political and/or social climate are closed to the industry, then consider saving yourself an uphill battle with opposing groups and look for a different jurisdiction.
Zoning and Setbacks
Is the property correctly zoned? Most cultivation facilities are relegated to light and heavy industrial manufacturing and agricultural zoned properties instead of in more retail locations, which makes sense since it’s a manufacturing/production facility. Dispensary/retail stores, extraction/infusion and testing facilities generally have a wider zoning criteria and are typically located in commercial, retail, industrial and/or mixed-use zone districts. Without the correct zoning, your facility will not be licensable.
In the municipality you’re considering, what are the setbacks between the property and nearby sensitive uses such as schools, parks, hospitals, day care and drug rehab centers? Based on the licensing jurisdiction, required setbacks and sensitive uses will vary, but typically one thousand feet in a direct measurement between property lines is the longest setback distance that is required. Depending on the municipality’s regulations, if the property is too close to nearby sensitive uses and within the setbacks then the property may be disallowed to be licensed.
Available Capital
How much capital do you have to invest in the property (regardless of leasing or owning)? Many of our clients and customers aren’t prepared for the time, cost, and effort of getting a property licensed and up and running. In my experience, tenant finish and equipment costs for indoor grows are generally around $120 to $150 per square foot and up. On a per light basis, build-out costs are in the range of $8,000 to $12,000 per flowering light fixture installed. Greenhouse and other types of cultivation facilities are generally less costly to fit up and provide for a lower cost of production over indoor grows, but there are tradeoffs between property types and growing methods.
Buy vs. Lease
Whether to buy or lease is really a matter of available capital and your business plan. Buying your own real estate will provide you with total control of your facility and you will not be subject to rent increases or other items as you are when leasing. On the other hand, leasing may be less costly upfront, but subjects your business to real estate swings, dynamics within your lease, and your relationship with the landlord. If you do lease, negotiate a purchase option for the property to secure the ability to buy it at some future point in time.
Exit Strategy
Lastly, what is your exit strategy for the property? If you expect to grow out of the facility in the near-to-mid-term, consider its viability at that time with the technology and innovations being applied today. Will it be outdated and inefficient in when it no longer suits your business, or will it be functional and effectively produce the product desired at the time you exit? If you spend too much on your facility, can you recapitalize out of it by selling the property and/or business?
While these are only five areas to consider when pursuing licensable marijuana real estate, there are many others that have been proven to be issues and others that are yet to be discovered. Consider each step along the way and how it impacts the vision for your company to set yourself up for long-term success.
Jason Thomas is the CEO and Managing Broker of Avalon Realty Advisors, Inc., a commercial real estate and business brokerage company based in Denver, Colorado. Avalon exclusively serves the licensed cannabis industry through providing brokerage services for buying/selling/leasing properties, buying/selling cannabis businesses and licenses, property and business valuations, expert witness testimony and consulting. With over 25 years of combined real estate and over 10 years of cannabis business experience, Avalon’s advisors are uniquely qualified to provide best in class real estate and business services to the licensed cannabis industry throughout the US.
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MEDICAL
In the municipality you’re considering, what are the setbacks between the property and nearby sensitive uses such as schools, parks, hospitals, day care and drug rehab centers? Based on the licensing jurisdiction, required setbacks and sensitive uses will vary, but typically one thousand feet in a direct measurement between property lines is the longest setback distance that is required. Depending on the municipality’s regulations, if the property is too close to nearby sensitive uses and within the setbacks then the property may be disallowed to be licensed.