New action from the DEA today caused a stir among hemp and CBD producers. The action – the insertion of a new rule in the Federal Register regarding cannabinoids – could have serious consequences for CBD product makers.
Is your CBD derived from hemp? Doesn’t matter to the DEA. The new extracts classification applies to all “extracts that have been derived from any plant of the genus Cannabis and which contain cannabinols and cannabidiols.” Hemp is not a separate genus. (Although it may be a separate species; lot of debate on that point.) Legally speaking, hemp is simply cannabis with no more than 0.3 percent THC content.
NCIA member Hoban Law Group produced a detailed memo responding to the DEA’s action and exploring ways that it might be challenged in court.
The fact that the DEA, an unelected government body with no legislative authority, is attempting to outlaw all cannabinoids is concerning and problematic as it pertains to portions of the plant not legally defined as “marihuana,” and as it pertains to lawfully cultivated and processed Farm Bill-compliant industrial hemp.
We’ll continue to monitor the activity around the DEA’s new rule and keep you updated with additional information.
Register today! NCIA’s Cannabis Industry Lobby Days – May 16-17, 2017
Eager to get more involved in cannabis politics and make your voice heard? Wondering how you can help secure the future of our industry in a time of uncertainty? Good news! NCIA’s annual Cannabis Industry Lobby Days in Washington, D.C. are coming in May.
It’s one of the most important ways you can stand up for cannabis reform and your business, and we don’t want you to miss it.
So CLICK HERE TO REGISTER TODAY and join us on May 16 and 17 for NCIA’s 2017 Cannabis Industry Lobby Days. NCIA’s Lobby Days provide the best opportunity to show our nation’s decision-makers what a responsible and legitimate cannabis industry looks like.
NCIA’s 2016 Cannabis Industry Lobby Days. Photo: Kim Sidwell, Cannabis Camera
NCIA members from across the country descend on Capitol Hill to tell their stories and urge their representatives to fix the unfair tax and banking policies crippling our industry.
With victories in eight states across the country during the 2016 presidential election, as well as the challenges ahead of us as we see a new administration come in to the White House, fixing federal policies is more critical than ever. Our team in Washington, D.C., works every day to make the industry’s voice heard, but nothing matches the power of a personal story personally told.
We’re excited that this year’s Lobby Days are being held in conjunction with the Spring 2017 Marijuana Business Conference & Expo, May 17-19 in Washington, D.C. MJBizCon is generously extending a $100 discount on full conference registration for Lobby Days attendees so be sure to register for Lobby Days and we’ll send the discount code in your confirmation e-mail.
We look forward to seeing you in D.C.!
Thank you to the co-chairs of NCIA’s Policy Council for their premier sponsorship of our 2017 Cannabis Industry Lobby Days:
Are you interested in sponsorship opportunities for your company at NCIA’s most important policy event of the year? Contact us at sponsorship@thecannabisindustry.org to find out more!
Video Newsletter: The Challenges Ahead
In our final video newsletter of 2016, NCIA’s Aaron Smith and Taylor West give an overview of our victories in eight states across the country, as well as the challenges ahead of us as we see a new administration come in to the White House. Hear more about the importance of NCIA’s work in the halls of Congress as we go forward into 2017 and beyond.
Member Spotlight: LivWell Enlightened Health
In December’s member spotlight, we speak with Neal Levine, who serves on NCIA’s Board of Directors, and is Senior Vice President of Government Affairs for NCIA Sustaining Member LivWell Enlightened Health. LivWell is a Colorado-based medical and adult-use cannabis dispensary with 14 locations across the state, employing hundreds of staff.
LivWell Enlightened Health
Cannabis Industry Sector:
Medical and Adult-Use Cannabis
NCIA Member Since: February 2012
Tell me a bit about your background in cannabis and why you joined the team at LivWell.
Neal Levine, Sr. VP of Government Affairs
I have been working on cannabis policy reform on the state and national level for the majority of my professional career. Specifically, I led or played a key role on the teams that first passed medical marijuana laws in Maryland, Vermont, Montana, Rhode Island, and Michigan; decriminalization in Massachusetts; and legalization in Alaska. I also led several teams which qualified initiatives via signature drives in several states, including the adult-use initiative that just passed on November’s ballot in Nevada. And I have been involved in some form or another in helping to develop industry regulations in many different states throughout the country after these laws have passed.
At some point I realized that I had switched from the lobbyist and campaign guy who was working on cannabis to the cannabis guy who was working on campaigns and lobbying. So I decided to shut down my political consulting practice and shift to the industry full time about a year and a half ago. Of all the cannabis companies existing today, LivWell Enlightened Health struck me as best placed, not only in terms of being successful in the industry but also in terms of presenting a positive example to cannabis entrepreneurs everywhere about how cannabis companies should engage with their industry peers, the legalization movement, their customers and patients, and the communities in which they operate. LivWell Enlightened Health has demonstrated time and again our willingness to fight for and defend the industry, and it has been my honor to lead the company’s continuing efforts in this regard.
What unique value does LivWell offer to the cannabis industry?
Every single day we try to live up to our reputation as the industry leader. It starts with taking care of our people, whom we view as our number-one asset. Our entry-level positions pay several dollars above the minimum wage, we offer full health care to all of our employees at no cost to them, and we put 3% into a 401(K) annually for all of our employees which vests instantly and is not a match – they do not have to put in a penny of their pay, although they are certainly welcome to contribute as well.
Beyond the high-quality cannabis products we sell, the well-paying jobs we create, and the tax revenue we generate for Colorado, LivWell Enlightened Health has determined to be involved in events and initiatives throughout the communities in which we operate. That’s why we established LivWell Cares, a program designed to work hand-in-hand with our local communities both as good neighbors and as fully-involved partners in community development. Through LivWell Cares, we have participated in numerous charitable activities, sponsored several local events, and educated community leaders and public service officials on the products we sell and the industry that we help to lead. Our deep and committed involvement in working with our neighborhoods and engaging with the communities whose lives we touch through our business, including those who may not patronize our stores, is a value that is nothing less than a part of the fabric of our company and an important piece of our culture.
Cannabis companies have a unique responsibility to shape this growing industry to be responsible and treated equally as any other industry. How does LivWell help work toward that goal for the greater good of the cannabis industry?
You’ve touched on something that is very important. First and foremost, we strive every day to be the industry that we want to be a part of. We take our position as an industry leader very seriously, and conduct ourselves accordingly. If you are a part of our industry, you simply must be engaged in your communities. You must join together with allies to defend against the seemingly endless threats to our advancement. We must all band together and work collaboratively on big picture projects like tax reform, banking, and removing cannabis from the Controlled Substances Act, while running responsible and compliant businesses that take care of the people who chose to join our teams. If this is not a key component of your company culture, I believe that you will eventually fail.
As a company, LivWell Enlightened Health is very focused at developing industry-wide best practices, helping to shape state and federal lobbying priorities, working to end the unfair taxation of 280E, and making it easier for cannabis businesses to receive the banking services they need to operate successfully. I ran for the NCIA Board promising to focus on these issues, and having won the seat, I feel that I have a mandate and responsibility to do what I said I would do from the membership that elected me.
From the beginning, the leadership at LivWell Enlightened Health has been determined to be the most compliant company in the industry and to support policy-makers and regulators from throughout the country and the world as they build a common-sense regulatory regime in which we can operate. This was one of the primary aspects of our culture that first attracted me to the company. We frequently host delegations of government and elected officials who tour our facilities and speak with our executives to learn more about how legal cannabis actually works, and offer to share our expertise and work with them to construct a regulatory environment conducive to both business success and public health and safety. We believe these efforts have already helped encourage more regulatory consistency in cannabis policies across the country, and have helped remove the stigma our industry faces in the eyes of officials who previously had little to no experience with cannabis in any form. We have been highly encouraged by the reactions of those officials with whom we have worked, as they quickly realize that we are just like any other business and deserve to be treated as such.
Building a better environment for our industry also requires sustained engagement with our patients and customers, particularly when it comes to education. We call ourselves LivWell Enlightened Health for a reason. Education has always been an important part of our company, a point best evidenced by our industry-leading employee training program, LivWell University. This two-week intensive course includes classroom, online, and on-site components, and covers everything from the science of the endocannabinoid system to how to complete a compliant transaction. We view our employees as company and industry ambassadors. The training our employees receive allows them not simply to be good at their jobs, but also to be knowledgeable enough to answer our customers’ tough questions while being advocates for responsible use. We have even begun taking components of our employee training program and developing them into customer-facing materials so that our customers can feel more empowered to make intelligent choices when it comes to their cannabis consumption.
Why did you join NCIA? What’s the best part about being a member?
NCIA is our national industry association, and every single business either in our industry or supplying our industry has an obligation to join and support NCIA. Being an NCIA member means supporting our efforts to end the scourge of 280E, open up banking, remove cannabis from the Controlled Substances Act, and be diligent in our efforts to make sure the new administration does not roll back any of our progress. Outside of the financial obligation, I believe every member should participate in Lobby Days, where we get to engage with Congress as an industry.
The best part of being a member is the ability to be part of our amazing national cannabis community, and work collaboratively with so many intelligent and dedicated people on the normalization of our industry on the path to ending prohibition once and for all.
Member Post: Raising Money 101 – Introduction to U.S. Public Cannabis Stocks
Most readers are familiar with the two major U.S. stock exchanges – the New York Stock Exchange (NYSE) and NASDAQ. But in the world of cannabis, almost all publicly traded companies are not listed on a stock exchange. Instead they trade over-the-counter (OTC). In fact, as of the date of publication, only a handful of cannabis companies (or at least cannabis-touching companies, as for most of these companies, cannabis is only a small part of their overall business) are traded on a U.S. stock exchange. There are publicly traded cannabis companies outside of the U.S., but those are beyond the scope of this article.
These companies primarily trade on NASDAQ: GW Pharmaceuticals (GWPH), a UK-based pharmaceutical company best known for its drug Sativex, a cannabinoid-based treatment for multiple sclerosis spasticity; Insys Therapeutics (INSY), an Arizona-based pharmaceutical company that has a number of cannabinoid-based drugs in development; Cara Therapeutics (CARA), a Connecticut-based pharmaceutical company that has a cannabinoid product in preclinical development; Zynerba Pharmaceuticals (ZYNE), a Pennsylvania-based pharmaceutical company that has synthetic cannabinoids for transdermal delivery under development; and Arena Pharmaceuticals (ARNA), a California-based pharmaceutical company that has a pain relief cannabinoid drug in development. There is also a largely non-cannabis company, 22nd Century Group, Inc. (XXII), with a cannabis-focused subsidiary called Botanical Genetics, LLC, that trades on NYSE MKT, the NYSE’s emerging company marketplace for smaller-cap companies. NYSE MKT has lower listing requirements than the NYSE.
MassRoots (MSRT), a Denver-based social networking company for cannabis users, made headlines when it was denied approval to be listed on NASDAQ. According to MassRoots, the stock exchange justified the decision by claiming that the company was aiding and abetting the distribution of an illegal substance. Some speculate, however, that the decision considered the company’s low share price, although MassRoots stated it did meet the listing requirements with a market capitalization in excess of $40 million and more than 300 shareholders. NASDAQ did not publicly provide the grounds for its rejection.
As of the date of publication, the New York Stock Exchange has approved the listing of Innovative Industrial Properties, Inc. (IIPR), a newly-formed real estate investment trust focusing on the cannabis industry, though the SEC has not yet approved the offering prospectus of the company and no shares of Innovative Industrial Properties currently trade publicly. This seems to indicate that NASDAQ’s rejection of MassRoots may not have been entirely based on its alleged aiding and abetting.
The language of publicly traded cannabis companies
If these companies aren’t on stock exchanges but still trade publicly, where and how do they trade? It’s best to start with an introduction to the vocabulary of publicly traded cannabis companies. Here are several terms you will see discussed frequently in this area:
OTC: An acronym for “over-the-counter” and refers to securities (both debt and equity) that are traded in a context other than a formal exchange. It may refer to stocks, debt securities, or other financial instruments such as derivatives. In general, the reason why a stock is traded over-the-counter as opposed to on a stock exchange is because the company is too small to meet exchange requirements. The overwhelming majority of publicly traded cannabis companies trade OTC.
Pink Sheets: The National Quotation Bureau (now the OTC Markets Group) formerly published price quotations for stocks on pink-colored paper called the Pink Sheets. The National Quotation Bureau renamed itself Pink Sheets LLC in 2000 and subsequently Pink OTC Markets in 2008. In 2010, the name was again changed to its current one, OTC Markets Group. Because of this historical background, people will often refer to OTC stocks generally as trading on the Pink Sheets. Another synonym is Penny Stocks, based on the low price of some OTC stocks. There remains an official reference to the color pink – the OTC Pink® Open Market.
SEC: Shorthand for the Securities Enforcement Commission, a government commission created by Congress to regulate the securities markets and protect investors. Any public offering of stock is subject to review by the SEC.
Stock Exchange: A marketplace (which could be a physical location or an electronic platform) in which securities are traded. The core function of a stock exchange is to ensure fair and orderly trading, as well as efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments, and other groups a platform to sell securities to the investing public. Each stock exchange will have certain listing requirements – such as regular financial reports and audited earnings reports. The New York Stock Exchange (NYSE) is an example of a stock exchange.
OTC Markets Group (formerly known as the National Quotation Bureau, Pink Sheets LLC, and Pink OTC Markets): Operates an electronic quotation system called OTC Link that displays pricing for many over-the-counter securities not listed on a national stock exchange. All transactions are carried out between dealers. The companies listed on the OTC Market are broken into three tiers based on the quality and quantity of information the companies have made available. These tiers, starting with the designation for the most established companies, are as follows: OTCQX® The Best Market, OTCQB® The Venture Market, and OTC Pink® The Open Market.
OTC Bulletin Board or OTCBB: A system run by FINRA (Financial Industry Regulatory Authority). Broker-dealers who subscribe to the non-electronic system can buy and sell OTC stocks. Companies on the OTCBB must make all required SEC filings, but there are no other size or corporate governance requirements. Most OTCBB companies are quoted on both the OTCBB and one of the OTC Markets Group marketplaces.
Gray Market: Refers to securities that are not listed on any stock exchange or on the OTCQX, OTCQB or OTC Pink marketplaces. There is likely little investor interest in or information available about such securities.
Liquidity: Refers to how easy it is to buy or sell a security. This is a function both of the market for the security and of the legal restrictions on resale.
Bid-Ask Spread: The difference between the highest price that a buyer is willing to pay for a share of stock or another asset (the highest bid price) and the lowest price that a seller is willing to accept to sell it (the lowest ask price).
Broker-Dealer: An individual or firm who is engaged in the business of buying and selling securities. When the individual or firm is executing orders on behalf of clients (i.e., acting as an agent), it is acting as a broker. And when the person or firm is acting as a principal (i.e., trading for its own account) it is acting as a dealer.
Reverse Merger: In the OTC context, this refers to a transaction whereby the stockholders of a private company acquire the majority of the shares of a public shell company, which is then merged into the purchasing entity. As a result of the merger, the private company exchanges shares with the public entity, making the purchaser a public company. Reverse mergers allow the private company to become public without raising capital, as opposed to a traditional initial public offering (or IPO) which combines going public via an S-1 and undertaking fundraising. A reverse merger is also quicker than a full-blown IPO or an S-1 filing. The full legal ramifications of a reverse merger versus an IPO or direct S-1 filing are beyond the scope of this article.
S-1: The traditional method for taking a company public is by filing an S-1, which is an offering prospectus for the shares to be listed publicly. This can be accomplished as part of an IPO, which also involves a fundraising process typically run by an investment bank, or it can be done by a company directly without the involvement of a bank. A company wishing to become publicly traded will file an S-1 with the SEC. Once filed, the company and the SEC will then go through a process of comments and revisions. When the SEC is satisfied with the revised S-1, it will declare the offering prospectus effective and the company can sell shares to the public.
Why cannabis companies trade OTC
Why would a company want to trade OTC? The simple fact is that it’s very difficult to trade on the NYSE or NASDAQ. In addition to limitations that apply specifically to cannabis companies, as may have been the case with MassRoots, though not with Innovative Industrial Properties, both NASDAQ and NYSE have high financial standards that most cannabis companies are too small or too unprofitable to meet. It’s also not free to list on these exchanges; while both exchanges have multiple revenue streams, one way they make money is by charging fees to the listed companies. There are other, smaller stock exchanges (note that NASDAQ, for example, has three different tiers domestically: The Nasdaq Global Select Market®, The Nasdaq Global Market®, and The Nasdaq Capital Market®, with different standards for each tier, and has other international markets beyond the scope of this article), but each will have requirements that companies need to meet to be listed. That leaves the OTC markets as the main alternative to a company that wants to be publicly listed, but has not yet achieved the size necessary to be listed on a stock exchange.
But why would a company want to be publicly listed in the first place? There are several reasons, most of which only apply to a company that is listed on a major stock exchange (e.g., the prestige of being a public company or additional liquidity), but the primary reason offered for becoming an OTC-traded company is that it allows the company a way to increase the amount of capital it can raise and offers existing equity-holders greater liquidity. With limited exceptions, a private company can only freely sell its securities to accredited investors (i.e., institutions or people who meet certain income or asset thresholds). And, prior to the JOBS Act, private companies were prevented from any kind of widespread public advertising (which they can now engage in, but only if they take steps to ensure only accredited investors purchase the equity for sale). A publicly registered company, in contrast, is largely free to offer and sell its stock to all interested parties, regardless of whether they are accredited. It is also far less restricted in its ability to advertise the fact that its stock is for sale.
Buying publicly traded stock is also far easier – investors don’t need to know anyone at the company in question. If a potential investor has access to a computer or phone, buying OTC stock is straightforward. In theory, this opens a far larger marketplace for a company’s stock, providing liquidity and allowing it to sell additional equity to finance growth and operations.
The risks of OTC cannabis stocks
There are other, less honorable reasons why a company might want to trade OTC. When a public stock is widely traded, it’s difficult to influence the price of the stock. Imagine trying to materially change the price of Google’s stock – it would require a vast sum of money. But when a company’s stock is infrequently traded and information about that stock is limited, it’s much easier for an individual or group to influence a stock’s price. And information does tend to be quite limited when it comes to OTC stocks. In contrast to stocks listed on the major exchanges, not all stocks that trade on the OTC Link are required to be registered with the SEC. As a result, the overall level of information available for OTC stocks is both less detailed and less up-to-date than that of stocks traded on the NYSE or NASDAQ. It is also not uncommon for an OTC stock to be deficient in providing the limited information that is required.
Several government agencies have sought to warn the public about the risks inherent in cannabis OTC stocks. On May 16, 2014, the SEC’s Office of Investor Education and Advocacy published a press release that specifically warned investors about the risks of cannabis-related stocks. The SEC highlighted the fact that five cannabis OTC stocks had recently been suspended from trading due to concerns about the accuracy of publicly available information about their operations. Two of these companies were also implicated in potentially illegal activity involving the sale of securities and market manipulation. And on November 12, 2015, the Colorado Division of Securities issued a warning to investors to be cautious when considering investments in marijuana-related companies, binary options, and digital currency. The Colorado Division of Securities noted that marijuana-related investments “could be particularly susceptible to scams, such as ‘pump-and-dump.’” A “pump-and-dump” scheme is an illegal scam where people holding equity in a company convince the market that the shares are worth far more than they are by spreading false or misleading information, a process made easier by the thinly traded nature of OTC stocks and the lack of good information about them. Before the public catches on, they sell all or a portion of their shares for a significant profit.
With some exceptions, most cannabis OTC stocks have minimal analyst coverage, if any coverage at all. Most major companies that are publicly traded, in contrast, are studied regularly by analysts, who frequently publish reports about the status and direction of the companies they cover. Academic literature has shown that analyst coverage can decrease informational gaps between investors and management of companies. But if no one is covering an OTC stock, then shareholders must either study the company themselves or risk being left in the dark about the condition of the company. In addition, many institutional investors do not invest in OTC stocks, so the investor base of an OTC company will have far fewer, if any, institutional investors, and more retail (i.e., ordinary individual) investors. This means that holders of OTC stocks, absent the benefits of analyst coverage, cannot count on their fellow shareholders to be sophisticated or committed to monitoring the company either. OTC investors must often do their own due diligence on the companies in question.
Finally, it is important to understand the liquidity issues of OTC stocks. To return to the example of Google mentioned earlier, it is very easy to dispose of Google stock (or to be more accurate, Alphabet Inc. Class A stock) since there is a very active trading market for those securities. It would not be difficult to sell all the Google stock you hold at, or very close to, the current publicly listed price – unless the stock was currently reacting to major news or you were trying to sell a material number of shares. For an OTC stock, however, an investor should not take any of these advantages for granted. OTC stocks typically have significant bid-ask spreads since they are typically far less liquid than stocks traded on public exchanges – meaning that they are not as actively traded. That means in the event you decide to sell your stock there may not be a buyer readily available. And even if you could find a buyer for your stock, there is also the risk that your sale of stock could impact the quoted price, forcing you to sell at a lower price. This is why, unless there is an active market for an OTC stock, the quoted price may not be the price at which you can liquidate your position.
This is not to suggest that all OTC stocks are scams or even poor investments. But investors need to be particularly careful when evaluating these types of stocks and should be aware that not all publicly traded stocks are the same.
Key takeaways
In short, when it comes to OTC stocks:
A publicly traded stock by any other name: Any investment in an OTC stock is inherently riskier than an investment in a blue-chip stock trading on a public stock exchange. If you want to sell an OTC stock, it may not be possible to find a buyer. And OTC stocks can be subject to high volatility and at greater risk of fraud. This doesn’t mean that buying stock in a cannabis company trading OTC is necessarily a bad idea. But these kinds of investments demand an understanding of the risks involved.
OTC company beware: Any company considering listing as an OTC stock, whether by way of a reverse merger or otherwise, should carefully evaluate the costs and benefits of being publicly registered. Consider drawing on the private equity markets instead of the public markets. Please bear in mind that as a cannabis company, you will likely face heighten scrutiny by the SEC.
Know your terms: Not all OTC stocks are alike. The OTC Link has three marketplaces which are tiered based on the quantity and quality of information provided by the companies:
OTCQX® The Best Market: This is the marketplace with the most stringent requirements. To qualify, companies must meet financial standards, demonstrate compliance with US securities laws, be current in their disclosure, and be sponsored by a third-party professional advisor.
OTCQB® The Venture Market: Entrepreneurial and development-stage companies that are unable to qualify for OTCQX trade on this marketplace. Companies must undergo an annual verification and management certification process and be current in their reporting to be eligible.
OTC Pink® The Open Market: Defaulting or distressed companies trade on this marketplace, although some companies trade on The Open Market by design. Companies are further sub-categorized into one of three tiers by the level of information they provide: Current Information, Limited Information, and No Information.
Other Designations: Caveat Emptor: A concern exists about the stock, company, or person(s) controlling the company. The quotes will be blocked on OTCBB while a stock is labeled Caveat Emptor. OTC, Other OTC or Grey Market: Securities not traded on the three OTC Link exchanges. Public quotes are not provided by Broker-Dealers.
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
Charles Alovisetti is a senior associate and co-chair of the corporate department at Vicente Sederberg LLC. Prior to joining Vicente Sederberg, Mr. Alovisetti worked as an associate in the New York offices of Latham & Watkins and Goodwin 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, Mr. Alovisetti 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. Mr. Alovisetti has experience in both U.S. and cross-border transactions, and has advised clients across a range of industries including cannabis, 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. Mr. Alovisetti is admitted to practice in both Colorado and New York and is a Level One Interprener.
Cannabis Caucus Takes Action!
by Brooke Gilbert, Director of Events and Education
At the end of October we wrapped up the fourth and final 2016 installment of our Quarterly Cannabis Caucus series. Thank you to the more than 700 attendees who joined us in cities across the United States throughout the month of October to network and to effect change on the local and national level!
We have a lot to be thankful for with the recent wins for cannabis in California, Nevada, Maine, Massachusetts, Montana, Arkansas, North Dakota, and Florida. However, a lot of uncertainty still lies ahead with the new administration. One thing we do know for certain is the Rohrabacher-Farr amendment currently offers the medical cannabis industry some amount of protection. This amendment bans the Department of Justice from spending money to prevent the implementation of state-level medical marijuana programs, in addition to removing funding for federal medical cannabis raids, arrests, and prosecutions in states where these programs are legal.
This important amendment needs to be reauthorized each year to stay in effect.At the end of September, Congress passed a continuing resolution to fund the government through December 9th. This means that in December, Congress will have to return and pass a funding bill for future government spending. Throughout the final installment of our quarterly cannabis caucuses we urged attendees to take action by contacting your elected officials and asking them to sign on to a letter supporting the re-authorization of the Rohrabacher-Farr amendment. If you didn’t take action on-site at the caucus, we encourage you to take action now and contact your representative here:
Weren’t able to make it to one of our caucuses in October? Check out the photo highlights below, and download the resources provided at the event on our Cannabis Caucus Resources page.
Thank you to our sponsors for making the final installment of our 2016 Quarterly Cannabis Caucuses possible!
Be on the lookout for 2017 Quarterly Cannabis Caucus dates in the coming weeks. See you at the next Caucus in 2017!
Member Spotlight: CannaRegs
This month, as we watch nine states vote on cannabis-related ballot initiatives on Election Day, we’re highlighting NCIA member CannaRegs, the company that is responsible for the data that appears on NCIA’s online State Marijuana Policies Map. Co-founder Amanda Ostrowitz prepares now to handle a flood of incoming data as new states begin to implement cannabis laws in the coming months and beyond.
Cannabis Industry Sector: Legal/Technology NCIA Member Since: 2015
Tell me a bit about your background and why you founded CannaRegs.
CannaRegs co-founder Amanda Ostrowitz
Prior to launching CannaRegs in May 2015, I was an attorney specializing in banking regulation. While serving in my position at the Federal Reserve Bank, I was engaged in several conversations regarding the issues of banking and cannabis. With just a few questions in mind, I began to research the rules and regulations of the cannabis industry. Although the questions seemed simple, it required several hours of research and more importantly, I noticed the answers varied by location, and at the state, county, and municipal levels. At that point I realized that I probably would not be able to fix the banking problem, but I had an idea to simplify researching the regulations into a user-friendly online database – CannaRegs was born!
What unique value does CannaRegs offer to the cannabis industry?
CannaRegs offers a unique value to the cannabis industry as the only cannabis-specific comprehensive research platform that aggregates state-, county-, and municipal-level law. Notable features of CannaRegs are:
Searchable Cannabis Rules and Regulations: The law on CannaRegs is searchable using three unique search functions—browse, smart search, and search laws. These search features were created by attorneys to address the difficulties encountered using conventional legal research tools. What previously took hours of research has been reduced to minutes.
No longer do you have to compile binders full of ordinances:CannaRegs’ technology and team of attorneys are constantly monitoring the law, keeping the database up to date. As new regulations and ordinances are adopted CannaRegs is the reliable source for a current amalgamated version of the law.
Rule-making Event Calendar: CannaRegs provides a consolidated schedule of rule and policy-making events happening around the U.S. In the month of October 2016, CannaRegs covered 82 municipal, county, and state-sanctioned meetings specific to marijuana.
Access to Official Publications: Where most databases provide access to the law, CannaRegs goes beyond by providing quick access to any official publications including forms, official guidance documents, industry bulletins, position statements, product recalls, etc.
CannaRegs Resource Tools: CannaRegs provides additional resource documents to help navigate the intricacies of cannabis rule-making.
CannaRegs & NCIA State Policy Map: This resource is the result of a collaboration between NCIA and CannaRegs that provides a detailed summary of each state’s cannabis market and regulations. This interactive resource is free to the public and is a great starting point for learning the basics about each state. CannaRegs keeps this map updated so that viewers are always looking at current information. Click on the map to see this unique member benefit or to sign up for a demo of CannaRegs.
With nine states voting for either adult-use or medical cannabis ballots on November 8, what does this mean in the larger scheme as it relates to your work?
The CannaRegs team of attorneys is prepared to begin monitoring laws and regulations for the nine state-level votes and more than 50 local marijuana ballot initiatives on November 8. It will be a busy time for the team, but it has also been exciting to see the growth in the number of CannaRegs users in anticipation of legalization.
In the larger scheme of things, the results of this election are likely to inform the trajectory of legalization for years to come. It is not just the number of states voting that is key, but also the states themselves.
California has the largest population of any state in the U.S., with nearly 12% of the entire country’s population living there. The results of California’s adult-use vote are likely to have a ripple effect throughout the country.
If California, Maine, Arizona, Massachusetts, and Nevada all approve adult-use, then nearly 25% of the U.S. population will live in states with adult-use cannabis.
If the medical initiatives in Arkansas, Florida, North Dakota and Montana all pass, then approximately 64% of the U.S. population will live in states with robust medical cannabis programs.
If the Arkansas initiative passes it will be the first state in the South to have a robust medical marijuana program. Combine that with the more limited program in Louisiana and it will only be a matter of time before the rest of the South embraces medical cannabis.
Three of the four states voting on medical cannabis are historically red states (Arkansas, North Dakota, and Montana). This is notable because up until now only two historically red states (Arizona and Alaska) have created robust medical marijuana programs. Louisiana has a more limited medical cannabis program than other red states.
Why did you join NCIA? What’s the best part about being a member?
CannaRegs joined NCIA to be able to connect with industry leaders and other cannabis organizations that are committed to best practices in the regulated market. NCIA offers several ways to support the industry in its efforts to legalize marijuana federally. As the most important trade association to the cannabis industry, NCIA has helped CannaRegs to connect with industry peers at annual conferences, networking events, or quarterly caucuses. CannaRegs was also excited to collaborate with NCIA on the creation of the State-By-State Marijuana Policy Map. We always look forward to connecting with other NCIA members, and provide a 15% subscription discount to other member businesses.
In this month’s video newsletter, we look ahead to the possibilities for progress in nine states voting on pro-cannabis initiatives on election day. With Arizona, California, Maine, Massachusetts, and Nevada voting on adult-use, and Arkansas, Florida, Montana, and North Dakota voting to create or expand medical cannabis programs, our industry has incredible potential to grow. Hear more from NCIA’s Executive Director Aaron Smith about this exciting election season.
It’s no secret that employment demands for the legal cannabis industry have soared in recent years. According to Marijuana Business Daily’s 2016 Marijuana Business Factbook, cannabis-related companies in the U.S. are now employing between 100,000 and 150,000 workers.
That data, if correct, means that legal marijuana companies in the United States are currently employing around the same number of people as there are librarians, web developers, data administrators, or flight attendants.
But the dramatic need to fill cannabis-related positions has also created some major issues for legal cannabis companies when it comes to their hiring practices. A lot of these mistakes can be found in any start-up company – but given the “Wild West” nature of the legal marijuana industry and its outlaw roots, there are also some unique HR issues.
We’ve boiled these issues down into a list: The Top 5 HR Mistakes that Cannabis Companies Make.
Poor Job Descriptions by Employers
As mentioned, many of the people now running cannabis companies don’t come from a traditional corporate background, so they’re not aware of how important a thorough and detailed job description can be.
A lot of these employers are also stuck in a start-up mentality, and haven’t yet made the mental leap when it comes to thinking long-term about who their employees are. And while these bosses are very knowledgeable by necessity when it comes to cannabis compliance and regulations, they’re still not used to explaining their company vision and mission to potential hires.
Verifying Employee Eligibility Federal law requires that every employer recruiting an individual for employment in the U.S. must have those employees complete an I-9 Employment Eligibility Verification form. The I-9 form helps companies ensure their employees’ identity and their authorization to work in the country.
But while cannabis companies are focused on legal marijuana compliance and regulations issues, this crucial piece of the employment puzzle often falls by the wayside – and that can be disastrous.
Most cannabis companies don’t realize that a missing or improperly filled-out I-9 form can lead to potentially ruinous government penalties if your business comes under a federal audit. We recently saved one of our clients close to $100,000 in fines by doing our own, internal audit of their paperwork and correcting their I-9s.
Fair Labor Standards Act (FLSA) Classifications
The FLSA are the minimum wage, overtime pay, record-keeping and youth employment standards established for employees in both the private and government sectors.
In most mainstream companies FLSA classifications help to establish which jobs should be considered exempt or non-exempt, or whether some positions are eligible for overtime.
These classifications are another important but overlooked issue for cannabis businesses. Part of the problem is because some of the jobs in the legal cannabis sector are still new and employers remain ignorant or uncertain as to how they should be classified.
For example, should the growers who daily tend the cannabis plants be considered exempt, or should that classification be reserved only for the geneticists who develop a company’s unique strains? And who gets overtime?
High Turnover
Part of this issue comes back to the dilemma of poor job descriptions. Employers in the legal cannabis sector might begin by hiring friends they can trust, but soon discover those friends don’t have the skills or commitment needed to stay with their jobs.
As a new industry, cannabis also attracts a lot of millennials – young workers for whom this might be their first “real” job, and who statistically are notorious job-hoppers. Once the novelty of working with marijuana wears off, and if they don’t feel invested in their work and their company, they often get bored and move on – taking their newly acquired skills with them.
Another important issue: hiring people who are comfortable with the rough-and-tumble cannabis culture. Most legal cannabis companies don’t want to have a rigid work environment, but they need to be concerned about potentially litigious issues that could lead to claims of harassment.
Recruiting
As these companies struggle to find the right employees, they’re often not thinking of the best methods to attract and engage potential workers, especially for the long haul. Most cannabis business employers aren’t aware they can offer their employees things like health benefits, direct deposit, and other perks that works at mainstream companies take for granted.
Admittedly the legal cannabis industry faces some very unique challenges as it grows and develops. When you’re working with an all-cash business model, it’s hard to get into the habit of keeping good records and an accurate paper trail. And the current federal prohibitions can put any legal cannabis industry high on the government’s radar when it comes to scrutiny for any possible regulatory slip-ups.
All these issues underscore why it’s very important that legal marijuana companies realize the importance of outsourcing or hiring in-house HR professionals – the people who can ensure their operations run smoothly and remain complaint across a wide variety of everyday workplace issues.
Caela Bintner, Faces Human Capital Management
Caela Bintner is Co-Founder and Managing Director of Faces Human Capital Management, based in Denver, Colorado. With over 25 years of sales, Caela has acquired a unique skill set including public relations and marketing experience.
She started her first public relations company in 1996 after she worked for The Bush Administration. She is also a member of Women Grow, the organization created to help women leverage their influence and succeed in the legal cannabis industry.
Your 2016 Cannabis Ballot Initiative Rundown
Michelle Rutter, NCIA
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
Guest Post: Cannabis Real Estate – 5 Ways to Make or Break Your Business
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.
Member Spotlight: MindRite PDX
For the month of September, we’re highlighting NCIA members MindRite PDX, a marijuana dispensary located in northwest Portland, OR. Owners Shea and Jaime Conley manage a true “mom-and-pop shop” in the cannabis industry, with the intention of representing the industry respectfully and responsibly. Most notably, within the last year they agreed to allow TV host John Quinones from “What Would You Do?” to make their dispensary the center stage for an experiment into whether passers-by would illegally buy cannabis for actors pretending to be underage.
Cannabis Industry Sector: Cannabis Providers
NCIA Member Since:
January 2016
Tell us a bit about you and why you opened MindRite PDX?
Shea and Jaime Conley, MindRite Dispensary
My husband Shea and I are the co-founders and sole proprietors of MindRite Medical Marijuana Dispensary in Portland, OR. Each of us has had a passion for cannabis and its medicinal benefits for almost our entire lives. We have both received many benefits from cannabis over the years, from general stress reduction to complete medical relief of my grand mal seizures and his migraines. We both previously worked in retail and hospitality for many years and had success managing, growing, and creating a positive work environment for our employers, but often felt unsatisfied and unrewarded.
When we realized we could enter into the cannabis industry together, following our passion for the products and realizing a dream of helping our community through a new avenue of health and wellness, while fulfilling our entrepreneurial spirits, we jumped in head first. Now we are successfully living and working in our own neighborhood and are excited to be at the forefront of the Oregon craft cannabis industry.
How does MindRite PDX provide unique value to cannabis consumers?
MindRite has developed a reputation for having the best medicine selection in Portland (voted Best Medicine Selection, Dope Magazine 2016). First, we set out to source our craft cannabis from across the entire state of Oregon, getting product from a select variety of micro-climates and elevations that provide some of the best natural environments for quality cannabis in the United States. We pride ourselves on having unique, small-batch strains that aren’t easily found elsewhere and supporting the small grower who has been honing their skills and refining their products for years. We have established strong relationships with some of the best grows in Oregon and through these relationships we’ve managed to keep cost to a minimum, translating that savings to our patients and now customers. We have had the same pricing structure and the same flower prices since the day we opened, not including the mandated taxation. Essentially, we are able to provide the highest echelon of product at the most affordable prices for our guests.
Secondly, we have made our customer care equally as important as the quality of our products. Our amazing staff shares our passion for cannabis, our desire to educate our neighborhood, and our commitment to providing safe, professional access to all things cannabis. When we originally opened, the staff decided as a group to pool all gratuities from patients (and now guests) into a charity fund, donating all of this money to a local charity of our choice. MindRite loved the idea and has fully matched every donation, helping our city by giving back several times a year.
In this last year, your place of business was featured twice on the popular television show “What Would You Do?” with John Quinones. Can you tell us what that experience was like and any lessons you learned from participating?
“What Would You Do?” TV still photo
The show was doing a special Portland edition and looking for a dispensary that was willing to participate during October 2016, for the first month of recreational cannabis sales. After many conversations regarding the content and overall tone that our business, but more importantly the cannabis industry as a whole, would be portrayed in, we decided to move forward with the shoot. We made it clear that we wanted to present the true cannabis consumer, the professional environment that cannabis can be provided in, and the importance of the medicinal benefits of the cannabis plant as well. Only after the entire production crew became daily guests at our shop (while scouting and shooting other scenarios in town) did we feel comfortable moving forward with the show.
The show’s premise is to see what someone will do in an unusual situation, using hidden cameras and actors to portray these awkward moments with the general public. They set up hidden cameras throughout our corner and inside our waiting area, having several actors (who were of legal age) pretending to be underage and asking passers-by as well as customers to purchase cannabis for them. We realized the risks we were taking with our business and the industry but felt confident in our community’s integrity and respect for safe access to cannabis.
Overall we were very happy with the final outcome of the show and felt that the risk of negative portrayal was well worth breaking the stigmas that have been deeply ingrained for many years about cannabis across the country. The producers did not tell us that the actors would also be offering additional money to coerce people to make purchases for them; we would have absolutely said no, as that is baiting and doesn’t accurately reflect the social experiment they were trying to depict. Regardless, it will continue to take mainstream media’s influence and cooperation of cannabis industry leaders to change unnecessary stigmas and misconceptions of this amazing plant and the people that benefit from it everyday.
Why did you join NCIA? What’s the best part about being a member?
Jaime and Shea Conley with Congressman Earl Blumenauer (D-OR)
We were introduced to NCIA through a personal friend [NCIA’s Bethany Moore] who had been working with NCIA for a few years. While we were building out our shop for opening, she invited me to an NCIA member networking event in Portland. It was an eye-opening experience to be in a room full of cannabis providers and consumers who were the leaders in every facet of the cannabis industry.
Seeing such a diverse, well-organized, and professional group was inspiring and fueled our passion to move forward. I can describe it best by saying we had “found our tribe” in every way. That has been the biggest benefit to becoming a member of NCIA – networking and participating with the business professionals of this ground-breaking industry!
Q4 #CannabisCaucus Dates & Locations!
By Brooke Gilbert, Director of Events & Education
Wow, does the time fly! It seems like just yesterdaywe were debuting the Quarterly Cannabis Caucus event series and now here we are – 8 months and 36 events later – getting ready to kick off the final round this October across the country.
Registration is now open for the fourth installment of our regionally based Cannabis Caucus series. Join an ever-growingcommunity of cannabis industry professionals coming together quarterly to make meaningful connections, share the latest developing trends, and take action on pressing issues, all while receiving crucial national and state-specific policy updates affecting their businesses day-to-day.
We invite you to join us in a city near you this October for the final Cannabis Caucuses of 2016:
Tuesday, October 11 – Portland, OR – ecotrust – Register!
Thursday, October 13 – Boston, MA – Hyatt Regency Cambridge – Register!
Thursday, October 13 – Miami, FL – Marseilles Hotel – Register! Tuesday, October 17 – Baltimore, MD – The Grand – Register! — ***Rescheduled, please note updated date***
Tuesday, October 18 – Chicago, IL – The Chop Shop – Register!
Tuesday, October 18 – New York, NY – Newman Ferrara LLP – Register!
Thursday, October 20 – Boulder, CO – The Riverside – Register!
Thursday, October 20 – Phoenix, AZ – mod – Register!
Tuesday, October 25 – Las Vegas, NV – Place on 7th – Register!
Tuesday, October 25 – Santa Rosa, CA – (TBD) – Register!
Thursday, October 27 – Long Beach, CA – The Grand – Register!
Thursday, October 27 – Seattle, WA – Sole Repair Shop – Register!
During July, we were able to update more than 200 member businesses on our federal advocacy efforts and provided them with the information and tools needed to engage with their elected officials during August recess. We also encouraged our members to participate in our on-site social media campaign to help put a face to our growing industry and bring visibility to the most pressing issues affecting us on a daily basis. You can help us keep the conversation going by using the #WeAreTheCannabisIndustry, #IAmTheCannabisIndustry, #CannaBanking, #DeScheduleNow, and #Reform280E hashtags on social media. Huge thanks to all those who have already participated!
Haven’t been to one of NCIA’s Quarterly Cannabis Caucuses before? Check out these photo highlights from our Q3 Northern California edition which took place at Gateway Cannabis Accelerator in Oakland, CA to see what you’ve been missing!
As always, a huge thanks to the support of our sponsoring member businesses and hosts who contributed to our efforts to foster cannabis community across the country!
Want to download the information we provided during the third quarter of our Cannabis Caucuses? Check out our Cannabis Caucus Resources page.
Have any feedback from a Caucus you attended in July? Fill out our short attendee survey to provide us with valuable feedback we’ll use to improve future events.
Interested in sponsoring an upcoming Cannabis Caucus in your area or a series of events across the country? Check out our Cannabis Caucus sponsorship guide which outlines pricing and benefits.
See you at the next Caucus in October!
Guest Post: Changes to Colorado Residency Requirements
By Charles Alovisetti, Senior Associate at Vicente Sederberg, LLC.
This is article is the second in a series, which will provide a general overview of the laws that impact raising money in the cannabis industry.
Introduction
Colorado currently has the strictest residency requirements for ownership of marijuana establishments in the United States, imposing a two-year residency requirement for any owner of a licensed business. In addition to the constraints imposed by such a lengthy residency requirement, the Colorado Marijuana Enforcement Division (the “MED”), which is the regulatory body concerned with the marijuana industry, takes a broad view of what constitutes ownership (e.g., guarantying the debt of a licensed entity can constitute ownership). Earlier this year, on May 11, 2016, in order to address the funding difficulties created by the strict residency requirements (note that because the changes to the residency requirements apply to both medical and retail marijuana businesses, this article will not distinguish between the two when discussing the legislative changes and will simply refer to licensed entities, which shall mean both medical and retail licensed entities), the Colorado Senate passed Senate Bill 16-040, as amended by the House, commonly referred to as the “Residency Bill” (the “Bill”). The Bill was subsequently signed into law by Governor Hickenlooper on June 10, 2016. The Bill, which goes into effect on January 1, 2017, will radically change the residency requirements imposed on licensed businesses. These changes are addressed in detail below. This article, with limited exceptions, only addresses the changes explicitly described in the Bill and does not address the further complexities raised by draft rules promulgated by the MED regarding the Bill since these rules are not yet final.
Current State of Colorado Law
As noted above, in addition to requiring that all owners of a licensed business be at least two-year Colorado residents (and must also meet certain background requirements), Colorado takes the view that a person or entity that has a beneficial interest in a marijuana business and/or substantial control over a marijuana business is considered an “owner.” A beneficial interest has been informally defined as being paid based on profits (whether gross or net). In determining if a person or entity has an ownership interest in a marijuana business, the state considers a non-exhaustive list of factors, including whether a person or entity 1) bears risk of loss and opportunity for profit; 2) is entitled to possession of the licensed premises; 3) has final operational decision-making authority over business; 4) guarantees the businesses’ debts or production levels; 5) is a beneficiary of the business’s insurance policies; 6) acknowledges tax liability for the business; 7) acts as an officer or director of the business; 8) is contracted to manage the overall operation of the business; 9) has a licensing agreement with the business (note that it is possible to structure licensing agreements so as to avoid triggering the determination of ownership, but this can be complicated); 10) has ownership of shares or other equity interests of the licensed business; 11) has a secured interest in furniture or fixtures directly used in the manufacture or cultivation of marijuana; or 12) has a secured loan with the business. In addition, any security interest in the furniture, equipment, or fixtures used directly in the manufacture or cultivation of marijuana or marijuana product may be considered ownership depending on the circumstances. Given the thoroughness of the foregoing list, it’s not difficult to understand why licensed entities have had difficulty raising capital from out-of-state investors.
However, Colorado laws do allow for out-of-state residents to invest in marijuana businesses through a permitted economic interest (“PEI”). A PEI is a financial interest in the form of an unsecured debt instrument, option agreement, warrant, or any other right to obtain ownership interest in a marijuana business, provided the conversion or transfer right is contingent on the holder qualifying as an owner and obtaining licensure as an owner by the MED – this could be upon the occurrence of either the holder meeting the two-year residency requirement or a change in law (which the Bill represents). A PEI may only be held by a natural person who is a U.S. resident. Holders of PEIs are subject to fingerprinting and criminal history background checks and must disclose financial and personal information with the MED in their applications. As of today, PEIs remain useful to licensed businesses since they allow them to accept out-of-state investment in advance of the Bill going into effect. On January 1, 2017, PEI holders will become eligible to have their interests converted into equity holdings in licensed businesses. After the Bill goes into effect, any kind of option, warrant, or similar convertible instrument will still be required to take the form of a PEI.
New Residency Bill
Before delving into the specifics of the Bill, it is worth noting that the summary attached to the Bill contradicts the actual law, as it was written prior to the passage of the final version of the Bill, and it should be ignored.
The Bill adds a number of new defined terms. Understanding these new terms is the key to understanding the Bill:
Direct Beneficial Interest Owner: Prior to the Bill, there was only a defined term for “Owner”; that concept has now been split in two – Direct Beneficial Interest Owner and Indirect Beneficial Interest Owner. Under the existing system, any level of control that the MED, using the 12-factor test outlined above, determined rose to the level of ownership resulted in the entity or individual being listed as a zero percent Owner (e.g., an individual who guaranteed the debts of a licensed entity might be considered as a zero percent Owner of that business, despite owning no equity in that entity). The term Direct Beneficial Interest Owner is meant to cover existing Owners who directly hold equity in a licensed entity. Direct Beneficial Interest Owners are subject to residency requirements and full background checks (except for Qualified Limited Passive Investors, a type of Direct Beneficial Interest Owner described in detail below). A Direct Beneficial Interest Owner must be either a resident of Colorado for at least one year or a US citizen. Publicly traded companies are explicitly barred from holding licenses.
Indirect Beneficial Interest Owner: The second new category that was previously included in Owner is Indirect Beneficial Interest Owner. No residency requirement exists for an Indirect Beneficial Owner. An Indirect Beneficial Interest Owner includes the following individuals and entities: (a) a holder of a PEI, (b) a recipient of a commercially reasonable royalty associated with the use of intellectual property by a licensee, (c) a licensed employee who receives a share of the profits from an employee benefit plan, (d) a qualified Institutional Investor (defined below), or another similarly situated person or entity as determined by the state licensing authority. The Bill does not explicitly state what kind of background check will be required for an Indirect Beneficial Interest Owner. Currently, the draft rules set forth an identical set of criteria to determine suitability to those for Direct Beneficial Interest Owners, but this may change in the final rules.
Institutional Investor: Up to 30% of a licensed business can be held by an Institutional Investor, and the Bill does not contemplate any residency requirement for an Institutional Investor since an Institutional Investor will be considered an Indirect Beneficial Interest Owner and residency requirements only apply to Direct Beneficial Interest Owners. The Bill sets out a list of entities that meet the definition: banks, registered investment companies, ERISA funds, and any other entities to be identified during the rule-making process. The current draft rules do not list any types of entities not specifically identified in the Bill. While not discussed in the Bill, the draft rules and legislative history make it clear that an Institutional Investor must be passive and may not have any control over a licensed company beyond voting its shares (meaning that the minority protections present in a typical non-control transaction cannot be present).
Qualified Limited Passive Investor: This is defined as a natural person who is a U.S. citizen and is a passive investor owning five percent or less of the equity of a licensed business.
New Residency Rule
In place of the existing rule that requires all Owners to be at least two-year residents of Colorado, the Bill now allows an entity to be either (i) held by an unlimited number of Direct Beneficial Interest Owners, each of whom must meet the one-year Colorado residency requirement, or (ii) if one or more Direct Beneficial Interest Owners do not meet the one-year residency, then the following conditions must be observed: (a) At least one officer of the licensed entity must be a Colorado resident of at least one year, (b) all officers with day-to-day operational control over the business must be Colorado residents of at least one year, and (c) there must be no more than 15 Direct Beneficial Interest Owners (this limitation is measured by natural persons on a look-through basis). A licensed business, whether wholly held by Coloradoans meeting the residency requirement or held by one or more Direct Beneficial Interest Owners who do not meet the residency requirement, may also have up to 30% of its equity held by qualified Institutional Investors.
Reasonable Royalties Now Allowed
One additional major change in the Bill is the allowance for commercially reasonable royalties to be paid to Indirect Beneficial Interest Owners. As the law currently stands, a royalty would be considered a form of ownership by the MED (as the royalty would likely be based on the profit of the licensed entity) and would thus make the recipient of the royalty subject to residency and other ownership requirements. In addition, the current system requires all of the Owners to be present at MED meetings—which presents a major obstacle to the operator of a licensed business who wants to enter into multiple licensing agreements since any licensor could potentially put a license at risk by refusing to attend a meeting or by committing a bad act. However, Indirect Beneficial Interest Owners, while still subject to background checks, are not subject to residency requirements or the limitation of 15 natural persons (as is the case for Direct Beneficial Interest Owners when one or more equity holders does not meet the one-year Colorado residency requirement). It may also be the case, though we will need to wait for the final rules, that removing an Indirect Beneficial Interest Owner is easier than removing a Direct Beneficial Interest Owner from a license.
Conclusion
As noted above, the MED is granted authority to promulgate rules pursuant to the Bill, and final analysis of the Bill will require careful study of these new rules. The MED is currently accepting written comments to the draft-proposed rules in advance of a formal, public hearing regarding the permanent rules on Friday, September 2, 2016. In addition, as with any other change in a regulatory regime, we will need to pay close attention to how the Bill plays out when actually put into practice.
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 and co-chair of the corporate department at Vicente Sederberg LLC. Prior to joining Vicente Sederberg, Charlie worked as an associate in the New York offices of Latham & Watkins and Goodwin 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 cannabis, 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. Charlie is admitted to practice in both Colorado and New York.
Ten Highlights (with Photos!) from #CannaBizSummit 2016
by Brooke Gilbert, Director of Events and Education
The 3rd Annual Cannabis Business Summit & Expo was NCIA’s biggest and most influential event to date! Check out these top ten event highlights which made this year’s Summit one to remember:
1. More than 3,200 inspired attendees:
2. An exciting keynote from California Lieutenant Governor Gavin Newsom, who spoke about the need to end the prohibition of cannabis from a social justice perspective:
3. Moving remarks from Oakland Mayor Libby Schaaf, who spoke about being the proud leader of a city whose economy is fueled by cannabusinesses:
4. An inspiring presentation from Ahmed Rahim, founder and CEO of world renowned B-corporation Numi Organic Tea, who shared insights into establishing a conscious culture for your company which takes people, planet, product, and profits into account to work for a better tomorrow:
5. Fifteen hours and 45 minutes of educational content over three days, featuring 30 breakout sessions and seven workshops, and led by more than 160 industry experts:
6. Fifteen tours at five locations, including retail marijuanafacilities, cultivation facilities, and analytical testing laboratories:
7. A sold-out expo hall buzzing with activity for 20hours, where more than 140 sponsors and exhibitors spread out over more than 37,000 square feet of expo hall space:
8. More than 100media personnel from more than 80 media companies, generating worldwide coverage, including in dozens of mainstream news outlets:
9. Attendees from 47U.S. states (including the District of Columbia and Puerto Rico) and 16 countries:
10. Thirty-one media and organizational partnersinvolved in the success of the Summit – thank you!
We look forward to seeing you at a future event! Register today for the Seed to Sale Show, taking place January 31 – February 1 in Denver, Colorado. Find out more at SeedtoSaleShow.com!
VIDEO: Member Spotlight on Solstice
In this video newsletter, we share the story of Solstice, a commercial cannabis producer founded in 2011 and based in the state of Washington. Vice president and co-founder Alex Cooley has infused his business model and practices with values that elevate the conversation around environmental sustainability and corporate responsibility in the cannabis industry.
Want to learn more about best practices and innovation for your cannabis business?
Register early for the best deals to attend NCIA’s Seed To Sale Show in Denver, January 31 – February 1, 2017. Sponsorship opportunities are also available!
DEA Rescheduling Announcement: What It Means, And What You Can Do
“DEA’s decision flies in the face of objective science and overwhelming public opinion.”
“The reality is that half of U.S. states have already passed effective laws allowing patients legal access to medical cannabis, and it is changing lives,”
“Continuing marijuana prohibition forces critically ill people to suffer needlessly, leaves life-changing treatments undeveloped, and keeps patients and providers in limbo between state and federal laws.
“We appreciate the positive step – however small – of opening up a few additional avenues for medical marijuana research. But patients deserve more, and Congress should help them by removing marijuana from the Controlled Substance Act, allowing state programs and medical research to move forward without interference.”
NOW WHAT?
This DEA decision presents an opportunity to elevate the conversations we are having with both the public and Members of Congress. It’s important that we continue to tell our stories about the benefits of state-regulated marijuana industries and the need to end federal marijuana prohibition.
Now, more than ever, is a chance to raise our voices in unison to make our issues undeniably heard.
We encourage you to get involved with Congress at home by attending a town hall meeting, inviting Members of Congress or their staff on a tour of your business, and scheduling meetings with your Member’s district office.
For advice, help, or materials to assist you, please contact NCIA’s Washington, D.C. office by emailing michelle@thecannabisindustry.org.
If your business is not yet a part of the movement, please join NCIA today.
Senate Subcommittee Just Says Yes… To A Hearing
by Michelle Rutter, Government Relations Coordinator
Earlier this month, the Senate Judiciary Subcommittee on Crime and Terrorism held a hearing entitled ”Researching the Potential Medical Benefits and Risks of Marijuana,” which was presided over by Sens. Graham (R-SC), Whitehouse (D-RI), Klobuchar (D-MN), Grassley (R-IA), and Blumenthal (D-CT). Witnesses included Sen. Kirsten Gillibrand (D-NY) and Sen. Kirsten Gillibrand (D-NY), federal officials from NIDA (National Institute on Drug Abuse), NIH (National Institute of Health), and the FDA (Food and Drug Administration), and members of the medical and legal community. For more information on the hearing and the witnesses, click here.
The first panel included Sens. Gillibrand (D-NY) and Booker (D-NJ), who both testified on the benefits medical cannabis can provide and noted that they are both original co-sponsors of the Compassionate Access, Research Expansion, and Respect States Act (S. 683), better known as the CARERS Act. Some of the key points that the Senators mentioned during the hearing included removing cannabis from its designation as a Schedule I drug, dismantling NIDA’s monopoly on cannabis used for research, and the urgent need to ease restrictions to allow for more research.
The next panel was comprised of two government agency officials: the Director of the Division of Extramural Research at the National Institute on Drug Abuse at the National Institutes of Health, and a doctor who is Deputy Center Director for Regulatory Programs at the FDA. Both panelists repeatedly stressed the importance of continued research into the therapeutic and medicinal benefits of cannabis, as well as the development of cannabis-based drugs. The FDA official also highlighted that the DEA is currently reviewing a recommendation on cannabis’s designation as a Schedule I drug, and the decision is pending.
The third panel included two doctors and a lawyer representing the DEA. The first doctor noted that THC and CBD do have therapeutic value but stressed the need for more research to determine if/how to mitigate any negative side effects of medical cannabis use. The second doctor on the panel is a well-known cannabis opponent, whose testimony sounded more like “reefer-madness” than a Senate hearing on cannabis in 2016. The lawyer present gave a moderately short statement, but did state that the DEA regulations around Schedule I drugs already provide a great deal of flexibility for research and can and are waived to allow legitimate studies and that the reclassification of cannabis to Schedule II would have little impact on the barriers to research – a statement that most in the cannabis community would strongly disagree with.
During questioning, Sen. Graham (R-SC) asked if the witnesses believed that cannabis should be re-scheduled as a Schedule II drug. Both the FDA official and the NIDA/NIH official weighed in, and with the same conclusion: more research is needed in order to make that determination. Chairman Graham also asked how to best facilitate medical cannabis research, which was answered by the DEA’s lawyer, who responded that the “flexibility” in the regulatory system could allow for it.
What does it mean?
Past Congressional hearings regarding cannabis have typically focused on the harms, not the benefits, of marijuana. As such, it’s a positive sign that the Chairman of the Senate Judiciary Subcommittee on Crime and Terrorism, Lindsey Graham (R-SC), held a hearing on the potential therapeutic benefits of medical cannabis. The main takeaway from the hearing was the desire from all parties – Senators, government officials, and medical professionals alike – for more research on cannabis, its compounds, and its effects.
Regardless, this hearing shows the progress that the industry has made in Congress and the momentum building nationwide behind the cannabis movement.
Top 3 Ways to Get Involved with Congress at Home During August Recess
by Michelle Rutter, Government Relations Coordinator
Each year, Congress recesses for the month of August. Traditionally, this time has been used for Members to return home to their districts and meet with constituents and, of course, campaign for re-election. Though this makes August a quiet month in D.C., it’s a great time for you and your colleagues to get involved with the political process, engage with Members of Congress, and educate them on cannabis policy.
Here are the top 3 ways you can get involved at home during August recess:
Attend (or plan) a town hall
Town hall meetings are an excellent way for businesses, local leaders, and representatives of the cannabis movement to communicate with elected officials about issues affecting your community. Make sure you call or check your Representative and Senators’ websites to see if any town halls have been scheduled during August recess. If they aren’t planning on holding one, consider planning a town hall yourself and inviting various elected officials to talk about cannabis policy in your community and on the federal level.
Invite Members of Congress or their office staff on a tour of your business
Even though cannabis is arguably more mainstream than it’s ever been, many elected officials still have not had the chance to experience what the responsible and legal cannabis industry looks like firsthand. Whether you’re involved with growing, processing, or dispensing cannabis, or operate an ancillary business, a tour with a Member of Congress and/or their staff can be invaluable to them. Reach out to your elected officials’ district office and ask if they would be interested in a tour- their answer may surprise you!
Schedule a meeting with your Member’s district office
August recess means Members of Congress are home for an entire month and is a great opportunity to meet with them and their staff! There are very few things more compelling than a personal story when talking to elected officials, so whether your experience has been with the benefits of medical cannabis, the unfair tax burden of 280E, or the struggle for traditional banking, be sure to schedule an appointment with your district office to tell that story. Click here to find out who your Representative is and visit their website to see where their district office is located.
We all have a responsibility to educate and engage with elected officials in order to change the perception surrounding cannabis. August recess is the perfect opportunity to get involved with federally elected officials without having to leave home! If you need advice, help, or materials to assist you, remember to contact NCIA’s Washington, D.C. office by emailing michelle@thecannabisindustry.org.
Member Spotlight: Cannabis Consumers Coalition
In the cannabis industry, the life cycle of growers, retailers, extractors, and infused product manufacturers would not exist were it not for the consumers. As we move toward self-regulating our industry from the inside out, it’s important to consider all views and perspectives in those decision-making processes. This month, we check in with Larisa Bolivar of Cannabis Consumers Coalition to talk about the work she’s doing to protect the interests and concerns of cannabis consumers.
I have been in the cannabis industry/movement since 2001 when I moved to Colorado as a medical cannabis refugee, and I have been a cannabis consumer for 25 years. I helped to establish safe access for Colorado patients through my organization called Caregivers for Safe Access, which became the Colorado Compassion Club and the first dispensary in Colorado prior to 2009. After several years on hiatus from the front lines of the movement, and spending time consulting on policy, business and communications in the emerging industry, I saw a need for more consumer-focused advocacy and that what was missing was a consumer protection agency. Much of the conversation had been focused on the needs of the industry, and that continues to play out today. It is my mission to change that. I believe that consumers are who drive the economy.
I believe my background is perfect for the task of playing watchdog for the industry. I have worked in startup and corporate environments in multiple emerging markets, including software, dot-coms, clean tech, and cannabis. My work in clean tech and software really prepared me for working in a tightly regulated environment. The clean tech company that I worked at, GridPoint, a billion-dollar-valuated startup with successful launch and exit is a smart grid company focused on energy management in the utility space, one of the most regulated industries in our country. When working in software, I worked as a technical recruiter staffing sensitive, high-level technical contracts mostly in defense, which is also highly regulated. I understand highly regulated environments really well, and it is easy to forget the consumer when trying to jump through so many regulatory hoops. I believe that with a strong consumer voice, we will eventually have fewer regulations.
Larisa Bolivar, Executive Director of Cannabis Consumers Coalition.
How does CCC provide unique value to the cannabis industry and movement?
The mission of the Cannabis Consumers Coalition is to provide cannabis consumers with a voice in the growing cannabis industry, and to ensure consumer rights and ethical behavior on behalf of cannabis-related businesses. The biggest value we provide is giving consumers a powerful voice and helping them to realize the purchasing power they have with their dollar in helping to hold the industry accountable to operating in an ethical, consumer-centric model. We provide consumers with a powerful voice, and have been very effective in changing laws to protect consumers. This occurred recently when we obtained and released the names of pesticide violators in Colorado. We quickly made a lot of enemies, and good friends, in the industry. Some business owners have called us anti-industry, which is quite the contrary. I risked my life trailblazing medical marijuana and laying the foundation for the launch of a billion-dollar industry in Colorado. This was pre-regulation, prior to when moneyed interests got into the game and created the framework for regulations. The industry began with blazing the path to create that possibility, breaking ground for the foundation to be laid. As such, I feel personally accountable for it, along with many of my peers and supporters who were also trailblazers and pioneers.
Consumers deserve the right to know that the cannabis they are purchasing is indeed the quality that is being marketed. They also need a strong voice to fight for their rights, and that is what I myself provide, especially with my history of activism, along with the support of our legal team at Fox Rothschild LLP. An Am Law 100 law firm, they have nearly 750 attorneys spanning multiple practice areas and across multiple industries, and have a reputation for working with nonprofit organizations and community groups.
Another value we provide is in helping businesses strive to provide the best consumer experience and high quality products. Quality end products in the cannabis industry are multi-faceted, starting with how a plant is grown, how it’s positioned in the market, to the consumer experience at retail outlets. All of it is so interrelated.
Here in Colorado, the issue of public consumption is hot and there are a couple of initiatives in the works this year to address that need. Can you tell me more about that and how you’re involved in this effort?
Indeed this is probably the hottest issue Colorado. Voters voted for the right to use cannabis legally, yet there are no places to consume. This also poses issues for cannabis consumers visiting the state. There are bed and breakfasts and some hotels that allow for consumption, but there are no places to consume and socialize. There are two initiatives in consideration.
There is the Responsible Use initiative put forth by Denver NORML, which is a private club designated license that requires people to become members, bring their own cannabis and allows for permitted events. The other initiative, The Neighborhood Approved Cannabis Consumption Pilot Program Initiative, will give permission to businesses, including bars, to allow cannabis consumption. Either one will be good for consumers. One is more exclusive, and by requiring membership it keeps things manageable and accountable by limiting the amount of people who can join, it does alienate neighborhood groups and businesses. My concern with the initiative permitting businesses to allow consumption, including bars, is that tourists new to cannabis consumption and consuming alcohol, can easily over-consume the two if they are not “seasoned” cannabis consumers.
Why did you join NCIA?
We joined NCIA after careful research into industry trade groups and selected the one that was the most diverse, influential, and had an ethical and inclusive industry. It is our desire to see a successful multi-billion dollar industry built on a foundation of integrity and inclusiveness, and NCIA offers that. While we may not align with the philosophies of all members, the organization pushes integrity in all that is does, and what I like the most is that it has organized councils that are really committed to creating an exemplary foundation for the entire industry, not just its members. You can see this in their Minority Business Council, where the discussions are always industry and community focused. I also like the networking available, especially meeting other passionate cannabis business owners across the country and having dynamic and energizing conversations.
NCIA is seeking a Business Development Specialist
NCIA is now hiring to expand our ten-person national team!
We’re seeking a Business Development Specialist. The application process is detailed below. (Do not call NCIA’s office to apply or follow up.)
Business Development Specialist – Membership and Relationship Sales:
This position can be based in any of the following regions: Denver, CO; Portland, OR; Seattle, WA; or San Francisco, CA. NCIA, the undisputed leading trade association in the fastest growing industry in the US is seeking a sales consultant and account executive, able to up-sell existing members and attract new members to the organization, and its mission.
This full-time position will handle business development and current client relationships in a specified territory.
We’re a hard working team seeking a candidate who is self-motivated, innovative, and dedicated to giving our team and clients the very best.
Key Responsibilities:
Prospect multiple direct-to-plant businesses, via cold-calling (50-70- cold calls per day on certain days), networking, and email/e-marketing.
Attend cannabis industry events to network and prospect, and represent the association.
Articulate the association’s value proposition to decision-makers to assess buying interest.
Promote the association’s products and services with various management levels and professionals across business disciplines.
Achieve or exceed goal for evaluations and first meetings on a monthly basis.
Qualify all sales leads based upon specific lead qualification criteria definitions.
Provide baseline research within targeted accounts to identify the key contacts and critical account information prior to calling.
Develop superior customer service relationship with prospects.
Learn and demonstrate a fundamental understanding of the association’s products and services, and clearly articulate capabilities and advantages to prospective members.
Contribute to every component of the critical functions associated with fulfilling the sales cycle (forecasting, reporting, customer database maintenance and data entry, correspondence, and communications).
Engage with social media platforms, create alerts on keywords, research topics and share information with individuals responsible for decision making in this industry.
Update lead rank/stage and prospect interaction in CRM. A high level of proficiency with CRM workflow, web-based demonstrations, shared calendars, Skype and instant messaging, as well as with office software such as Word and Excel and their Google equivalents is required.
Qualifications
Professional level sales experience required. Experience in association sales is preferred, as is experience in the cannabis industry. Ideal candidates will be located to work from the Denver, CO office, or work from home office in Seattle, WA, Portland, OR or San Francisco, CA.
Your sales process will be primarily telephone and online application based with regular territory visits. The Business Development Specialist reports to NCIA’s Director of Development. Frequent travel throughout the U.S. is required.
How to apply
Follow all of the instructions below to e-mail a one-page cover letter and resume to jobs@thecannabisindustry.org.
Please include the job title, “Business Development Specialist” in the subject line of your email.
In your cover letter, please specify how you learned about the job opening, your stance on marijuana law and the industry’s role in reform, and why you think you would be an excellent fit for the position sought. Feel free to include any other information you deem relevant, as long as your cover letter is limited to one page.
Your cover letter and resume must be sent as one single PDF document that includes your first initial and last name in the file name.
When your application is received, you should receive an automatic email confirmation. Do not call NCIA’s office to follow up. If we are interested in more information or an interview, we will contact you within about a week.
Salary:
Base salary plus commission, negotiable.
Benefits:
Full health, dental, and life insurance coverage, an employer-matched retirement plan, and a generous PTO policy.
Education:
4-year Degree
Colorado Cannabis Cultivators: Participate in an Energy Use Case Study
The Cannabis Conservancy (TCC) is inviting all types of growers (indoor, greenhouse, and outdoor) in Colorado to participate in an Energy Use Case Study for the Colorado Energy Office (CEO). Growers can choose to be named and celebrated for their participation or remain absolutely anonymous. Participation is requested as soon as possible, and no later than July 31, 2016. If you are interested, contact Jacob Policzer, President of TCC, today.
The Study TCC has been contracted by the Colorado Energy Office to conduct a research report on energy use in the marijuana cultivation industry. The purpose of the report is to understand where the industry is developing in Colorado, how energy (and water use) by the industry is impacting our grid (and water supplies), what is feasible and available to the industry in terms of operational and technological efficiencies and funding, and to create a baseline for the industry with accurate data. As part of this study, TCC is required to conduct case studies and work with growers of varying operational types (outdoor, indoor, and combination) in the state to track interval load data to create a baseline for the industry.
Grower Involvement Growers will be required to have smart meters and sub meters installed at their operations and participate in an individualized on-site participant energy workshop. TCC will pay for the installation and maintenance of the meters as well as compensate growers for workshop participation. The choice to participate anonymously or publicly is absolutely at the discretion of the participant.
The individualized participant energy workshop will include: document reviews, building envelope analysis, grow system analysis (based on TCC Sustainability Standards), interviews, and meter installation.
What are the Benefits to Growers? By participating in the case study, growers will learn very detailed information about their energy consumption, which is the first step in system optimization, leading to higher yields and cost savings. Growers will also receive energy and water use consultation services from TCC for system optimization and are one step closer to Sustainability Certification. If growers choose to be named in the case study they are demonstrating their industry leadership and commitment to sustainability.
What is the Colorado Energy Office (CEO)? The CEO’s mission is to improve the effective use of all of Colorado’s energy resources and the efficient consumption of energy in all economic sectors, through providing technical guidance, financial support, policy advocacy, and public communications.
What is The Cannabis Conservancy (TCC)? TCC’s mission is to empower and assure that the regulated cannabis industry achieves environmental, economic, and social sustainability.
Video Newsletter: #CannaBizSummit Recap and Seed to Sale Show Announcement
Did your team join us for NCIA’s 3rd annual Cannabis Business Summit & Expo in Oakland last month, where we got inspired, educated, and connected with more than 3,000 cannabis industry professionals?
In this month’s video newsletter, hear from NCIA’s Aaron Smith and Brooke Gilbert as we look back on the most exciting and successful event in NCIA’s history, and announce our upcoming Seed To Sale Show, happening in Denver, January 31-February 1, 2017.
This month’s NCIA Member Spotlight takes us to Ohio to speak with Andy Joseph, founder and president of Apeks Supercritical, whose company manufactures botanical oil extraction systems utilizing subcritical and supercritical CO2. Apeks recently became Regional Winner and National Finalist of the EY (Ernst & Young) Entrepreneur of the Year — recognized for outstanding leadership, ingenuity and entrepreneurial spirit.
NCIA Member Since:
August 2013
Tell us a bit about you and why you founded Apeks Supercritical?
Andy Joseph, Founder and President of Apeks Supercritical
I had been building botanical extraction equipment in my barn on weekends for about ten years as a side business to help pay college expenses for my five children. I saw an opportunity to grow my Apeks business with the sky-rocketing demand for extraction equipment as legalization of cannabis expanded. Along with that, after talking to many physicians, I became inspired to have a role in helping provide patients with cannabis that’s safer to consume with products processed from non-toxic CO2 subcritical and supercritical extractions.
So I left my job as Director of Welding and Testing Labs at Edison Welding Institute (EWI) to go all in with manufacturing CO2 extraction equipment, primarily for the cannabis industry. Apeks plans to eventually expand into other industries as well. We want to bring CO2 extraction to the masses.
How do you provide unique benefits to cannabis business owners?
Apeks Supercritical Systems
CO2 extractions offer greater safety on two levels: processing and consumption. CO2 is not flammable or explosive so our equipment is safer to operate for our customers, and they don’t have to worry about processing requirements associated with butane and ethanol. In addition, our customers can offer their customers purer extractions because there are no residuals in the extracted material when using CO2 as a solvent.
CO2 is environmentally friendly and recyclable which saves operating expenses for our customers.
Our extraction systems deliver processing efficiencies. Our Diaphragm Compressor Technology provides faster and more energy-efficient extractions and our patented Valveless Expansion Technology (no decompression valves) removes the risk of product getting clogged.
Also, in-house financing to customers. This is especially helpful given the difficulty people in the cannabis industry have in getting financing from banks for large capital purchases. We’ve provided financing for 40 to 50 customers.
As a business owner, you’re very involved in not only federal, but also state and local politics. Can you tell us more about the progress being made on behalf of cannabis policy in your home state of Ohio?
Last year’s ballot initiative in Ohio was so misguided, I had to speak out against it. Since then, I’ve been proactive in educating state and local legislators about the multi-faceted factors surrounding legalization of medical marijuana, even arranging for Dr. Sue Sisley of Arizona and other experts to testify on the benefits of medical cannabis. Now that Governor Kasich has signed a bill legalizing medical marijuana, I am lobbying to be appointed to the state’s Medical Marijuana Advisory Commission to help to ensure the program is properly administered.
Andy Joseph testifying to Ohio House of Representatives
There needs to be a proper balance between patient access to safe, tested medical cannabis and the requirements placed on the businesses that make it available. For patients to have the access they need, there must be an appropriate list of qualifying conditions, physician protection, and access to dispensaries. Likewise, regulatory measures on businesses must be reasonable. If licensing or taxation is too burdensome, businesses will not be sustainable, especially given that many start-ups in this industry already struggle to get the financing they need.
Why did you join NCIA?
I joined soon after NCIA was established because I appreciated its focus on supporting businesses in this fledgling industry. Now that medical marijuana is legal in Ohio where we manufacture our equipment, Apeks will begin processing as well. So I appreciate even more the work of NCIA in lobbying for federal policy reform, particularly 280E tax and banking solutions, as Apeks transitions from an ancillary business into the processing side as well.
Registration is now open for the third quarter of our Quarterly Cannabis Caucus events series! Join more than 600 cannabis industry professionals this July in networking and sharing best business practices, as well as the latest national and local policy updates.
Tuesday, July 12 – Portland, OR – Opal 28 – Register!
Tuesday, July 12 – Washington, D.C. – The National Press Club – Register!
Thursday, July 14 – Boston, MA – Hyatt Regency Cambridge – Register!
Thursday, July 14 – Miami, FL – Biltmore Hotel – Register!
Tuesday, July 19 – Chicago, IL – The Chop Shop – Register!
Tuesday, July 19 – New York, NY – LMHQ – Register!
Thursday, July 21 – Denver, CO – Jane HQ – Register!
Thursday, July 21 – Phoenix, AZ – mod – Register!
Tuesday, July 26 – Las Vegas, NV – Place on 7th – Register!
Tuesday, July 26 – Santa Monica, CA – Real Office Centers – Register!
Thursday, July 28 – San Francisco, CA – Gateway Cannabis Accelerator – Register!
Thursday, July 28 – Seattle, WA – Sole Repair Shop – Register!
The second round of NCIA’s new quarterly educational and networking series took place this April and they were a success by every measure. Thank you to the 235 member companies and 650+ supporters who joined us over the course of three weeks in 12 different states around the country.
Haven’t been to one of NCIA’s Quarterly Cannabis Caucuses before? Check out these photo highlights from the second quarter:
NCIA’s Colorado Quarterly Cannabis Caucus with Dana Rohrabacher
We could not have held these events without the support of our sponsoring member businesses and hosts so huge thanks to all those listed below!
Want to download the information we provided during the second quarter of our Cannabis Caucuses? Check out our Cannabis Caucus Resources page.
Have any feedback from a Caucus you attended in April? Fill out our short attendee survey to provide us with valuable feedback we’ll use to improve future events.
Interested in sponsoring an upcoming Cannabis Caucus in your area or a series of events across the country? Check out our Cannabis Caucus sponsorship guide which outlines pricing and benefits.
See you at the next Caucus!
Video Newsletter: Member Spotlight on Bryna Dahlin of CannaRegs
In this month’s Video Member Spotlight, we introduce you to Bryna Dahlin, a double-member of NCIA through her law firm Rollman & Dahlin, LLP, and as general counsel to CannaRegs.
CannaRegs provides enhanced access to all cannabis-related rules and regulations from state, county, municipal, and federal sources, and aggregates these rules and regulations. NCIA’s new State-by-State Marijuana Policies Map is powered by CannaRegs and provides a valuable overview of every state’s approach to cannabis and cannabis markets. (Click here to request a demo of CannaRegs’ services and save 15% if you’re an NCIA member.)
Watch this video to hear more from Bryna, and catch her speaking on two panel discussions at the Cannabis Business Summit and Expo next week in Oakland, CA, June 20-22. All NCIA Members save $150 on admission. Register today!
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MassRoots (MSRT), a Denver-based social networking company for cannabis users, made headlines when it was denied approval to be listed on NASDAQ. According to MassRoots, the stock exchange justified the decision by claiming that the company was aiding and abetting the distribution of an illegal substance. Some speculate, however, that the decision considered the company’s low share price, although MassRoots stated it did meet the listing requirements with a market capitalization in excess of $40 million and more than 300 shareholders. NASDAQ did not publicly provide the grounds for its rejection. 
There are other, less honorable reasons why a company might want to trade OTC. When a public stock is widely traded, it’s difficult to influence the price of the stock. Imagine trying to materially change the price of Google’s stock – it would require a vast sum of money. But when a company’s stock is infrequently traded and information about that stock is limited, it’s much easier for an individual or group to influence a stock’s price. And information does tend to be quite limited when it comes to OTC stocks. In contrast to stocks listed on the major exchanges, not all stocks that trade on the OTC Link are required to be registered with the SEC. As a result, the overall level of information available for OTC stocks is both less detailed and less up-to-date than that of stocks traded on the NYSE or NASDAQ. It is also not uncommon for an OTC stock to be deficient in providing the limited information that is required. 
But while cannabis companies are focused on legal marijuana compliance and regulations issues, this crucial piece of the employment puzzle often falls by the wayside – and that can be disastrous.
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.
Colorado currently has the strictest residency requirements for ownership of marijuana establishments in the United States, imposing a two-year residency requirement for any owner of a licensed business. In addition to the constraints imposed by such a lengthy residency requirement, the Colorado Marijuana Enforcement Division (the “
One additional major change in the Bill is the allowance for commercially reasonable royalties to be paid to Indirect Beneficial Interest Owners. As the law currently stands, a royalty would be considered a form of ownership by the MED (as the royalty would likely be based on the profit of the licensed entity) and would thus make the recipient of the royalty subject to residency and other ownership requirements. In addition, the current system requires all of the Owners to be present at MED meetings—which presents a major obstacle to the operator of a licensed business who wants to enter into multiple licensing agreements since any licensor could potentially put a license at risk by refusing to attend a meeting or by committing a bad act. However, Indirect Beneficial Interest Owners, while still subject to background checks, are not subject to residency requirements or the limitation of 15 natural persons (as is the case for Direct Beneficial Interest Owners when one or more equity holders does not meet the one-year Colorado residency requirement). It may also be the case, though we will need to wait for the final rules, that removing an Indirect Beneficial Interest Owner is easier than removing a Direct Beneficial Interest Owner from a license. 
3. Moving remarks
4. An inspiring
5. Fifteen
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“The reality is that half of U.S. states have already passed effective laws allowing patients legal access to medical cannabis, and it is changing lives,”
Each year, Congress recesses for the month of August. Traditionally, this time has been used for Members to return home to their districts and meet with constituents and, of course, campaign for re-election. Though this makes August a quiet month in D.C., it’s a great time for you and your colleagues to get involved with the political process, engage with Members of Congress, and educate them on cannabis policy. 
