NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
by Madeline Grant, NCIA’s Government Relations Manager
Founded in 2010, the National Cannabis Industry Association is the oldest and largest trade association representing legal cannabis businesses. Our membership consists of hundreds of forward-thinking businesses and tens-of-thousands of cannabis professionals from coast to coast. That being said, our work and effectiveness in cannabis policy reform continues to be one of the most important duties at NCIA. During the pandemic, NCIA’s government relations team continued to work to support congressional offices through education and conversation. As we continue to be effective on Capitol Hill, our lobbyists work closely with NCIA’s Evergreen roundtable to effectively shape policy reform.
Due to Evergreen members’ investment in shaping policy for the cannabis industry, we are able to take our Government Relations work to the next level. This month, we will be hosting our first ever Virtual Mini-Lobby Days, taking place the week of January 31. As we continue to represent a value-driven, responsible industry, our main goal is to educate congressional offices on all aspects of cannabis policy reform; social equity, banking, 280E, scientific data, and much more. I want to thank our Evergreen members for supporting our policy agenda.
You’ll remember that during the 116th Congress, the SAFE Banking Act became the first cannabis-related bill to be passed by a chamber of Congress. It also became the first piece of cannabis legislation to pass the 117th Congress in April of 2021 by a vote of 321-101. Since last spring, the bill has languished in the Senate due to disagreement over enacting comprehensive versus incremental reform.
This year, expect pressure on the passage of SAFE to increase. While efforts to enact comprehensive reform continues, the votes are simply not there as of now. If you’re interested in learning more about this conundrum, take a look at this piece that the Brookings Institute recently posted.
NCIA is continuing to build support for the SAFE Banking Act in the Senate, but some big news was announced recently that will certainly impact the legislation in the future: longtime champion and lead sponsor, Rep. Ed Perlmutter (D-CO), just announced that he will not be running for re-election next session. Rep. Perlmutter spoke to Colorado Public Radio this month about his decision not to run for reelection this November and his disappointment that, while the House has approved the Secure and Fair Enforcement (SAFE) Banking Act five times now in some form, the Senate has failed to advance it under both Republican and democratic leadership. The congressman says that he’s going to work to pass his marijuana banking bill before his time on Capitol Hill comes to an end.
There are numerous bills that have received much attention in terms of descheduling cannabis – among them the MORE Act (H.R. 3617), the States Reform Act (H.R. 5977), and the discussion draft (not formally introduced) of the Cannabis Administration and Opportunity Act (CAOA). Please read my colleague’s blog HERE for more detail.
As we continue to discuss comprehensive legislation with Capitol Hill offices, our main focus is to continue to be a resource when these offices have questions or concerns. It is imperative that NCIA remains in conversations as language is analyzed and discussed. As we work with NCIA members and our Evergreen roundtable, we continue to relay the burden of federal prohibition and how it impacts our businesses and communities.
There are ways for you to be more active as an NCIA member. For example, you can consider applying to be on one of NCIA’s committees this summer. As a committee member you’ll work alongside other cannabis professionals as thought leaders to develop industry standards. Some of our committees include: Education committee, Retail committee, Hemp committee, State Regulations committee, Diversity, Equity & Inclusion committee, and many more.
If you are a larger company looking to make a meaningful investment in NCIA’s government affairs work, there is the opportunity to join our Evergreen Roundtable. For more information or a consultation feel free to email Madeline@TheCannabisIndustry.org. Stay tuned for policy updates from our Government Relations team.
by Michelle Rutter Friberg, Deputy Director of Government Relations
With the start of 2022 also comes the final year of the 117th Congress. Last year was marked with some small victories, although meaningful cannabis reform has yet to be enacted on the federal level this session. While it’s a midterm election year, I have no doubt that we’ll see some significant movement over the coming months. Keep reading to see my answers to some of your FAQ’s for the new Congress:
You’ll remember that during the 116th Congress, the SAFE Banking Act became the first cannabis-related bill to be passed by a chamber of Congress. It also became the first piece of cannabis legislation to pass the 117th Congress in April of 2021 by a vote of 321-101. Since last spring, the bill has languished in the Senate due to disagreement over enacting comprehensive versus incremental reform.
This year, expect pressure on the passage of SAFE to increase. While efforts to enact comprehensive reform continues, the votes are simply not there as of now. If you’re interested in learning more about this conundrum, take a look at this piece that the Brookings Institute recently posted.
NCIA is continuing to build support for the SAFE Banking Act in the Senate, but some big news was announced this week that will certainly impact the legislation in the future: longtime champion and lead sponsor, Rep. Ed Perlmutter (D-CO), just announced that he will not be running for re-election next session.
There are numerous bills that have received much attention in terms of descheduling cannabis – among them the MORE Act (H.R. 3617), the States Reform Act (H.R. 5977), and the discussion draft (not formally introduced) of the Cannabis Administration and Opportunity Act (CAOA).
Back in the 116th Congress, the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act became the first piece of comprehensive legislation to pass the House of Representatives by a vote of 228-164. More recently, the MORE Act passed out of the House Judiciary Committee in September 2021 by a vote of 26-15. While this is certainly news to be celebrated, the bill has been referred to another eight committees of jurisdiction and faces a more conservative chamber overall than last session for full passage.
The States Reform Act is a newer piece of legislation that was introduced in the House by freshman Congresswoman Nancy Mace (R-SC). The bill deschedules cannabis, regulates it through ATF/TTB for cannabis products and FDA for medical use, and institutes a 3% federal excise tax on products to fund law enforcement, small business, and veterans mental health initiatives. Many have lauded the pro-business elements of the bill, however, additional provisions must be added to address equity and restorative justice. It’s unlikely that the bill will move this Congress for partisan reasons – particularly during an election year.
As for the Senate-led CAOA – there are too many unknown elements to make any real predictions! Senate Majority Leader Schumer (D-NY), Finance Committee Chairman Wyden (D-OR), and Sen. Cory Booker (D-NJ) outlined their plans for the CAOA in February 2021, unveiled the text in July 2021, with comments due by September 1 (make sure you check out NCIA’s response!). Due to the sheer magnitude of input received, the never-ending pandemic, and other legislative priorities, official language still has not yet been introduced. NCIA continues to work with the sponsoring offices on the CAOA and anticipates introduction in the spring.
If you’re following cannabis policy at the federal level, definitely keep your eyes on what’s happening in various congressional committees. Given that there were few cannabis-related hearings and markups in 2021, I’m hopeful that there will be more this year. I’ll specifically be keeping my eye on both chambers’ appropriations, financial services, tax, and judiciary committees.
Midterm elections will be here before we know it, but NCIA is continuing to keep the pressure on our elected officials to reform our outdated cannabis laws. Want to learn more about what’s possible? Make sure your company is an active member of NCIA and register for our next webinar, check out our podcast, and hop on over to NCIA Connect to chat with us and learn more about what we’re working on in D.C.!
by Morgan Fox, NCIA’s Director of Media Relations
The last week or so has been an interesting one in Congress when it comes to cannabis policy reform, and carried with it the usual mix of positive and unfortunate developments.
First, in yet another installment in the long and ongoing saga that is the SAFE Banking Act’s path toward becoming law, a minor setback. Champion and lead sponsor Rep. Ed Permutter had been working for weeks to get SAFE Banking language included in the NDAA, or National Defense Authorization Act. This spending package is typically focused on security and military matters, and is considered “must-pass” legislation by both chambers. Now, you may be asking what allowing banks to more easily work with legal cannabis businesses has to do with national security, and the answer – oddly enough – is a lot. Beyond the obvious public safety benefits of no longer forcing most cannabis businesses to operate entirely in cash and making them targets for crime, allowing access to banking would dramatically increase financial transparency in the industry. This would give law enforcement additional tools to help prevent the admittedly rare occurrences of criminals extorting legal businesses or using them to launder money, which is certainly a security concern. Perhaps even more relevant, being able to use the financial services that are available to other legal industries would help remove significant barriers to entry into the legal market and allow small cannabis businesses to be more competitive with unregulated operators, some of whom have ties to international drug trafficking organizations that present an ongoing threat to global security.
Unfortunately, Rep. Perlmutter decided not to add the banking language to the NDAA at the urging of Speaker Pelosi in order to ensure the spending package would pass without issue. Despite this compromise, however, Rep. Perlmutter has vowed to attempt to add it to every available legislative vehicle going forward. Given the fact that the Senate is currently stalling on the SAFE Banking Act as a standalone bill, this may be the most viable strategy of getting cannabis banking reform through both chambers before the end of the current Congress.
Speaking of other vehicles for reform, the ongoing appropriations process continues to hold hope for passing a number of cannabis-related items in the near future. Lawmakers recently approved a continuing resolution to fund the government through February and avoid a shutdown. This means that there will be no changes to the previous budget until then, but it does give us more garner support for the provisions that we want to make sure are part of that spending package. That includes preventing the Department of Justice from targeting state-legal adult-use cannabis businesses and programs, SAFE Banking, improving access for veterans, expanding research, and more.
In better news, Reps. David Joyce (R-OH) and Alexandria Ocasio-Cortez (D-NY) partnered up to introduce a bill that would provide federal support for state-level expungement efforts. The Harnessing Opportunities by Pursuing Expungement (HOPE) Act would allocate $20million for a grant program to help reimburse states for the costs associated with expunging non-violent cannabis convictions. This is incredibly important because most of the federal expungement conversation has focused around federal convictions, yet the vast majority of arrests and convictions occur under state laws. Most states lack the resources and infrastructure to effectively address this issue at a large enough scale and in a manner that is affordable to the victims of prohibition who are just trying to clear their records of convictions for behavior that is now legal for a majority of Americans. It is wonderful to see bipartisan support for this important legislation, and we look forward to working with lawmakers to push it through as soon as possible.
That’s all for now, but stay tuned for further updates from Capitol Hill. And don’t forget to register for NCIA’s Cannabis Business Summit in San Francisco next week!
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Recent polling from Gallup showed that an astonishing 68% of Americans believe that cannabis should be legal. And while support spans age groups and party lines, cannabis is usually thought of as an issue Democrats champion – but one woman is looking to change that.
This week, freshman GOP Congresswoman Nancy Mace (SC) officially threw her hat in the cannabis reform ring with the introduction of the States Reform Act. Notably, this is the second comprehensive cannabis bill introduced by a Republican member of Congress (the other was sponsored by Rep. Dave Joyce, one of the co-chairs of the Cannabis Caucus).
NCIA applauds Rep. Mace for introducing this new and carefully thought out piece of legislation. There are many provisions in the bill that we support: low tax rates and barriers to entry, allowing states to lead – but also many areas with room for improvement like those pertaining to criminal justice and trade. NCIA will continue to work with Rep. Mace’s office to improve this bill and attempt to find common ground across political parties in order to advance cannabis policy reforms.
by Madeline Grant, NCIA’s Government Relations Manager
There is no doubt that we’ve missed the in-person, one on one interactions in the cannabis industry. For anyone that attended the Midwest Cannabis Business Conference in Detroit in September, it was refreshing to connect with friends and meet new friends in the cannabis industry. Fortunately, we have the chance to meet in person again at the 7th Annual Cannabis Business Summit and Expo (CannaBizSummit) in San Francisco, California. From networking with California-based cannabis companies to meeting new companies in the industry, there is no lack of connections to make at CannaBizSummit.
Pictured Right: NCIA member Sonny Antonio with Sunshine Design and I at MJBizCon at NCIA’s booth.
The National Cannabis Industry Association (NCIA) has been hard at work in Washington, D.C. With the introduction of the Cannabis Administration and Opportunity Act draft legislation, there had been an undeniable excitement to support momentum towards cannabis policy reform. The Government Relations team submitted comments to the sponsoring offices on behalf of NCIA’s members and will continue to work to support members’ best interests. We appreciate your support of NCIA and the missions we continually work to achieve.
At #CannaBizSummit there will be opportunities for educational panels on federal cannabis policy and opportunities to connect with cannabis professionals in all sectors of the cannabis industry. Below are just a few of the education panels and “Lightning Lessons” that will be taking place throughout the conference:
You can find more information and details on the agenda and sessions HERE.
NCIA is honored to welcome our 2021 #CannaBizSummit Keynote Speaker, Troy Datcher, CEO of The Parent Company. Leading a new generation of c-suite innovators, Chief Executive Officer Troy Datcher, together with Chief Visionary Officer Shawn “JAY-Z” Carter, helms a cannabis business for the post-prohibition era The Parent Company. Combining best-in-class operations with leading voices in popular culture and social impact, the company focuses on building brands that will pave a new path forward for a legacy rooted in equity, access, and justice.
Beyond the panels and educational resources, attendees will be able to meet others from around the country. From cannabis cultivators to cannabis retail owners, there is no shortage of potential to network. At NCIA, we continue to support our members’ best interests by providing a continued understanding of the political landscape of cannabis policy reform. It’s our goal to support value-driven reform and support a responsible cannabis industry. Remember, if you are an NCIA Blooming or Evergreen member, you have a number of complimentary tickets to our trade shows.
If you have any questions regarding your membership or the CannaBizSummit please reach out to me via email, Madeline@TheCannabisIndustry.org. There is a lot to be excited about this year and I hope to see you out in San Francisco this December!
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
Registration to the Cannabis Business Summit in San Francisco is now open with special limited-time super early bird pricing on tickets available, head to our website for more information today.
by Kharla Vezzetti, California NORML
I’ve been helping with the preparations for California NORML’s upcoming 25th Anniversary of Prop 215 Conference and Afterparty occurring this Friday, November 5, 2021.
Scanning my collected newspaper articles from the era for our slideshow has really brought back memories of my early activist days working toward The Compassionate Use Act of 1996, commonly referred to as Prop 215.
Those were the days when you had to say “water pipe” not “bong” for fear of being kicked out of a head shop. I once had a pipe shop refuse to carry hemp lip balm citing that it would imply that their pipes were being sold for marijuana use. Even some in the hemp industry were opposed to associating marijuana with hemp. That said, there were supporters of medical marijuana, and some who just needed education.
I was 24 years old and my relationship with the cannabis plant had been purely recreational. Then I made a new friend, Alan Silverman, who introduced me to a community (and career path) that changed my life. He took me to a screening of a new film, “The Hemp Revolution.” It was an eye-opening event with the director in attendance, and notably several Sonoma County businesses selling their industrial hemp wares. I was deeply inspired, not having known the history and multitude of uses of the plant. I joined the hemp industry with the contacts I met that night, distributing their wares to local shops and tabling at festivals and markets. It was more of a public education service than a profitable business, as many were not familiar with the hemp plant and some saw it as an excuse to promote marijuana. I transitioned into a day job with HempWorld, an industry magazine. These were fun years even if we were ahead of our time.
Alan also told me about a state initiative campaign that was in the planning stages and educated me on the medicinal uses of marijuana. I had previously studied ecology, the idea that our environment has countless symbiotic relationships between lifeforms fascinated me. So, learning about the fiber, oil, and seed of the hemp plant while also gleaning information about medicinal benefits of marijuana just strengthened my impassioned advocacy for both. I felt at the time that consumable marijuana would need to be destigmatized before industrial hemp would ever have a chance.
I joined the volunteer group which we at first called “Sonoma County Chapter Californians for Compassionate Use” to match the name of the state-level group behind the current campaign. The term “compassionate use” was not so well known; when I set up our voicemail, the representative thought we were advocating for “Compassionate Youth.”
Being our media liaison, a news reporter from the local TV station called me one morning. The story we had discussed fell through and he asked if there was anything else he could cover. In a few frenzied hours, I was able to find an oncology nurse from a local hospital willing to be interviewed in support of medicinal marijuana. She led me to a medical marijuana patient she knew, who introduced himself to me on the phone by saying, “I’ve been HIV positive for ten years, and I’m fat!” He wanted to be interviewed, too. Enough local activists joined us that afternoon in front of our County Board of Supervisors chambers to fill the camera frame. The nurse requested her interview be conducted apart from the activists, as to not appear a part of our group, which was better optics for our message. She was being brave and outspoken.
We made up small binders with recent news pieces supporting medical marijuana and sent them out to all our local media contacts. We included a commentary published in the Journal of the American Medical Association, an editorial from The Lancet, along with a Universal Press Syndicate piece by William F. Buckley, Jr, and a Cannabis Canada article, “Cannabis Buyers’ Club Flourishes in ‘Frisco,” written by Rose Ann Fuhrman, a fellow local activist and writer. The soon-to-be iconic red cross with overlayed green leaf image was printed for the covers of the binders.
The cross and leaf image for the movement so effectively portrayed the topic, some of us, while gathering signatures, simply wore 11 x 8.5” signs with this image around our necks to gather attention of potential signers.
All in all, Sonoma County was an easy place to gather signatures on this issue. Rather than approach people individually, I’d stand in a trafficked area and repeat the same spiel, it was along the lines of “Sign the medical marijuana petition, it helps with epilepsy, multiple sclerosis, chemotherapy, glaucoma…” I remember one man who walked right past me into a grocery store parking lot, only to turn around when I verbalized the ailment that affected his family member. Another signer who stood out was attending a concert. He walked up to me in the free speech zone between the parking lot and the venue. Signing his name, he said, “I’m a cop. I’m tired of the hypocrites.”
The local coverage that I was most excited about occurred on Friday, November 1, 1996, four days before the election. Elvy Musikka had been traveling around California speaking in favor of Prop 215. Elvy was interviewed by The Press Democrat newspaper about being one of eight people in the United States who not only could legally smoke marijuana, but also was being provided joints by the federal government. The story ran with a large photo of Elvy smoking a legal joint in my living room. Elvy will be speaking at the Cal NORML conference.
Another inconsistency with what most knew at the time was the existence of the San Francisco Cannabis Buyers’ Club. Founded by Dennis Peron, who also wrote San Francisco’s Prop P, this ground-breaking club was raided by the DEA, but enjoyed great local support. Prop P passed by 80% of San Francisco voters in 1991, basically making marijuana possession and cultivation the lowest priorities for law enforcement. Dennis, who passed away in 2018, is a legend in the world of medical marijuana. I had the unexpected experience of meeting him when Rose Ann and I went to his club to pick up the initiatives for our group to collect signatures. We all had barely begun when informed that the first initiatives had a printing error and needed to be replaced. We had car trouble in the city and Dennis invited us to stay overnight in the club, an historic experience I relish. Dennis will be represented at the 25th Anniversary event via a recorded statement and through his family members, Jeff and Bryan Peron.
It was an exhilarating time for me, I met many truly impressive activists, authors, and businesspeople who were inspired to make the world a better place. I felt I was making the world a better place. Ellen Komp, one of my co-workers from my years with HempWorld, went on to become the Deputy Director for California NORML, she hired me onto the organization in 2017. For the 25th Anniversary of Prop 215 events this week, I will be celebrating with many of the folks who made 215 possible. I hope you’ll join us in honoring the history that launched the modern industry.
Kharla Vezzetti is the Business Membership and Advertising Manager for California NORML, a non-profit, member-supported organization that has been advocating for sensible and fair cannabis laws since 1972. She can be reached at kharla@canorml.org
This month, NCIA’s editorial department continues the monthly Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
My name is Michael Webster, and I am the Founder & Managing Member of Exspiravit LLC, a licensed Michigan cannabis company. I earned a bachelor’s degree from the Harvard Extension School in Liberal Arts, and a master’s degree in Composition and Rhetoric from New York University. As a native New Yorker, I tried to wait patiently for cannabis legalization at the state level, but Michigan represented a unique entry point to the regulated market.
Like many NYC kids, my introduction to cannabis occurred at an early age. It was part of the local culture. However, it wasn’t until my late teens that I indulged. And it was even later, when my mom – a fierce cannabis advocate – was diagnosed with breast cancer, that I was introduced to the medicinal benefits of cannabis. I went on to write my graduate thesis on this very topic. From there, I embarked on my cannabis career path.
I launched Exspiravit for a myriad of reasons, not the least of which was to access a burgeoning market that held such promise for the creation of generational wealth. But as a frontline victim of the war on drugs – a simple possession charge of less than a gram of cannabis that temporarily derailed my academic pursuits – I saw an opportunity to educate and destigmatize this amazing plant, that, up until about 80 years ago, had been a staple commodity in human society.
We are currently deploying our Cannabis Event Organizing license for consumption events throughout the state of Michigan – both large and small – while we raise capital for the build-out of our solventless extraction lab. We believe in clean plants and derivatives and are working closely with the Cannabis Certification Council on securing the “made with organic flower” seal. The event organizer license has proven the perfect complement to our other ventures, as it has allowed us to redefine what “an event” really is, and to take our show on the road. We also offer consultancy to other social equity and small operators, with a focus on regulatory compliance, helping to share what we’ve learned on our journey.
When it comes to our company values, Exspiravit advances a unique position on social equity. For far too long, social equity has been considered a gift or non-transactional offering. We at Exspiravit believe equity – social or otherwise – is earned and therefore OWED. Most current social equity initiatives in the cannabis industry broadcast messages of handouts and favors. This is the wrong message. When accessing the equity in your home, or other assets, neither you nor the bank treats those transactions as gifts. Social equity represents a debt owed from those who have weaponized their racial or class privilege to monetize a commodity market that was built on the willful destruction of black, brown, poor white, and otherwise marginalized communities. Debts are owed. Debts are to be paid. And their payment represents the satisfaction of an obligation and not a benevolent gesture.
Quite the opposite, those tapping equity are claiming what is rightfully theirs. Again, equity is earned, accrued, developed, and owed, but certainly not to be asked or begged for. Exspiravit plans to use its voice to correct this adversely impactful interpretation of social equity, in hopes of realigning access to resources in the regulated cannabis sector. In addition to our work on the social equity front, Exspiravit’s goal for the greater good of the cannabis industry is to advance the for-purpose market. We believe that flower and euphoria only represent the tip of the iceberg when it comes to products and outcomes. We envision an ultra-specific and ultra-targeted market that features purpose-driven derivatives for a highly informed consumer.
Like many social equity cannabis operators, accessing capital has been our greatest challenge. And this challenge is intrinsically linked to our greatest criticism of social equity initiatives –- the lack of social equity funding. For social equity applicants, the process can be grueling. And for those of us who make it through to licensure, being greeted on the other side by predatory investment opportunities exacerbates our challenges. Social equity initiatives MUST feature a robust social equity fund. Without it, social equity operators are being positioned for failure. Diversion of existing tax revenue or special taxes levied against large and multi-state operators can easily address these challenges. Too, we would like to see more collaboration than competition. Regulated cannabis markets should be rolled out in ways that foster greater opportunities to collaborate. Support for collectives, and other similar strategies, are low-hanging fruit when it comes to solutions.
We joined the NCIA for a variety of reasons. Firstly, it was accessible. Through its outreach, the NCIA met us where we were and provided us a robust package of resources that weren’t intended to lure us into paid membership, but rather to help us stand up and be able to recognize the benefits of such association. You can’t effectively inform a starving, homeless, injured person until you have fed, housed, and rendered aid to them. And that appears to be the NCIA’s philosophy – meet the immediate, pressing needs of social equity operators, positioning them to then effectively and efficiently access industry resources. The perfect example of this strategy is NCIA’s decision to offer one year of complimentary membership to social equity operators, including access to the national and regional conventions. The value here, to one’s first year of operation, is immeasurable. These events have provided the opportunity to forge important and lasting connections with other industry stakeholders that have made all the difference for us. Without question, we would not be enjoying such forward progression without the genuine efforts of the NCIA.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
Registration to the Cannabis Business Summit in San Francisco is now open with special limited time super early bird pricing on tickets available, head to our website for more information today.
By Rachel Kurtz-McAlaine, NCIA’s Deputy Director of Public Policy
After months of delay, the United States Postal Service (USPS) has released its FINAL rule enforcing the Prevent All Cigarette Trafficking (PACT) Act, effective October 21, 2021, and unfortunately, they are indeed applying it to cannabis/hemp vaporization products. The PACT Act has now made it extremely difficult for anything related to vaporization to be mailed, either business to business (B2B) or business to consumer (B2C). Your business could be affected even if you are not mailing out products. Although this is a massive burden on the cannabis/hemp vape industry, there are ways to deal with it. NCIA remains vigilant in making sure the federal government understands this unnecessary hardship to the industry, and making sure our members are fully educated on this issue.
The Prevent All Cigarette Trafficking (PACT) Act went into effect June 29, 2010, applying strict regulations to the mailing and taxation of cigarettes and smokeless tobacco products, effectively banning the mailing of cigarettes unless authorized by an exception. With the rise of e-cigarettes, especially their popularity among youth, Congress decided that vaporization products should be included in those provisions. On December 27, 2020, Congress modified the definition of “cigarettes” to include Electronic Nicotine Delivery Systems (ENDS), broadly defining ENDS to include nearly all vaporization products, regardless if they contain nicotine or are used for nicotine. Specifically:
“(1) any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device; and (2) any component, liquid, part, or accessory of an ENDS, regardless of whether sold separately from the device.”
When the USPS issued their notice of proposed rulemaking, they received more than 15,700 comments, with many expressing frustration with the broad interpretation of ENDS, so the USPS delayed issuing FINAL rules while it considered the practical application to the unique cannabis and hemp industries. NCIA was proud to submit comments with a broad coalition and to issue an action alert to get our members to express their concerns.
In the meantime, the USPS issued a guidance document (“April 2021 Guidance”) (86 FR 20287) to help prepare businesses for the final rule and what documentation will be needed to apply for an exception. The exceptions include:
18 U.S.C. 1716E(b)(2)-(6). These exceptions are the ONLY way to mail these products moving forward. Unfortunately, the USPS was not accepting applications for exceptions until the final rule was published, but now that it has been published, it is time to apply for an exception.
FedEx and UPS have already banned delivering these products, so they are out as an alternative.
If you manufacture, sell, or buy vapor products, you will be affected. Manufacturers and distributors who use the mail to get their products to stores for resale (B2B) will have to apply for an exception through the USPS Pricing and Classification Service Center. If you are a business receiving these products, you will have to work with the business that mails it to you to be included in their exception as a recipient. If you are a retailer who delivers vaporization products to consumers via the mail, such as online retailers (B2C), you will also need to apply for an exception. If you buy the end products as a consumer, expect an increase in price because of the extra costs placed on the suppliers.
If your business has ANYTHING to do with the manufacture, delivery by mail, or retail of cannabis/hemp vaporization products, including liquids, batteries, empty cartridges, etc., you should get familiar with this final rule that is in effect as of October 21, 2021. The USPS spends the time addressing potential issues or suggestions from the comments it received, so any questions of why they did something are probably answered there.
You will also want to read the guidance document the USPS issued in the Spring that details if you qualify for an exception and how to apply for it. This will require cooperation between the mailer and the recipient, so make sure you are working with your supplier/retailer to get all the necessary information.
NCIA remains committed to making sure our members understand all of the legal ramifications and how to continue operations despite this rule. We continue to work with our coalition partners to better understand the effects and best practices, and will share with you as much information as possible to ease the transition via blog posts and webinars.
I will be participating in a webinar on November 9, 2021, that will be diving deeper into the PACT Act, how your business can operate with it, and how, if any, the tax considerations of the PACT act apply to cannabis/hemp businesses: PACT Act Leaves Vaping & CBD Industries in a Fog: The Latest Tax and Legal Considerations.
As always, feel free to contact me Rachel@TheCannabisIndustry.org with any questions or concerns.
by Alexa Rivera, Assistant Marketer at PeopleGuru
As a member of the NCIA, you probably already know how difficult so many of the aspects of business are due to the nature of the industry. Unfortunately, sometimes it seems like the laws and regulations are never-ending, and frankly, it can cause quite the impact on the way operations are handled.
As much as we hate to be the bearer of bad news, it is likely a good idea to be wary of these things, especially regarding compliance regulations.
While numerous states have legalized cannabis, it remains federally illegal under Schedule I of the Federal Controlled Substances Act. While the hope is that cannabis will soon be federally legalized and decriminalized, we haven’t quite gotten there yet.
Because of the state of our society and often the stigma associated with cannabis, not to mention the astronomical fines associated with being involved in the legal industry incorrectly, many financial institutions refuse to touch cannabis businesses. Yes, even when a client does everything correctly.
As you can imagine, this creates a lot of problems involving transactions and payroll. In fact, as of June 30th, only 706 banks and credit unions were actively providing banking services to marijuana-related businesses. These banking issues lead many business owners to conduct mainly cash transactions, making things even more challenging to monitor. Around 40% of Colorado cannabis businesses lack bank accounts altogether.
Cannabis companies constantly have to get creative with how they handle revenue –– which is enough to make any business owner pretty uneasy. Without banks, stores are often forced to take payment in cash and invest in ATMs for their shops while they’re at it. Holding so much cash means armored vehicles to collect the money and tremendous crime risk. Yikes, talk about a debacle.
In an attempt to make things easier, some companies have opted to funnel cash through shell companies, but as you can imagine, that puts a big target on their backs. “It can start to look a lot like money laundering,” says businessman Tim Cullen. Despite complaints from states that collecting hundreds of thousands of dollars in cash for taxes is troublesome (to say the least), little has been done to rectify the problem.
A Massachusetts company running three cannabis dispensaries has found itself in quite the mess despite believing they were following protocol properly. After an eight-month investigation, the company has been ordered to pay $300,000 in restitution and penalties.
This situation has resulted from unintentionally neglecting a state law requiring businesses to pay 1.2 times the regular hourly wage on Sundays and Holidays. The company has admitted that these errors have stemmed from difficulty in hiring a traditional payroll service provider.
One way many owners are attempting to get around payroll and tax issues is to misclassify their employees as 1099 contractors to avoid many of the tedious payroll-associated hurdles. Sounds too good to be true? It is! The Department of Labor does not take this kind of infraction lightly, and if you think $300,000 for missing Sundays and a few holidays is a steep fine, buckle up, and fast. If the DOL suspects the misclassification was intentional, you can expect up to $1,000 in criminal penalties per employee and even jail time. So for some legal options……
The IRS has recently launched a program titled “Cannabis/Marijuana Initiative” with the hopes of implementing a strategy to increase voluntary compliance. This is fantastic news for the industry because, as was the case for the dispensary above, often, the breeches are simply a result of misinformation. Hopefully, with an initiative such as this one put in place, small business owners can grasp tax regulations before any compliance issues arise with the guidance of the IRS on the industry’s side.
Another great option is investing in a software solution that supports the cannabis industry and won’t leave you hanging. With payroll support and full-service banking, HCM software can prevent issues that may arise by automating the systems that cannabis businesses spend a great deal of time on in avoiding any missteps. You must find a company that won’t leave you hanging with an unreliable banking service.
While more and more of America seems to be coming around to the idea of legal cannabis businesses being a legitimate industry, we still have some ways to go. In the meantime, covering all your bases and ensuring compliance is the best bet to ensure you don’t end up between a rock and a hard place — and as a result, spending a small fortune in fines and fees. Be sure to keep up with changing laws and consider your options for the best shot at easy and secure payroll and tax keeping.
PeopleGuru develops and supports cloud-based Human Capital Management (HCM) software to help mid-market organizations in the Cannabis Industry attract, retain, and recognize their people and streamline back-office HR and Payroll functions.
PeopleGuru HCM is a highly configurable, true single solution residing on one database that efficiently manages every stage of the employee lifecycle. Behind PeopleGuru’s best-in-class technology, is a team of Gurus who are passionate about helping clients meet their desired business goals by ensuring that they always have the tools and support they need to deliver on their strategic HR objectives, maintain tax & legislative compliance, and boost people productivity.
Alexa is the Assistant Marketer at PeopleGuru. With a B.A. in Advertising and currently pursuing an M.A. in digital strategy, Alexa has a passion for writing, content creation and branding strategy. Specializing in copywriting and unique niche positioning, the world of HCM Software is her latest and greatest challenge.
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by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
I’m not sure if you’ve seen the news, but Congress has had a lot on its plate recently: negotiations over infrastructure, the budget, the debt ceiling, reconciliation, not to mention the ongoing COVID-19 pandemic! And while the path to cannabis reform has been slightly overshadowed by some of these larger issues, for the time being, the NCIA team is continuing to work tirelessly and incessantly on your behalf to enact legislation that would help you and your business. Let’s take a look at some of the more recent developments from Washington, D.C:
Last month, the House passed the language of the SAFE Banking Act for the fifth time via the must-pass National Defense Authorization Act (NDAA). NCIA and our allies on Capitol Hill are always trying to be creative and come up with new, different avenues to advance our policy priorities, and the NDAA was a great opportunity that we were able to take advantage of! NCIA will continue to work with members of the Senate Armed Services Committee and other stakeholders to push for the SAFE Banking Act to be included in the final bill language. Stay tuned as the NDAA process unfolds throughout the remainder of autumn.
Also last month, the House Judiciary Committee passed the MORE Act out of committee by a vote of 26-15 but the bill still has a long journey ahead of it. It’s unlikely that committees like Ways and Means and Energy and Commerce will waive their jurisdiction again, and it’s critical to remember that the chamber actually became slightly more conservative following the 2020 election. Committee schedules are jam-packed right now, however, we continue to meet with those with jurisdiction over the MORE Act and encourage them to take up this important piece of legislation.
The discussion draft of the Cannabis Administration and Opportunity Act (CAOA) was unveiled back in July by Senate Majority Leader Schumer (D-NY), Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ). In the following month, NCIA worked diligently with our Evergreen Roundtable, board, committees, social equity scholarship members, and others to provide detailed feedback on various topics as requested by the Senators. NCIA continues to be a resource for the Sponsoring Offices and committees of jurisdiction, however, official bill introduction likely won’t happen until early-2022.
Last week, the House Veterans Affairs Committee: Subcommittee on Health held a hearing on a number of bills; among them H.R. 2916, the VA Cannabis Research Act of 2021. While this bill is not a piece of NCIA priority legislation, we applaud the committee, longtime sponsor and ally Congressman Correa (D-CA), and their teams for discussing this important topic. Of note is testimony from Dr. David Carroll, Executive Director at the Office of Mental Health and Suicide Prevention at the Department of Veterans Affairs (VA). His testimony is only about a page long, but the gist is that the VA does not support this bill. I’d also like to highlight the statement Rep. Correa submitted for the record, which you can find here.
Even though Capitol Hill’s bandwidth is stretched, NCIA will continue our work in Washington, D.C. to get these (and other) cannabis provisions enacted into law. Have questions or thoughts? Find me over on NCIA Connect!
NCIA chief economist and his cannabis economics firm, Whitney Economics, are collaborating with NCIA to conduct a national survey of businesses and stakeholders in the U.S. cannabis industry. Below, please find a link to the Survey of U.S. Cannabis Industry Sentiment and Business Conditions. It examines the key issues facing the industry including what you are experiencing when doing business in the industry. The survey seeks to investigate what is working and what can be improved from the perspective of businesses and stakeholders in the cannabis industry.
The goal of the survey is to tabulate ancillary business and cannabis operator opinions on the state of the U.S. cannabis market. Responses are confidential and will be kept anonymous.
Your participation and insights will help policymakers understand the issues that face the industry from your perspective. The survey takes between 4–5 minutes to complete. Please complete the survey by Sunday, October 31.
The initial analysis will be made available to all participants later this fall.
If you have any questions regarding the survey, please contact Beau Whitney from Whitney Economics at Beau@whitneyeconomics.com
Thank you for supporting this survey.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Usually, things are somewhat slow when it comes to cannabis policy reform in Washington, D.C., but the last week has been quite the whirlwind! In the span of one week, the SAFE Banking Act was included in (and passed via) the must-pass National Defense Authorization Act (NDAA) and the House Judiciary Committee marked up and subsequently passed the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act!
Last week, the House passed the language of the SAFE Banking Act for the fifth time via the must-pass NDAA. NCIA and our allies on Capitol Hill are always trying to be creative and come up with new, different avenues to advance our policy priorities, and the NDAA was a great opportunity that we were able to take advantage of! At first, there were some concerns that the language (proposed as an amendment to the larger package) would not be ruled germane, however, we were able to clear that hurdle in the House Rules Committee, allowing the provision to move forward for Floor debate and a vote.
The amendment was then debated for a short period of time on the House floor and for the first time ever, passed via voice vote! This is incredibly exciting and reinforces the strong, bipartisan support that this legislation has.
SAFE’s inclusion in the Senate’s version of the bill is a bit more uncertain. Currently, the Chair and Ranking Member of the Senate Armed Services Committee (which has jurisdiction over the NDAA) have circulated their draft of the package that differs in many ways from the House’s bill. Here at NCIA, we will be working with Senate allies to determine what’s next for the NDAA in that chamber and collaborating with other stakeholders to ensure that the SAFE Banking language is included and passed into law. I’ll be the first to admit that I am not (nor have I ever been) a defense lobbyist, however, I’m definitely getting a crash course now!
Then, less than 24 hours later, the House Judiciary Committee announced that they would be holding a markup on the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act. You’ll recall that the MORE Act was marked up in that committee in November 2019 (during the last Congress), and passed by a vote of 24-10. Then, after all of the other relevant committees waived their jurisdiction, the MORE Act was brought to the House Floor in December 2020 and passed 228-164.
While the MORE Act passed out of the Judiciary Committee this session by a vote of 26-15, the bill still has a long journey ahead of it. It’s unlikely that committees like Ways and Means and Energy and Commerce will waive their jurisdiction again, and it’s critical to remember that the chamber actually became slightly more conservative following the 2020 election. Additionally, there is no companion legislation in the Senate as of publication.
As always, NCIA will continue to work with our allies and stakeholders on and off Capitol Hill to get these policies enacted into law. Have questions? Find me on NCIA Connect. Want to become more involved with policy at NCIA? Learn more about our new Evergreen Roundtable here.
by Madeline Grant, NCIA’s Government Relations Manager
As the deadline to submit feedback for the Cannabis Administration and Opportunity Act approached last week, our Government Relations team worked tirelessly to submit a detailed analysis and recommended improvements on behalf of the legal cannabis industry. The full comments and an executive summary can be downloaded here. The Cannabis Administration and Opportunity Act (CAOA), submitted in July by Majority Leader Charles Schumer (D-NY) and Senators Cory Booker (D-NJ) and Ron Wyden (D-OR), would remove cannabis from the schedule of controlled substances, create a regulatory structure and federal guidelines for cannabis products and state-legal markets, and is intended to support restorative justice for the people and communities that have been disparately hurt by prohibition while ensuring fair opportunities in legal cannabis markets for small businesses and marginalized communities.
The introduction of the comprehensive draft language was a pivotal moment for the United States Senate and NCIA will continue to do whatever we can to ensure value-driven policies for the cannabis industry. Meanwhile, we continue to see movement at the state level as support for cannabis legalization efforts continues to grow. Here are some important updates happening at the state level.
California officials announced that they are soliciting proposals for a program aimed at helping small marijuana cultivators with environmental clean-up and restoration efforts. The California Department of Fish and Wildlife’s (CDFW) Cannabis Restoration Grant program will release applications this fall and remain open through spring 2023. The $6 million in potential funding, which comes from cannabis tax revenue, must go to government agencies, California nonprofits, or Native American tribes who would then work with cultivators on environmental efforts.
The newly inaugurated governor of New York says she wants to “jumpstart” the implementation of cannabis legalization. Governor Kathy Hochul took a major step by making two key regulatory appointments to oversee the state’s cannabis market. Soon after they were quickly confirmed by the Senate during a special session. Former New York Assemblywoman Tremaine Wright (D) will serve as chair of the Cannabis Control Board, and former Drug Policy Alliance (DPA) staffer Christopher Alexander will be the executive director of the state’s Office of Cannabis Management.
Ohio activists can begin collecting signatures for a 2022 ballot initiative to legalize marijuana in the state. The Coalition to Regulate Marijuana Like Alcohol (CTRMLA) launched its ballot effort last month. The new initiative is a statutory proposal and if supporters collect 132,887 valid signatures from registered voters, the legislature will then have four months to adopt the measure, reject it, or adopt an amended version. In the case of lawmakers not passing the proposal, an additional 132,887 signatures will be required to place the proposal before voters on the ballot in 2022.
Another adult-use legalization proposal has been filed. Legal Missouri 2022 submitted the latest measure to the secretary of state’s office, and it will now go through a review period before potentially being certified.
The Cannabis Control Division announced applications are now open for businesses interested in legal cannabis producers licensed by the state of New Mexico. After an application is submitted, regulators will have 90 days to issue a determination.
Colorado voters will decide on an initiative in November that would raise cannabis taxes to fund programs that are meant to reduce the education gap for low-income students. The secretary of state confirmed that the campaign behind the measure collected more than the required 124,632 valid signatures to make the ballot. The measure would give low and middle-income families a $1,500 stipend to have school-aged children participate in afterschool programs, tutoring, and summer learning programs.
As states continue to legalize medical and adult-use cannabis, be sure to check out our state policy map for updates. Our Government Relations team will continue to educate congressional offices as states move forward. It’s vital to have accurate information and resources for members and Congress and staffers on Capitol Hill. With advancements at the state level, we continue to relay the importance of cannabis legalization at the federal level. Please stay tuned for more updates from our Government Relations team.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
By NCIA’s Retail Committee
Have you ever wondered where or how a cannabis retail business banks? You should know that it’s complicated because of federal prohibition. So what do you do? Some are finding workarounds and loopholes, others are able to obtain services with smaller financial institutions for exorbitant costs, while many others struggle to maintain an expensive, risky, and dangerous cash-only ecosystem.
The 2020 elections set the creation of four new regulated state cannabis markets in motion, and four more state legislatures followed suit in the first half of 2021, making the last year arguably one of the most consequential and momentous periods for the cannabis industry and policy reform.
However, cannabis is still illegal at the federal level, classified as a Schedule I substance under the Controlled Substances Act, despite state-level regulated cannabis markets in more than half the country. This prevents banks from doing business with cannabis companies because of fear of prosecution or reputational risk, as these businesses aren’t viewed as legal under outdated federal laws.
The cannabis industry is optimistic about the future, though, thanks to an increasing interest in cannabis, public safety, and economic development in Congress. Lawmakers in both chambers are actively debating comprehensive legislation to remove cannabis from the schedule of controlled substances and regulate it federally while repairing some of the harms caused by prohibition, but there are also incremental reforms in play that have a track record of success in the House as well as bipartisan support. Chief among them is the Secure and Fair Enforcement (SAFE) Banking Act, which would provide safe harbor for financial institutions that wish to work with state-legal cannabis businesses and allow them to provide services to the industry without fear of prosecution. This legislation originally passed the House in 2019 and was the first piece of standalone cannabis policy reform legislation ever to receive a vote or be approved by a full chamber vote.
Since then, cannabis banking has been approved in the House three more times in various forms, mostly recently when it passed the SAFE Banking Act again – and with record bipartisan support – earlier this year. The bill is now awaiting consideration in the Senate, but has yet to be taken up by the Senate Banking Committee.
Loans, capital markets, and credit card processing are common interests for cannabis companies. Access to traditional lending is particularly important for small businesses that usually lack connections to angel investors and venture capital. However, some of the benefits of this legislation are of special interest to cannabis retailers. Check out what some of the Retail Committee members are considering to be important aspects of broadened access to banking and financial services:
“As a retail cannabis business operator, safety is of our top priorities as it directly affects our staff, our patrons, and our bottom line,” said Larina Scofield, director of retail operations at Lucy Sky Cannabis Boutique dispensary chain in Colorado and vice-chair of NCIA’s Retail Committee. “We are required to operate as a predominantly cash business in a high-risk industry that can sometimes lead to criminal targeting; this can put not only our business at risk but also the potential individuals on-site if a targeted crime were to take place.
“There is also no doubt that operating a cannabis business is costly, due in part to the fact that we do not receive the same benefits and protections that other businesses have; cannabis companies are also subject to higher fees in order to get similar services, if those services are available at all. Lucy Sky is fortunate enough to have banking and armored services, as well as a cashless ATM service to allow for safer money handling, but this does not come without a price… a high price. Our company pays top dollar every year in order to have banking and secured payment delivery (something that is not seen in traditional businesses), in order to provide safety for our business and to the individuals who frequent our facilities.
“SAFE Banking would mitigate that and allow for retail cannabis companies to operate without having to “constantly look over their shoulders” so to speak. It would provide an enormous sense of security in an already high-risk business, it would allow for small business owners to receive proper funding to allow for safer operations, and it is truly crucial in the progression of the industry as a whole.”
“Less cash during COVID-19 is always a plus. The goal is to limit contact, and we all know cash is constantly being passed from person to person. There are plenty of studies highlighting how many germs really are on physical cash. Researchers found plenty of questionable microbes on $1 bills in a more recent study. In a world where we are all concerned about our physical health, the time is now to reduce physical cash in cannabis businesses. Or at least, give people the choice to go cashless if they want to. Let’s also not forget the security benefits of carrying less cash on the premises”, said Byron Bogaard, CEO of Highway 33, a cannabis dispensary in Crows Landing, California, and chairperson of NCIA’s Retail Committee.
“Golden State Greens had a spike in deliveries during the COVID pandemic but were still forced to collect cash and signatures from customers. When online orders can process card transactions we can make a true contactless delivery where both payment and signature are managed from the customer’s device. This will increase the safety of our drivers by maintaining safe distancing practices and allow new types of deliveries to drop boxes or to customers’ homes similar to Amazon,” said Gary Strahle, chief growth officer for California dispensary Golden State Greens.
Beyond these major issues, there are a number of potential outcomes that could impact retailers as well.
Revamping the relationship between cannabis businesses and banks will likely trigger higher competition for banking services, resulting in lower fees. This would clearly benefit small businesses but could also have an impact on the frequency and nature of mergers and acquisitions in the cannabis space.
Regulatory frameworks will certainly change, and outstanding litigations will most definitely become more complex. Chargebacks from credit transactions will be a constant problem, due to the level of surveillance and data collection they will more easily be disputed.
Better access to banking also positions technology companies for success, as there will be a high demand for mobile wallets, online ordering, and automatic recurring memberships. We can’t predict everything, and there might be more hurdles to cross than we realize, but the technologically-agile retailer may benefit most. Studies show that most of the Top Fortune 500 Companies use software platforms such as Salesforce to manage their enterprise, however many of the canna-specific solutions are missing much of the integration and scalability needed to immediately handle broadly increased access to the banking system.
The SAFE Banking Act is critical to the cannabis industry’s success, and your voice will tip the scales. Reach out to your members of Congress, especially your Senators, and tell them what safe banking means to you as a cannabis retailer. Remember, policy needs to support logic over emotion. Emotions are important, but remind Senators of the logic behind implementing safe banking solutions for cannabis businesses:
If your senator already supports the SAFE Banking Act, please politely ask them to prioritize this legislation in the current session.
by Morgan Fox, NCIA’s Director of Media Relations
Last week, the hemp and CBD industries took another blow from the Food and Drug Administration when the agency refused to grant a request from prominent CBD producer Charlotte’s Web to regulate the substance as a dietary supplement. This is the latest in a series of delays and setbacks on the part of the FDA when it comes to regulating hemp-derived cannabinoids and products since they became technically legal at the federal level under the 2018 Farm Bill.
Bloomberg reports: “The company’s bid to sell its full-spectrum hemp extract with CBD as a dietary supplement won’t be considered because of the FDA’s own prior decision to treat CBD as a drug, according to a letter posted on the agency’s website Wednesday. This shouldn’t disrupt the business of Charlotte’s Web or prevent other companies from continuing to sell such products, which already exist in a gray area without the agency’s oversight. The decision shows the agency’s ongoing hesitancy to regulate cannabidiol, the non-psychoactive ingredient in cannabis plants better known as CBD… The FDA’s objection rested in part on its prior approval of Epidiolex, a CBD drug to reduce seizures, which the agency said precludes it from authorizing CBD for dietary purposes. Even if the drug hadn’t been approved, though, the FDA said in the letter to Charlotte’s Web dated July 23 that it “has concerns about the adequacy of safety evidence” that the company submitted.”
You can read the full FDA letter here.
This position is likely to create serious problems for the CBD industry. Without allowing CBD products to be regulated as dietary supplements or food additives, the FDA will be forcing producers to get federal approval for their products under the Investigational New Drug program. This process can often take years and cost applicants millions of dollars.
This casts even more doubt on what the future of the CBD market will look like as producers continue to operate in an uncertain landscape. The legality of CBD combined with the lack of federal regulations has created a lot of opportunities for responsible producers to bring products to market without dealing with the often overly strict state cannabis programs, but it has also opened the door to irresponsible operators who have been accused of actions from making misleading or unsubstantiated health claims to selling mislabeled or adulterated products.
Furthermore, the lack of federal regulations has discouraged many larger retailers from selling CBD or hemp-derived products altogether, drastically limiting the market options for producers. Some industry insiders have theorized that lack of access to those retailers has directly led to some producers desperately searching for ways to unload their excess CBD, including processing it into unregulated Delta 8 THC and flooding the markets in both legal and prohibition states, creating concerns among regulators, lawmakers, licensed cannabis operators, and consumers.
This troubling news follows on the heels of another memo issued by the Farm Credit that suggests that financial institutions that provide financing to hemp businesses should only do so if the company is operating under the auspices of a USDA-approved state hemp program.
“While many states and federally recognized tribes have since submitted those plans, 20 states are still operating under an earlier provision: a hemp pilot program created by the 2014 Farm Bill. That program, which is still valid and would be further extended under pending legislation that has passed the House and is pending in the Senate, requires less federal oversight than the new USDA-approved programs,” Marijuana Moment reports.
Some in the industry are concerned that the memo will lead to lenders dropping their hemp clients operating under the pilot programs, but others have suggested that it will not have a significant impact on the lenders who are already working with hemp businesses given the amount of reporting that they must already complete for the federal government and the lack of federal prosecutions for doing so historically.
It seems pretty clear by this point that the FDA will not move forward with regulating CBD in a timely and reasonable manner without outside pressure. You can add your voice to the chorus calling for sensible CBD regulations by visiting RegulateCBDNow and urging Congress to take action.
by Rachel Kurtz-McAlaine, NCIA’s Deputy Director of Public Policy
STOP what you’re doing and ask yourself 2 questions:
If you answered yes to one or both of these questions, please take a quick moment to let us know! Click on the unique link next to the relevant question. If you want to learn more about either issue, keep reading.
Hopefully, by now you’ve had a chance to read the discussion draft of the Senate bill released a few weeks ago, detailed in Michelle’s last blog post, Crazy for Cannabis Administration and Opportunity Act (CAOA). If not, at least read the summary so you understand what is happening with this potentially historic legislation.
We are at the precipice of federal legalization, but as you know, in such a highly regulated industry, how legalization gets implemented can have a significant impact on your business. So it’s important that your voice is heard when these laws and regulations are being discussed. We’ve created this simple form for NCIA members to easily give us feedback on the CAOA. If you’re a committee member, you can provide feedback through your committee as well.
You may remember reading my article, Text Messaging (SMS) Crackdown Impacting the Cannabis Industry, published back in May, written when we were first learning the scope of the issue. Although many companies seemed to be able to move on with workarounds, we’re hearing even workarounds are disappearing. And even when businesses are still able to operate, they get charged high fees or are severely hampered in what they can do with the messages.
Because this issue has been affecting so many of our members in one way or another, we want to help, but we need to hear from you. This isn’t a law that we can lobby to change, it is a convoluted policy that telecommunications giants are enforcing on their customers, ostensibly to cut down on customers complaining about spam, but in some cases, they are applying blanket bans on cannabis companies.
As an industry, we can fight back. We are organizing a working group to take on the telecommunications giants, including a potential class-action lawsuit. If you want to be part of this or learn more, please email me.
Those workarounds going away, or extremely expensive and cumbersome. It can seem overwhelming to fight back.
At this point, time to organize and use strength in numbers against giant telecommunications companies.
By Morgan Fox, NCIA’s Director of Media Relations
The process of approving the federal budget is moving full steam ahead, with the House Rules Committee considering several amendments related to cannabis to a series of funding bills this week. Amendments that pass this committee move on to a full vote on the House floor.
In terms of overall cannabis policy reform, the most prominent amendment is one that would prevent the Department of Justice from using funds to interfere with state adult-use and medical cannabis programs or target people and businesses that are in compliance with state cannabis laws. This amendment was offered by bipartisan congressional cannabis champions Reps. Earl Blumenauer (D-OR), Tom McClintock (R-CA), Eleanor Holmes Norton (D-DC) and Barbara Lee (D-CA). The amendment was ruled in order Wednesday and will proceed to a vote, possibly as soon as this week.
Even though the DOJ has generally been respecting state cannabis laws in recent years, passage of this amendment in the final federal budget would add the force of law to that policy for the next fiscal year, providing peace of mind for tens of thousands of regulated cannabis businesses and millions of consumers across the country. This would also add significant momentum to congressional efforts to remove cannabis from the schedule of controlled substances and regulate it at the federal level in separate stand-alone legislation.
Provisions to prevent the DOJ solely from targeting state-legal medical cannabis programs and providers have been approved by Congress every year since 2014. With public support for medical cannabis at roughly 90%, these protections have become mostly a non-issue in Congress and have been included in the original base language of the relevant House appropriations bills since 2019.
The amendment extending those protections to state adult-use programs was approved by the House in the budget votes in 2019 and 2020. Unfortunately, it did not receive the same support in the Senate and was not included in the final funding packages approved by the previous Congress.
An amendment that would remove the renewal of medical cannabis program protections from this legislation, flying in the face of long-supported policy and unnecessarily taking up lawmakers’ time, was also introduced by Rep. Doug LaMalfa (R-CA) and ruled in order.
Rep. LaMalfa, a staunch prohibitionist, has also introduced several amendments to appropriations bills to increase DEA funding for eradication efforts. He made headlines recently when his office released videos of him joining law enforcement in bulldozing outdoor cultivation sites in Siskiyou County, California while grandstanding for the camera and ripping off quotes from the film Apocalypse Now. These sites were located in primarily Hmong communities, a Southeast Asian ethnic diaspora that alleges that the county has prevented its members from obtaining cannabis licenses and prevented water shipments to their communities with serious harm to the quality of life there. LaMalfa’s behavior in these videos is particularly offensive given that many Hmong fled their homes to settle in the United States during and following the Vietnam War after facing persecution for supporting America in that conflict.
Unfortunately, some positive cannabis amendments were ruled out of order by the committee this week and will not be voted upon in this legislation. Delegate Norton offered a pair of provisions that would have prevented the Dept. of Housing and Urban Development from using funds to punish residents of federally assisted housing for state-legal cannabis use in adult-use and medical states, respectively. These reforms are incredibly important, as people living in federal housing can be and are frequently evicted from their homes if they or anyone in their household exercises their legal rights or uses the medicine that works best for them. This leaves many people with no place to legally use cannabis, leading to increased public consumption in low-income communities and continued racial disparities in arrests and citations.
On the positive side, an amendment from Rep. Kurt Schrader (D-OR) to highlight the need for the Food and Drug Administration to establish regulations for CBD products was also ruled in order and approved.
Last week, another bad amendment, introduced by Rep. Debbie Lesko (R-AZ), to remove language from the original legislation that would allow federal funding for universities that are conducting cannabis research was ruled in order but voted down in the House.
The House appropriations bills have a broad range of other cannabis provisions related to topics like banking reform, research, law enforcement funding and grant programs, federal employment guidelines, and allowing the District of Columbia to finally regulate cannabis after it was legalized by voters in 2014. We’ll get into these in more detail in the coming weeks as we get closer to a full vote in the House. Stay tuned!
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week was undoubtedly one of the most exciting weeks in federal cannabis policy ever! On July 14, Senate Majority Leader Chuck Schumer (D-NY), along with Sen. Cory Booker (D-NJ) and Senate Finance Committee Chair Ron Wyden (D-OR), unveiled long-awaited draft legislation that would remove cannabis from the schedule of controlled substances while allowing states to determine their own cannabis policies. Let’s take a look at what we know:
You’ll recall that back in February, the trio of Senators announced that they were working on a comprehensive cannabis bill. Since then, NCIA and other advocates have (im)patiently been waiting to see what shape that would take – I was calling it the best-kept secret in Washington! However, at long last, the discussion draft of the Cannabis Administration and Opportunity Act (CAOA) was released.
A discussion draft is exactly what it sounds like – prior to introducing this language as formal legislation, the Senators have shared it in this form, allowing stakeholders, the public, and others the opportunity to weigh in and provide their expertise and feedback.
As I mentioned above, the CAOA removes cannabis from the list of controlled substances, effectively legalizing it at the federal level while still allowing states to set their own policies. According to the bill’s detailed summary, it has a few goals:
“… [it will] Ensure that Americans – especially Black and Brown Americans – no longer have to fear arrest or be barred from public housing or federal financial aid for higher education for using cannabis in states where it’s legal. State-compliant cannabis businesses will finally be treated like other businesses and allowed access to essential financial services, like bank accounts and loans. Medical research will no longer be stifled.”
The bill also includes:
The discussion draft comment and feedback process will be ongoing until September 1. Until then, NCIA will be working with our board, Policy Council, committees, and our members (particularly our Evergreen members!) to solicit their expert input on some of the areas the Senators have expressed interest in. After that deadline, the Senators will take their time to review submissions and subsequently formally introduce the revised language later this year. Stay tuned via our newsletter, blog, and upcoming events to learn the latest on this and how you can actually submit your thoughts to us!
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. This week Bethany is joined by NCIA’s GR team in Washington D.C. to discuss the Cannabis Administration and Opportunity Act discussion draft introduced by Senate Majority Leader Chuck Schumer. Join us every Friday on Facebook for NCIA Today Live. Registration to our Midwest Cannabis Business Conference in Detroit is now open with special limited-time super early bird pricing on tickets available, head to www.MidwestCannabisBusinessConference.com today.
At long last, the day we’ve been waiting for all year has finally come! Early Wednesday morning, Senate Majority Leader Chuck Schumer (D-NY) and Sens. Cory Booker (D-NJ) and Ron Wyden (D-OR) released the discussion draft language for a comprehensive bill that would effectively make cannabis legal at the federal level while allowing states to continue to determine their own cannabis policies and work to repair the harms caused by prohibition.
While it has yet to be formally introduced in the Senate (stay tuned!), this draft legislation is designed to jumpstart bipartisan negotiations that have been building momentum in Congress since the first states chose to regulate cannabis for adults, and which came to the forefront in the wake of last year’s renewed focus on criminal justice reform and the House passage of the MORE Act at the end of the last congressional session.
You can find a summary of the language here and the full draft here.
NCIA will be carefully reviewing the details of this proposed legislation in the coming days and will be actively eliciting feedback from our members, allies, and especially our Evergreen members, Policy Council, and committees to determine what – if any – changes need to be made before the bill is introduced. Our dedicated in-house government relations team will also be working closely with lawmakers to find an effective path forward for comprehensive cannabis policy reform that helps to undo the disastrous impacts of our current federal laws in the immediate future.
Senate leadership will be taking comments and suggestions until September 1. If you would like to add your input, please contact Deputy Director of Government Relations Michelle Rutter Friberg at Michelle@TheCannabisIndustry.org.
By Rachel Kurtz-McAlaine, NCIA’s Deputy Director of Public Policy
What a time to be in the cannabis industry! Federal legalization feels like it is finally on the horizon, especially with the big news that tomorrow will be a press conference to introduce a draft discussion bill that has been promised by Senate Majority Leader Chuck Schumer Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ).
When I first started cannabis reform advocacy 25 years ago, cannabis legalization seemed unattainable in my lifetime, given the stigma we were, and still are, up against. But medical cannabis was just starting to pass and more of us were coming around to believing in the potential of the plant and being horrified at the war on drugs to the point that we devoted our lives to ending it. That includes the founders of this organization and many who went on to start businesses that are now members of NCIA.
Running a business in the cannabis industry can be a daily challenge, from banking to text messaging to supply chain issues, so it may be hard to notice the sea change happening with cannabis bills around the country. Four state legislatures legalized cannabis just within the first six months of this year, for a total of 18 states and Washington, D.C., that have legalized cannabis for adult use over 21 years of age. (You can check out our state policy map to learn more about the status of different states.)
Believe it or not, that sea change is happening in Congress, too, and we want to make sure we’re doing everything we can to inform you about what is happening and to hear you.
As Michelle wrote about previously in the Government Relations blog, Give Us MORE, the MORE Act of 2021 was reintroduced at the end of this Spring in the House of Representatives. Read Michelle’s excellent summary, but more importantly, read the bill! An almost identical version of the MORE Act passed the House last Fall, only to be held up by a GOP-led Senate, but showed the real momentum happening in Congress.
Despite the hold up in the Senate, there is some bipartisan support. A Republican bill was even introduced in the House, the “Common Sense Cannabis Reform For Veterans, Small Businesses, and Medical Professionals Act,” that would have similar legalization efforts to the MORE Act, such as descheduling cannabis from the Controlled Substances Act and punting on regulations to federal agencies, but would not have any of the provisions that address industry equity and retribution from the years of harm caused by cannabis prohibition.
Support for legalization is now so mainstream that even Amazon is now backing cannabis legalization, expressing support for the MORE Act, although it remains to be seen if they will continue supporting MORE or get behind Sen. Schumer’s bill.
The SAFE Banking Act of 2021 is still in play and remains a crucial bill given that it could have the highest likelihood of passing the soonest. It can be overlooked given the trajectory of descheduling bills, but NCIA’s Government Relations team remains committed to SAFE and continues lobbying for it because, even though we’re planning what descheduling looks like now, it could take a few years to get there. In the meantime, banking is in emergency status.
As federal descheduling appears on the horizon, I encourage you to read the bills, including the Schumer bill, and consider how they will affect you and your business. I’m not saying legislation will necessarily pass this year, but right now is when ideas are being discussed, amendments are being drawn up, decisions are being made.
Consider how much we need to do federally versus getting the states to standardize their regulations versus having a set of voluntary self-regulatory measures that shows we are a self-aware industry and want to be safe for our customers. Keep in mind that much of the alcohol industry is self-regulated, and why would we purposely advocate to regulate ourselves more than the alcohol industry when cannabis is demonstrably safer? I appreciate the thriving alcohol market, the innovation and craft, but I know we can do even better while minimizing harm and acknowledging the past harm, but we have to be diligent.
NCIA is proud and honored to be representing the broad spectrum of the industry, from multi-state operators, to small legacy farmers, to those that have been hurt by past prohibition and want to be part of this thriving industry – all of the industry. That means hearing from you, your concerns, your ideas, your insights. Please feel free to contact me at Rachel@TheCannabisIndustry.org.
I encourage you to read the bills, including Sen. Schumer’s draft discussion bill being released tomorrow, keep reading blog posts, watching webinars, checking out NCIA’s industry buzz, and stay informed because a new day is dawning, but it’s going to be a long day, so we better be prepared for it.
by Beau R Whitney, NCIA’s Chief Economist
The first half of the year was a strong one for cannabis revenues. After a strong first quarter, with $5.9 billion in revenue, cannabis retailers are experiencing continued growth in Q2 with preliminary results coming in at $6.2 billion to $6.5 billion.
If this trend remains in the second half of the year, the cannabis retail sales are projected to be $24.5 to $25 billion for the year. This would reflect another cycle of 35% year-over-year growth.
Source: Whitney Economics, Leafly
While the industry has seen strong growth over the past year, this does not necessarily mean that the industry as a whole is in good shape. Retailers are struggling to make profits due in a large part to federal taxation. IRC 280E does not allow entities conducting business in federally illicit trade, such as cannabis, to write off common and ordinary deductions from their federal taxes. As a result, cannabis operators pay significantly more taxes than other businesses. This has long been an issue with the cannabis industry and organizations such as NCIA has been working tirelessly to address this, but as long as it remains a federal policy it will be negatively impacting the industry.
With over $12 billion in first-half revenues, cannabis retailers will be on the hook for $1.2 billion in federal taxes for the first half of the year alone. This is $756 million more than what “normal” businesses would pay. Cannabis retailers are forecasted to pay over $1.5 billion more in taxes in 2021 and, when combined with the rest of the supply chain, will pay over $2.2 billion in additional taxes in 2021.
| 280e Example of Impact on Retail | Normal Business | 280E Business | Comment | |
| Retail mid-Year Revenue | $12,000,000,000 | $12,000,000,000 | Based on data from Whitney Economics | |
| Cost of Goods Sold (COGS = 50%) | $6,000,000,000 | $6,000,000,000 | ||
| Ordinary and Necessary Expenses (30%) | $3,600,000,000 | $3,600,000,000 | Not allowed under 280e | |
| Real Pre-Tax Profit w/o 280e | $2,400,000,000 | $2,400,000,000 | ||
| Taxable Profit | $2,400,000,000 | $6,000,000,000 | Big difference in taxable rates | |
| Fed Tax @21% * | $504,000,000 | $1,260,000,000 | Retailers pay 150% more | |
| Effective tax rate | 21.0% | 52.5% | Some effective tax rates approach 60%-70% | |
| Net Annual Profit (Before State Tax and Debt Service) | $1,896,000,000 | $1,140,000,000 | A difference of $201,000 per year per retailer |
Source: Whitney Economics
*Assumes taxed at C-corporation rates
The effective tax rate increases significantly for retailers and in many cases exceeds 60% to 70%. The level of additional taxes that cannabis operators pay, over the course of the next five years, will increase by an average of $630 million per year for the industry if the business tax rates increase from 21% to 28%. Depending on how corporate tax policy negotiations are settled, things may go from bad to worse for cannabis retailers.
Based on sales data from 2020, there were over 7,550 licensed cannabis retailers in the U.S. with each retailer generating an average of $2.4 million per year. This is right around the amount of revenue required to be a sustainable retail business. In 2021, there have been roughly 1,000 more retailers licensed and even with an increase in sales, retailers are only forecasted to average $2.7 million per year.in sales. In fact, in 13 states, retailers are not projected to average the $2.4 million per year to remain viable. While retailers in some states may be OK, other retailers are not able to make ends meet.
IRC 280E will reduce cannabis retailers cash flow by $200,000 in 2021 and that $200,000 would go a long way in shoring up the finances and provide retailers with the breathing room they need to remain viable. 280E reform would allow retailers to pay for health care for more employees, hire more workers and expand their business. However, in the current environment, many cannabis operators will continue to struggle.
The key message here is that retailers are under duress due to 280E and policy reform in the area of federal taxes may make the difference between success and failure. The time for reform is now, before it is too late.
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