The regulated cannabis industry is inextricably linked to politics, and all politics is local — so when trying to open and operate a cannabis business, you’re almost sure to need to work with local government in some way.
To help our members understand how to start these relationships right, the NCIA State Regulations Committee hosted a webinar on how to approach local government earlier this year. That focused on identifying your relevant local authorities, how to introduce yourself, and how to properly navigate those relationships.
Once you’ve figured out who to talk to and have gotten in touch with them, they’ll often have questions about the cannabis industry, and there is plenty of good information you can proactively share as well. To help NCIA members inform their local governments about the wide range of issues surrounding our industry, we’ll be diving even deeper with a series of blog posts.
We’ll be starting this series where the whole cannabis supply chain begins: cultivation. Future posts will touch on processing, retail, and more. Even though states categorize their licenses differently, with some issuing stand-alone cultivation licenses and others combining cultivation with processing (or sometimes issuing vertically integrated licenses, with retail too), we’ll be focusing in on the various operations individually.
ECONOMIC IMPACT
When elected officials hear about a new business wanting to open in their town or city, their first question is usually, “how many jobs will it bring?” Mayors, city and town councils, departments of economic development, and other government entities are often laser-focused on building up the local economy, so explaining how your business will help them towards that goal is integral to moving your project forward.
Lucky for them, cannabis cultivation is a very labor-intensive endeavor, and you’ll likely be hiring dozens of people to staff your facility. If you’re an experienced operator who knows exactly how many people you need to hire and in what roles, let your local government know! They’ll be interested to see the range of responsibilities and necessary experience, from entry-level trimmers to mid-career managers to botanists with a Ph.D. If you’re still figuring out your exact staffing plan, providing a range of possibilities will help them understand the scale of your project. Be sure to avoid pie-in-the-sky estimates that you’ll never be able to reach — in the long run, it’s always better to under-promise and over-deliver than to make it seem like you were pulling a bait-and-switch. Also do not forget to include all the contract jobs created by constructing or retrofitting your facility.
Beyond the sheer number of hires you’ll be making, it’s important to talk about the compensation and benefits that you’ll be providing to your employees. If you’re starting everyone above the state’s minimum wage — or better yet, starting everyone at a living wage (generally thought to be at least $15/hour) — highlight that! If you’re providing health insurance or other benefits to your hourly employees, let them know! Elected officials like to see companies doing better than the bare minimum, and love to see companies that do even more.
Your physical facility will also have an economic impact on the community that’s worth talking about. If you’re buying your building, you’ll be paying property taxes, and you can let your elected officials know just how much you’ll be contributing to the tax base. Mayors and councilors always love to see unused space being occupied, so if you’re making use of a vacant or neglected building, be sure to let them know. This goes double if you’ll be making improvements to the building that increase its value (and triple if you’re using a local construction company to make those improvements).
Finally, consider whether you will be providing any additional revenue to the local government. While some state cannabis laws do allow for local taxes, these typically apply to retail rather than cultivation. Massachusetts and some other states also make heavy use of “community host agreements,” or CHAs, where a business commits a percentage of its revenues to the local government for a limited period of time. If either of these applies to you, be sure to provide elected officials with the relevant parts of state law, and the specifics you’re willing to offer. If you plan to financially support any charities, provide details — and if you’d like some guidance on what local charities are doing the most good, just ask, since most officials would be happy to tell you some of their favorites.
PUBLIC SAFETY
Elected officials also care about public safety, but usually follow the lead of their police chief and fire chief, for whom safety is their one and only priority. It’s good to proactively highlight the ways your facility will improve public safety — if you’re installing outdoor security cameras or floodlights, those can protect your neighbors as well as yourself, and there have been multiple cases where cameras on a cannabis business have helped solve an unrelated crime.
It’s important to remember that police and fire chiefs are spread thin and need to know a little about a wide variety of topics. Unless there are already cannabis businesses in their town, they probably haven’t read the state security requirements to open a facility, so providing an overview of the state law can help demonstrate how tightly regulated you will be. Knowing that the state already has rules for waste disposal, product storage, and controlled access areas can alleviate many of their initial concerns.
Once you’ve explained the security features of your building and run through the state requirements for cannabis businesses, you should address any lingering fears or questions that they may have. Two of the most common concerns are the safety of employees while transporting product or cash, and the risk of your building being targeted by burglars looking to steal product.
Regarding employee safety, explain how you will be shipping product to processors or dispensaries. Are you delivering it, are they picking it up, or are you using a third-party transporter? If you are transporting product yourself, explain both the state requirements and your own operating procedures, from GPS tracking to using two employees for each delivery.
You should also go into detail about your banking relationships. Many people outside the industry assume that it’s 100% cash, but if you’re part of the large majority of cannabis businesses with bank accounts, let your local officials know, especially the police chief. They will be much more comfortable if they know your customers will be wiring payments directly to your bank, rather than dropping off duffle bags full of cash at your facility.
Regarding burglary, be sure to re-emphasize your security measures, from cameras and fencing to access control and alarms. Explaining the cannabis life cycle may also be helpful — since plants are not useable products for most of their life, they’re poor targets for theft. This means that cultivation facilities are not prime targets for burglars, but in the rare cases that they are targeted, you can point to examples where cameras have led to burglars’ arrests.
COMMUNITY IMPACT
While economics and public safety are almost always the top two concerns of local governments, they may also be worried about other impacts on the community and how your business will affect residents’ quality of life. Common questions include whether your facility will emit any odor, and if it will increase traffic in the area.
Cannabis is famous for its strong odor, so it’s understandable that people would ask about it. Whether your state requires it or not, it’s advisable to use charcoal scrubbers or other odor mitigation technology to prevent your plants’ odor from escaping the building. Knowing that you’re taking steps to address this concern will help elected officials feel comfortable welcoming you into their community, especially if it’s in a densely populated area.
Traffic concerns may arise, especially if there are recent news stories about mile-long lines at dispensary grand openings. You can address this easily by explaining how cannabis cultivation facilities are not accessible to the public, and the main people coming to your building will be employees and inspectors, not customers.
When built and operated properly, cannabis cultivation facilities should be virtually indistinguishable from any other commercial warehouse. Unless you have very explicit signage (which we do not recommend), most people driving or walking by will not even know that you’re a cannabis business.
GOING FURTHER
Even after you have addressed all of your local government’s concerns, there will probably be even more questions — and that’s okay! This is a great opportunity to keep the dialogue open. Be sure to stay up to date on state laws and regulations so that you can serve as a resource for local officials. Because they’re spread so thin, they will appreciate having someone like you as a go-to when they have questions about cannabis politics or the industry.
If you’re able to offer tours of your facility, that’s a great way to build relationships with your local officials while educating them about your business and the cannabis industry as a whole. They may also appreciate invitations to events hosted by state cannabis regulators, or local industry conferences where they can get broader exposure to the cannabis world.
And of course, it’s important to be a good member of your community. Whether it’s participating in local projects, supporting local organizations, or organizing your own trash clean-ups or other events, staying active and visible will help the community know that they can count on you being a good neighbor.
Be sure to stay tuned for future installments in this series, where we will be addressing other cannabis license types. Our next blog will focus on processors.
Small Business Committee Congressional Hearing – The Cannabis Industry’s Unlocked Potential
by Michelle Rutter, NCIA’s Government Relations Manager
On Wednesday, June 19, the House Committee on Small Business will hold a hearing entitled “Unlocked Potential? Small Businesses in the Cannabis Industry.” This is the first time in history that this committee has ever considered this topic! As the nation’s oldest and largest trade association, NCIA is proud to represent thousands of small businesses at this hearing.
The hearing will “focus on the opportunities the legitimate cannabis industry presents for small businesses in states with legal cannabis, as well as entrepreneurs from traditionally underserved communities. The hearing will also enable members of Congress to explore the challenges currently faced by those businesses, and also those of “ancillary” or “indirect” cannabis businesses who may not be directly involved in the production or distribution of cannabis products.”
NCIA has been proud to work very closely with the House committee on this hearing. As a result, Dana Chaves, who is chairwoman of NCIA’s Banking Access Committee and the Senior Vice President and Director of Specialty Banking at First Federal Bank of Florida will be testifying at the hearing!
Other witnesses will include Shanita Penny, M.B.A., President of the Minority Cannabis Business Association, Eric Goepel, Founder & CEO of the Veterans Cannabis Coalition, and Paul Larkin, who is the John, Barbara, and Victoria Rumpel Senior Legal Research Fellow in the Meese Center for Legal and Judicial Studies at The Heritage Foundation.
The Committee memo also states “the marijuana legalization movement brings new opportunities for entrepreneurship and business start-up in the cannabis industry. Because this is such a nascent sector, legalization also allows policymakers to increase equity and diversity in the cannabis industry, which can take the form of addressing financial barriers to market entry and ensuring the industry reflects the local community.” It also recognizes that “because this is such a nascent sector, legalization also allows policymakers to increase equity and diversity in the cannabis industry, which can take the form of addressing financial barriers to market entry and ensuring the industry reflects the local community.”
According to a recent Leafly report, “Annual [cannabis] sales nationwide are nearing the $11 billion mark. And the number of Americans directly employed in this booming industry has soared to more than 211,000. When indirect and ancillary jobs—think of all the lawyers, accountants, security consultants, media companies, and marketing firms that service the cannabis industry—are added, along with induced jobs (local community jobs supported by the spending of cannabis industry paychecks), the total number of full-time American jobs that depend on legal cannabis rises to a whopping 296,000.”
NCIA applauds the House Committee on Small Business and Chairwoman Velazquez (D-NY) for discussing this important topic. NCIA is proud to represent all of the cannabis industry’s small businesses!
Member Blog: Cannabis Industry Banking Predictions In The U.S.
There is little doubt that lack of access to banking is one of the most immense challenges facing cannabis retailers. Legally-operating cannabis businesses are at a significant disadvantage, as well as the communities they operate in. Luckily, there are positive signs that a new day is quickly approaching and cannabis banking laws in the United States are about to go through a major change.
What’s Going on with Cannabis Banking Laws?
Recently and for the first time, the U.S. Congress held hearings on the all-cash nature of the cannabis business. The bill at the center of these monumental hearings: the Secure and Fair Enforcement (SAFE) Banking Act, originally introduced in 2006 and has been stuck in a holding pattern, as have similar bills, ever since.
The committee heard testimony from cannabis industry stakeholders, police departments, and banking executives. These witnesses painted a robust picture of the cannabis banking problem, from the danger it poses to communities in the form of increased risk of armed robbery, to the burden it places on legal dispensary owners who have to find alternative cash management solutions, to the lack of accountability cash creates from a tax perspective.
The bill has yet to come up for a vote. While there are elected officials who reject the concept outright, there is an ever growing coalition in both houses of Congress pushing for a cannabis industry banking solution. More than ever, it seems the U.S. could finally see a loosening on federal restrictions to banking legal cannabis business.
4 Reasons why the U.S. will Loosen Cannabis Banking Regulations Soon
There is more political will for the legal cannabis industry than ever before.
While one hearing is far from passing the law, it is a sign that times are changing. Ten states have legalized recreational cannabis and 33 more have some form of medical cannabis laws in place; this is a drastic increase in the last decade. Shockingly in a time of so much partisan rancor, 62% of Americans favor legalizing marijuana. That is more than double the approval rating cannabis enjoyed in 2000 (31%).
The cannabis banking law being discussed is relatively innocuous. It does not legalize or reclassify cannabis at all, just allows banks to offer services to state-legal cannabis businesses. All in all, considering the strong support across party lines and the success of state industries, passing this law would be an easy win for Democrats, Republicans, and President Trump in a time when political wins are a rarity.
Current banking solutions are prohibitively expensive and states want to see their prosperous legal cannabis industry grow.
Credit unions and banks that currently offer cannabis industry banking charge prohibitively expensive fees, up to $2,000 a month for a simple business checking account. This is a problem for state elected officials.
Recreational and medicinal cannabis states seem, generally speaking, to enjoy the tax revenue they receive from this robust and rapidly growing industry. It is in the best interest of the state for legal cannabis businesses to thrive. If cannabis business owners can’t afford the currently available banking services, it hinders their ability to build upon their business. Even worse, these prohibitive fees keep dispensaries operating on an all cash basis, creating a much higher risk of robbery and violence in the community.
California’s behemoth market is drastically tipping the scales.
It is hard to overstate just how massive California’s legal cannabis market is. Expected to rake in over $50 billion by 2026, the influence this one state industry has is profound and its cash management problem will significantly magnify the problem.
The industry will continue to grow and mature, pushing out the gray market over time. As more cash comes flowing into the legal cannabis industry, it will begin to strain the cash supply and law enforcement to such a degree that action, more than it already is, will be imperative.
Money talks; state and federal governments want their tax revenue.
More than anything else, what will ultimately carry a cannabis banking law across the finish line is money. Cash-only businesses are fertile for tax fraud, simply pocket a little cash here and there and then never report it to the IRS. If there is one thing that can motivate an otherwise slow-moving government, it is tax revenue being left on the table. Allowing cannabis industry banking is a clear way to increases transparency and ensure the state and federal government get their share of the profits.
Access to banking will allow the rapidly growing cannabis industry to advance even faster. Will you be ready? Subscribe to our blog to stay up to date on the latest cannabis news, industry trends, and best practices for running your cannabis dispensary!
Gary Cohen leads Cova’s charge into the legal cannabis space by guiding the vision, strategic development, ‘go to market’ plans and culture.
Before joining Cova, Gary was a principal in over a dozen tech start-ups in the mobile communications industry ranging from small VC funded companies to Fortune 100 firms, including Onavo, which was later acquired by Facebook. In those companies he led sales, marketing, business analytics and market expansions. He has also held a multitude of leadership roles with Verizon and AT&T.
Gary holds a degree in finance with a master’s in marketing from the University of Colorado.
VIDEO: Capitol Hill Update On Cannabis Banking Hearing In Congressional Committee
Every day, our Government Relations team is keeping our finger on the pulse of what’s happening on the Hill and how it affects our industry. In this case, we have important news from D.C. about movement to fix the banking crisis faced by cannabis industry operators.
Watch this video to learn more about the historic hearing that took place on February 13 in the Subcommittee on Consumer Protection and Financial Institutions. They held the first ever hearing on marijuana and financial services, entitled: Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses. Up for discussion was a new version of the Secure and Fair Enforcement (SAFE) Banking Act.
There’s no better way to stay informed and connected with what’s happening in federal policy than by being a member of NCIA – the largest and most influential national trade association representing the legal cannabis industry. We fight on your behalf year-round in the halls of Congress for our industry to be treated fairly like any other legitimate industry in this country.
Be sure to register in advance for our popular Cannabis Caucus event series – tickets are complimentary for NCIA members, and a limited number of non-member tickets are available. Join us throughout the month of March in Los Angeles, San Francisco, Denver, Lansing, and Philadelphia. For more information, visit our website.
And now is the time to start planning your trip to Washington, D.C. to join us on Capitol Hill! For the 9th year in a row, we’re hosting our Annual Cannabis Industry Lobby Days on May 21-23. This is your chance to walk the halls of Congress and make your voice heard about the unfair tax and banking policies that cripple our industry. This event is exclusively for current NCIA members, so if you’d like to join us for what NCIA members say is “the most important and exciting NCIA event of the year,” then now is the time to join NCIA at one of our three levels of membership, and then join us in May in our nation’s capitol.
If you’re already planning to join us, now is a perfect time to read up on our latest Policy Council report to learn more about priorities for our industry in the 116th Congress.
Three New Bills In The 116th Congress
by Michelle Rutter, NCIA’s Government Relations Manager
The 116th Congress just began, but there’s already been a flurry of new cannabis bills filed. Let’s take a look at some of the first pieces of legislation to be filed in the House of Representatives on the topic:
Bill: H.R. 420: Regulate Marijuana Like Alcohol Act Introduced by: Congressman Earl Blumenauer (D-OR) What It Does: This bill was introduced in the 115th Congress by now-Governor Jared Polis (D-CO). Filed in the 116th Congress by Rep. Blumenauer, this bill would remove cannabis from the Controlled Substances Act entirely. It would also transfer cannabis enforcement authority from Drug Enforcement Administration to a renamed Bureau of Alcohol, Tobacco, Marijuana, Firearms and Explosives. Both shipping or transporting cannabis into states that have not legalized it would continue to be prohibited. Last year, the bill garnered 26 cosponsors.
Bill: H.R. 493: Sensible Enforcement of Cannabis Act Introduced by: Rep. Lou Correa (D-CA) Additional cosponsors: Reps. Steve Cohen (D-TN), Don Young (R-AK), Dina Titus (D-NV), Matt Gaetz (R-FL), Eleanor Holmes Norton (D-DC), Salud Carbajal (D-CA), Peter DeFazio (D-OR), Katie Hill (D-CA)
What it does: This bipartisan bill seeks to enshrine the now-rescinded Cole Memo into federal law. The legislation directs the Attorney General, in enforcing the provisions of the Controlled Substances Act relating to cannabis, to focus on certain enforcement priorities that were outlined in the Cole Memo, such as:
Distribution of marijuana to minors.
Revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels.
Diversion of marijuana from States where it is legal under State law in some form to other States.
State-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity.
Violence and the use of firearms in the cultivation and distribution of marijuana.
Drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use.
The growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands.
Marijuana possession or use on Federal property.
This bill was previously introduced at the very end of the 115th Congress. NCIA is proud to have endorsed this legislation.
Bill: H.R. 127: Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2019 Introduced by: Rep. Steve Cohen (D-TN) Additional cosponsors: Reps. Don Young (R-AK) and Matt Gaetz (R-FL)
What it does: This bill would amend the Controlled Substances Act to state that regulatory controls and administrative, civil, and criminal penalties do not apply to a person who produces, possesses, distributes, dispenses, administers, tests, recommends, or delivers medical marijuana in compliance with state law. The bill also excludes “cannabidiol” (CBD) from the definition of “marijuana” and limits the concentration of delta-9-tetrahydrocannabinol (THC) in CBD to 0.3 percent on a dry weight basis. The bill also directs the Department of Health and Human Services (HHS) to terminate the Public Health Service’s interdisciplinary review process that is used to evaluate applications for medical marijuana research, opening up a multitude of research opportunities. The bill requires the DEA to license manufacturers and distributors of marijuana for medical research;, for HHS to register practitioners to conduct research, and for the Department of Veterans Affairs (VA) to authorize VA health care providers to provide recommendations and opinions to veterans regarding participation in their states’ cannabis programs.
Many more (possibly dozens!) of cannabis bills are expected to be filed in the next few months. NCIA will continue to track these pieces of legislation and endorse critical cannabis reforms on Capitol Hill.
VIDEO: The Benefits of Legalizing Cannabis
In this third installment of NCIA’s animated educational video series, we explore the benefits of legalizing cannabis nationwide and beyond. Learn how ending federal prohibition can improve public safety and add economic opportunities to our communities, and how you can help.
The Marijuana Freedom and Opportunity Act (Finally) Makes Its Debut
After more than two months since Senate Minority Leader Chuck Schumerannounced forthcoming marijuana reform legislation, this week finally saw the bill’s introduction. The Marijuana Freedom and Opportunity Act removes marijuana from the schedule of controlled substances, allowing states to determine their own cannabis policies without fear of federal interference.
The Marijuana Freedom and Opportunity Act, cosponsored by Senators Bernie Sanders (I-VT), Tim Kaine (D-VA), and Tammy Duckworth (D-IL), would specifically remove marijuana from the Controlled Substances Act, effectively decriminalizing the substance at the federal level and allowing states to determine their own cannabis policies without the threat of interference.
The full text of the bill describes further provisions, including providing funding to cannabis businesses owned by women and people of color through the Small Business Administration; funding studies on traffic safety, impairment detection technology, and health effects of cannabis; restricting advertising that could appeal to children; and setting aside $100 million over five years to help states develop streamlined procedures for expunging or sealing prior cannabis convictions.
“We commend Senator Schumer for joining the growing chorus of Congressional leaders stepping forward with alternatives to the failed prohibition of marijuana,” said Aaron Smith, executive director of the National Cannabis Industry Association (NCIA). “With millions of Americans already living in states that successfully regulate adult-use cannabis and support for national legalization at record levels, this legislation would finally align federal marijuana policies with mainstream voter sentiment.”
Video: Another Successful NCIA Lobby Days
NCIA’s Aaron Smith re-caps another successful Cannabis Industry Lobby Days! Watch this video to hear more about NCIA Members’ experiences and why you should plan to join us next year in D.C.
Are you an industry leader looking to invest in continued national advocacy for the industry but not yet a member of NCIA?
NCIA’s staff and professional lobbying consultants work year-round in our nation’s capital to build support for the cannabis business community and the policy changes needed for our industry to reach its full potential. That work has led us to the tipping point we are seeing today and it’s all been made possible by the financial support of our members.
Adding your name to the growing list of responsible businesses behind this effort will bring us even closer to reaching the day when the cannabis industry is treated fairly under federal law.
Already a member of NCIA but want to enhance your support for this vital work? Sponsor a quarterly Cannabis Caucus event in a city near you! All profits from event sponsorships support the efforts of our robust team in D.C.
America’s Own Homegrown Industry
Co-authored by NCIA and BDS Analytics
It all begins with the humble plant.
The fastest-growing industry in the United States relies 100 percent upon the simple cultivation and harvesting of one plant, cannabis sativa — its buds, its leaves, and the diversity of organic compounds the plant provides, including THC.
If the plant is grown indoors, as is most legal cannabis in the United States, it first needs a building before it ever digs roots and spreads a canopy. The building requires complicated lights, many of which are manufactured in the United States. It demands a wilderness of HVAC networks, to maintain a healthy temperature and humidity level. Irrigation systems, potting soil and soil amendments, complex sprinkler systems in case of fire, high-tech security systems — all of these and much more must be in place before the first plant begins to rise towards the light.
And these first steps produce jobs and work: real estate professionals, lawyers, accountants, bookkeepers, electricians, carpenters, plumbers, HVAC specialists, irrigation experts, sprinkler and alarm installation technicians, factory workers. Once the building is ready, the company needs horticulture experts and trimmers, among others. And it requires ongoing work, too, from electricians and other trades specialists, as things break and need to be replaced or updated. The cultivation of the plant alone is a rapidly-developing career field.
But hands-on growing represents just one small patch of the cannabis landscape. Every step along the way, from seed to store, propagates work for people in hardhats, lab coats and blazers. And all of the jobs are Made in the USA. Even more, due to the patchwork regulatory environment, cannabis industry jobs also tend to root, and stay put, within individual states and communities.
Legal cannabis today in the United States is the ultimate homegrown industry. Detailed sales data from industry market research firm BDS Analytics reveals astounding growth within states where cannabis is legal. For example, during the first quarter of 2018 in Colorado, where sales of recreational cannabis have been legal since 2014, dollar sales of concentrates in recreational shops grew by 47.4 percent compared to the first quarter of 2017. Concentrates do not represent a tiny piece of the overall recreational marketplace: During this year’s first quarter, adult use concentrates sales hit $85.35 million, and captured a full 30 percent of the recreational marketplace. That’s an enormous chunk of the state’s mature adult use cannabis market, and yet sales still expand by close to 50% within a year.
And with all of that growth, quarter after quarter, comes increased need for workers.
States with laws that replace criminal marijuana markets with regulated industries are also benefiting from significant tax revenues that support important programs like school construction, law enforcement, and drug education. According to the National Cannabis Industry Association’s , the five states that allowed adult-use sales realized nearly $800 million in combined state tax revenue alone.
Industry investment and market research firms The Arcview Group and BDS Analytics predicted in their study US Legal Cannabis: Driving $40 Billion Economic Output that the industry will hatch 414,000 jobs in a multitude of fields both directly and ancillary related to cannabis by 2021 — everything from delivery drivers to retail sales pros to extraction technicians, warehouse workers, bakers, marketing gurus, and PhDs in pest control.
The industry’s impact is certainly felt in Colorado, which began retail cannabis sales for adult use on Jan. 1, 2014 — the first in the nation to do so. Many economic experts attribute the state’s lowest-in-the-nation unemployment rate, at least in part, to the cannabis boom.
Colorado’s ascending sales results, as well as those in the other cannabis-legal states, would likely resound with even more oomph if two difficult issues could be resolved: banking, and the ability to write off business expenses for cannabis companies.
As the industry’s leading national advocate, NCIA is working hard on both fronts.
The Small Business Tax Equity Act of 2017, co-sponsored by Rep. Carlos Curbelo (R-FL) and Sen. Ron Wyden (D-OR), seeks to let cannabis companies operating legally under state law to implement business-related tax credits or deductions for expenses — the entire issue is often referred to simply as 280E (the applicable section of the tax code) as shorthand. For now, the federal government treats marijuana sales in legal states the same way it treats sales of illegally-trafficked drugs — needless to say, people illegally selling controlled substances cannot itemize tax deductions or claim business-related tax credits but NCIA believes that state-licensed businesses should not be caught up in the wide net cast by 280E.
Meanwhile, the Secure and Fair Enforcement (SAFE) Banking Act seeks to provide a “safe harbor” and additional protections for depository institutions that want to engage with cannabis companies that are in compliance with state law. Rep. Ed Perlmutter (D-CO) and Sen. Jeff Merkley (D-OR) are co-sponsors of this important legislation, which finally would, among other things, provide cannabis companies access to bank loans — taken for granted in most industries, but long outlawed in legal cannabis.
The success of the industry truly astounds despite such profound roadblocks. Success in alleviating such banking and taxation headaches would further stoke what is already the hottest industry in the country.
Research into the economic benefits of cannabis legalization and regulation is just beginning, and for now it remains too early to make definitive declarations about how legalization will influence the economic path of different communities. Undoubtedly the effects will vary from location to location — the effect on San Francisco, for example, may be entirely different from the effect on Fort Collins, Colorado.
One early study, conducted by the University of Colorado-Pueblo’s Institute of Cannabis Research, found that legalization in Pueblo, a diverse, blue-collar area about two hours south of Denver, could be responsible for the County’s recent success. In addition, the study rejected predictions that legalization would bring increased homelessness and crime to the region.
“When compared to similar communities in states where cannabis is not legal in any form, Pueblo appears to be doing better on a variety of measures,” the study says. “Overall, the positive changes that are noticed in Pueblo County, such as increasing real estate values, higher income per capita, and more construction spending may be attributed to legalization of cannabis in the state of Colorado.”
To date, cannabis still represents a fairly small slice of the employment pie in Colorado. A recent study conducted by the Federal Reserve Bank of Kansas City estimated the industry directly supports 17,821 jobs today. The study’s author writes: “Employment in the marijuana industry is a relatively small share of total employment in Colorado, but in recent years it has been one of the state’s fastest-growing industries,” adding that between 2016 and 2017 jobs in cannabis rose by 17.7 percent.
The study also noted the effect Colorado’s cannabis industry has had on state government coffers; in 2017 alone, it added $247 million to the budget. Cannabis tax receipts go to a variety of places. The state’s Building Excellent Schools Today school construction program, for example, receives the first $40 million from excise taxes on wholesale cannabis, and Colorado Gov. John Hickenlooper recently signed a bill that will drastically increase this amount. Local governments receive another 10 percent of the taxation haul.
Nationwide, the cannabis industry now supports close to 10,000 active cannabis licenses — that is, businesses that need licenses to grow, manufacture, distribute or sell the plant, according to CannaBiz Media, which tracks marijuana licenses. These “touch-the-plant” businesses are the sturdy and rapidly expanding trunk of a flourishing industry — without them, none of the other jobs and businesses that are sprouting up around cannabis sales today would exist.
But if touch-the-plant businesses are the trunks of the industry, the branches, leaves and flowers are the ancillary jobs — those that don’t grow, manufacture or sell marijuana directly. Of those anticipated 414,000 cannabis jobs by 2021, many will not sprout directly from licensed businesses. For example, software developers targeting the cannabis industry are flourishing. Entrepreneurs across the country are opening factories that make everything from plastic containers and child-safe bags for cannabis, to customized extraction equipment. New legal, public relations, marketing, and other professional services appear every day that revolve around the industry.
During a recent economic conference, Ian Siegel, the CEO of ZipRecruiter, which is a prominent job recruitment marketplace, said of cannabis: “Twenty-nine states have legalized marijuana [in some form]. There’s a 445 percent job growth in job listings in the category year-over-year.” By comparison, Siegel said other hard-charging industries like technology and healthcare lag far behind, with job growth at 245 percent and 70 percent respectively. He also noted that cannabis jobs expansion grew at a more rapid pace during Q4 2017, which saw an increase of 693 percent compared to the previous year.
As growth rockets ahead (new jobs, workers with new skills, growing tax revenues, etc.), the same trajectory is beginning to rise in Canada, where adult-use cannabis use is expected to begin later this summer. Despite Canada’s relatively small size — with a population of 35 million, it is smaller than California and dwarfed by the United States population of nearly 326 million — it enjoys a distinct advantage on the global stage: Canada allows cannabis exports. Growers and manufacturers in Canada ship cannabis to Germany, Israel and other countries that seek cannabis for their medical programs (only one other country in the world, Uruguay, enjoys legal adult-use cannabis use and sales). This is a fairly small market, for now. But as more and more countries embrace the medical, if not adult-use, benefits of cannabis, it is a marketplace destined to expand and grow increasingly dynamic. Permitting cannabis exports remains another NCIA priority.
Either way, the cannabis revolution is here, across the United States — where it all began. It is the ultimate homegrown industry, one we all should embrace, nurture and strengthen. It’s good for America, and good for America’s cities, towns and citizens.
This post was co-authored by the National Cannabis Industry Association, the largest cannabis trade association in the U.S. and the only one representing cannabis businesses at the national level and BDS Analytics, the leader in providing comprehensive cannabis market intelligence and consumer research. Learn more about NCIA by visiting: thecannabisindustry.org. Learn more about BDS Analytics by visiting: bdsanalytics.com.
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After more than two months since Senate Minority Leader Chuck Schumer announced forthcoming marijuana reform legislation, this week finally saw the bill’s introduction. The Marijuana Freedom and Opportunity Act removes marijuana from the schedule of controlled substances, allowing states to determine their own cannabis policies without fear of federal interference.
