Members of Congress Announce Bipartisan Cannabis Caucus

by Michelle Rutter, Government Relations Manager

On February 16th, the House of Representatives took another step towards recognizing the need for federal reform of cannabis laws. Representatives Earl Blumenauer (D-OR), Dana Rohrabacher (R-CA), Jared Polis (D-CO), and Don Young (R-AK) announced their newly formed Congressional Cannabis Caucus. The bipartisan coalition will focus on issues like medical research, access for veterans, and business needs — including banking and 280E reform.

The four co-chairs of the caucus were united in their support for states to be allowed to determine their own cannabis policies. In addition, the group noted that the growing momentum for reform across the country has finally reached the halls of Congress. With eight more states legalizing some form of cannabis just this past November, the caucus co-chairs say there has been a “tremendous increase” in interest for joining the caucus, including from Republicans. The caucus will also allow members to talk freely about cannabis legislation and give the opportunity to show that cannabis consumers and entrepreneurs are an important part of the American economy.

Prior to the announcement today, the House had started an informal marijuana working group, but decided that it’s now time for a more formal cannabis caucus that seeks to educate other Members of Congress on the discrepancy between state and federal law, the importance of making sure that cannabis businesses are treated fairly, and that states’ rights are protected. The Cannabis Caucus is also an opportunity for NCIA to educate Capitol Hill staffers and policymakers on the issues our members face on a regular basis.

Join us in Washington, D.C., May 16-17, for NCIA’s 2017 Cannabis Industry Lobby Days!

NCIA’s Cannabis Industry Lobby Days provide the best opportunity to show our nation’s decision-makers what a responsible and legitimate cannabis industry looks like and to help raise awareness of issues like the unfair tax and banking policies hampering our industry’s potential to grow and be treated like any other U.S. business sector. Your $25/person registration fee includes a lobby training session with NCIA’s government relations staff and two days of coordinated meetings with congressional offices across Capitol Hill.

Member Spotlight: Cannabase

In this month’s NCIA Member Spotlight, we speak with Jennifer Beck, co-founder and Managing Director of Cannabase, a wholesale cannabis marketplace and technology dashboard. Cannabase is headquartered in Denver, serving more than 75% of marijuana licenses in Colorado, with plans to expand nationwide in 2017.

Cannabase

Cannabis Industry Sector:
Wholesale Distribution, Technology

NCIA Member Member Since:
2014

Tell me a bit about your background in cannabis and why you launched Cannabase?

Cannabase co-founders, Chase Beck and Jennifer Beck

When my husband, Chase Beck, and I co-founded Cannabase, we had a background in technology and a passion for cannabis. Not only were we amazed by the incredible science surrounding medical marijuana, but we also believed that cannabis was a much healthier alternative to alcohol for general adult-use purposes. The idea of being part of an emerging industry – helping to shape the framework while increasing its validity and chances of survival – was a really exciting idea to us.

What unique value does Cannabase offer to the cannabis industry?

Cannabase is the oldest and largest online wholesale marketplace in Colorado, providing a safe and compliant platform for businesses to connect over wholesale bud, trim, extracts, seeds, and edibles. We represent over 75% of the licensees in the state in our intuitive, automated platform, streamlining wholesale purchases and aggregating the powerful market data that drives our market statewide. Cannabase will be expanding nationwide in 2017, and is the exclusive wholesale partner of BioTrackTHC and MJ Freeway point-of-sale systems, which makes Cannabase the only firm to have direct, non-self-report access to virtually the entire Colorado market’s real-time inventory.

Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does Cannabase help work toward that goal for the greater good of the cannabis industry?

Cannabase was founded on the principle that legal cannabis was a statewide experiment, and the health of the industry was critical to that experiment being considered a success. As a result, we’ve treated compliance, transparency, and integrity as non-negotiable cornerstones of our company’s evolution and product development. We’re disciplined in our vetting of licensed businesses and ensuring that anyone using our product has a valid license with their state and uses the site appropriately. Similarly, we’re passionate about supporting industry groups like NCIA that are doing amazing work for the future of our industry. We believe that investing in industry groups is as important as ever, especially in light of the changing political climate.

What kind of challenges do you face in the industry and what solutions would you like to see?

We still see the ramifications of the overarching federal limitations and restrictions – primarily 280E (which squeezes capital industry-wide) and lack of banking. These roadblocks impede progress for all cannabis businesses, and make it more difficult for ancillary businesses to solve the critical day-to-day challenges faced by our customers.

Why did you join NCIA? What’s the best part about being a member?

We love the work NCIA does to strengthen, connect, empower, and fight for the legal cannabis industry. In the three years we’ve been in the cannabis industry, we’ve never experienced anything short of total professionalism from the staff at NCIA. It’s a group that never under-delivers, and has been a pillar for community and our community’s future. We are proud to be a part of NCIA and look forward to seeing what 2017 brings!

Note: NCIA member profiles highlight members and stories within our cannabis industry community. They do not constitute an endorsement or recommendation of specific products or services by NCIA.

Member Spotlight: LivWell Enlightened Health

In December’s member spotlight, we speak with Neal Levine, who serves on NCIA’s Board of Directors, and is Senior Vice President of Government Affairs for NCIA Sustaining Member LivWell Enlightened Health. LivWell is a Colorado-based medical and adult-use cannabis dispensary with 14 locations across the state, employing hundreds of staff.

LivWell Enlightened Health

Cannabis Industry Sector:
Medical and Adult-Use Cannabis

NCIA Member Since:
February 2012

Tell me a bit about your background in cannabis and why you joined the team at LivWell.

Neal Levine, Sr. VP of Government Affairs

I have been working on cannabis policy reform on the state and national level for the majority of my professional career. Specifically, I led or played a key role on the teams that first passed medical marijuana laws in Maryland, Vermont, Montana, Rhode Island, and Michigan; decriminalization in Massachusetts; and legalization in Alaska. I also led several teams which qualified initiatives via signature drives in several states, including the adult-use initiative that just passed on November’s ballot in Nevada. And I have been involved in some form or another in helping to develop industry regulations in many different states throughout the country after these laws have passed.

At some point I realized that I had switched from the lobbyist and campaign guy who was working on cannabis to the cannabis guy who was working on campaigns and lobbying. So I decided to shut down my political consulting practice and shift to the industry full time about a year and a half ago. Of all the cannabis companies existing today, LivWell Enlightened Health struck me as best placed, not only in terms of being successful in the industry but also in terms of presenting a positive example to cannabis entrepreneurs everywhere about how cannabis companies should engage with their industry peers, the legalization movement, their customers and patients, and the communities in which they operate. LivWell Enlightened Health has demonstrated time and again our willingness to fight for and defend the industry, and it has been my honor to lead the company’s continuing efforts in this regard.

What unique value does LivWell offer to the cannabis industry?

Every single day we try to live up to our reputation as the industry leader. It starts with taking care of our people, whom we view as our number-one asset. Our entry-level positions pay several dollars above the minimum wage, we offer full health care to all of our employees at no cost to them, and we put 3% into a 401(K) annually for all of our employees which vests instantly and is not a match – they do not have to put in a penny of their pay, although they are certainly welcome to contribute as well.

Beyond the high-quality cannabis products we sell, the well-paying jobs we create, and the tax revenue we generate for Colorado, LivWell Enlightened Health has determined to be involved in events and initiatives throughout the communities in which we operate. That’s why we established LivWell Cares, a program designed to work hand-in-hand with our local communities both as good neighbors and as fully-involved partners in community development. Through LivWell Cares, we have participated in numerous charitable activities, sponsored several local events, and educated community leaders and public service officials on the products we sell and the industry that we help to lead. Our deep and committed involvement in working with our neighborhoods and engaging with the communities whose lives we touch through our business, including those who may not patronize our stores, is a value that is nothing less than a part of the fabric of our company and an important piece of our culture.

Cannabis companies have a unique responsibility to shape this growing industry to be responsible and treated equally as any other industry. How does LivWell help work toward that goal for the greater good of the cannabis industry?

You’ve touched on something that is very important. First and foremost, we strive every day to be the industry that we want to be a part of. We take our position as an industry leader very seriously, and conduct ourselves accordingly. If you are a part of our industry, you simply must be engaged in your communities. You must join together with allies to defend against the seemingly endless threats to our advancement. We must all band together and work collaboratively on big picture projects like tax reform, banking, and removing cannabis from the Controlled Substances Act, while running responsible and compliant businesses that take care of the people who chose to join our teams. If this is not a key component of your company culture, I believe that you will eventually fail.

As a company, LivWell Enlightened Health is very focused at developing industry-wide best practices, helping to shape state and federal lobbying priorities, working to end the unfair taxation of 280E, and making it easier for cannabis businesses to receive the banking services they need to operate successfully. I ran for the NCIA Board promising to focus on these issues, and having won the seat, I feel that I have a mandate and responsibility to do what I said I would do from the membership that elected me.

From the beginning, the leadership at LivWell Enlightened Health has been determined to be the most compliant company in the industry and to support policy-makers and regulators from throughout the country and the world as they build a common-sense regulatory regime in which we can operate. This was one of the primary aspects of our culture that first attracted me to the company. We frequently host delegations of government and elected officials who tour our facilities and speak with our executives to learn more about how legal cannabis actually works, and offer to share our expertise and work with them to construct a regulatory environment conducive to both business success and public health and safety. We believe these efforts have already helped encourage more regulatory consistency in cannabis policies across the country, and have helped remove the stigma our industry faces in the eyes of officials who previously had little to no experience with cannabis in any form. We have been highly encouraged by the reactions of those officials with whom we have worked, as they quickly realize that we are just like any other business and deserve to be treated as such.

Building a better environment for our industry also requires sustained engagement with our patients and customers, particularly when it comes to education. We call ourselves LivWell Enlightened Health for a reason. Education has always been an important part of our company, a point best evidenced by our industry-leading employee training program, LivWell University. This two-week intensive course includes classroom, online, and on-site components, and covers everything from the science of the endocannabinoid system to how to complete a compliant transaction. We view our employees as company and industry ambassadors. The training our employees receive allows them not simply to be good at their jobs, but also to be knowledgeable enough to answer our customers’ tough questions while being advocates for responsible use. We have even begun taking components of our employee training program and developing them into customer-facing materials so that our customers can feel more empowered to make intelligent choices when it comes to their cannabis consumption.

Why did you join NCIA? What’s the best part about being a member?

NCIA is our national industry association, and every single business either in our industry or supplying our industry has an obligation to join and support NCIA. Being an NCIA member means supporting our efforts to end the scourge of 280E, open up banking, remove cannabis from the Controlled Substances Act, and be diligent in our efforts to make sure the new administration does not roll back any of our progress. Outside of the financial obligation, I believe every member should participate in Lobby Days, where we get to engage with Congress as an industry.

The best part of being a member is the ability to be part of our amazing national cannabis community, and work collaboratively with so many intelligent and dedicated people on the normalization of our industry on the path to ending prohibition once and for all.

Guest Post: Favorable IRS Ruling – State Excise Tax May Escape 280E Treatment

by Luigi Zamarra, CPA

On July 31, 2015, the IRS released ILM 201531016, concluding that the old Washington State cannabis excise tax may be properly treated as a reduction of gross revenues received. This is a very favorable ruling for our industry as it means that this tax can escape the harsh non-deductibility treatment of IRC Section 280E.

Although this ruling is applicable directly only to old Washington law, it may have far-reaching consequences for cannabis businesses operating in other jurisdictions that also impose special taxes on cannabis business activities. taxbag

As originally enacted, the Washington excise tax is imposed upon all sales of cannabis, at either the producer level, the processor level, or the retail level. As written, the tax is imposed upon each sale. (This law has now been amended so that the tax is imposed only at the retail level.)

The IRS has concluded that businesses may treat this tax as a reduction of Gross Revenues. This treatment is similar to “Returns & Allowances” in that it is a “Revenue Contra Account.” As such, it is not an expense, either above-the-line (Cost of Goods Sold) or below-the-line. Since it may be treated as a reduction of Gross Revenues rather than as an expense, it should escape treatment as non-deductible under IRC Section 280E.

Colorado also imposes a variety of special taxes upon cannabis sales. In California, local cities and counties impose special taxes on cannabis sales too. Although it is not yet clear, it seems there may be opportunities for businesses in these jurisdictions to take advantage of this ruling. This would involve these businesses changing their accounting treatment for these taxes: away from an expense or Cost of Goods Sold treatment and toward a Revenue Contra Account treatment.

Businesses are advised to consult with their CPA for a more in-depth analysis of the application of this ruling to their particular situation.

Luigi Zamarra, CPA, has been a member of NCIA since 2013. Luigi CPA is an accounting firm located in Oakland, CA, that helps all types of businesses and individuals with tax planning, tax compliance, and tax dispute services. Luigi specializes in the medical marijuana industry. He helps these businesses comply with IRC Section 280E so as to balance tax cost against audit examination risk.

*Disclaimer: NCIA does not provide legal or financial services or advice. Any views or opinions presented in this guest blog post are solely those of the author and do not necessarily represent those of the organization. You must not rely on the legal information on our website as an alternative to legal or financial advice from your lawyer or other professional services provider.