Policy Matters: Golden State Green – Regulating California’s Cannabis Industry
Join us for the fourth episode of our enlightening #IndustryEssentials webinar series, “Policy Matters,” where we delve deep into the regulatory and policy dynamics shaping the cannabis industry. In this episode, we are honored to host Nicole Elliott, Director of the California Department of Cannabis Control (DCC), for an exclusive discussion on the evolution and trajectory of cannabis regulation in California.
Nicole Elliot brings a wealth of experience and insight as she shares her personal journey as a cannabis regulator, her priorities within the California market, and the most notable accomplishments and milestones achieved by the DCC in 2023. Gain valuable insights into the Department’s upcoming priorities for the year and get a sneak peek into the topics Nicole will cover at the upcoming NCIA California Stakeholder Summit hosted in Sacramento, CA on Thursday, February 22nd from 2:30PM PT- 5:30PM PT.
Stay tuned for more updates, mark your calendars and register now for the fourth episode of Policy Matters!
Learning Objectives:
Our previous episodes have offered a diverse array of insights into the evolving cannabis landscape.
As we approach our upcoming episode, we aim to synthesize these regional insights, providing a holistic understanding of the ever-evolving regulatory landscape across different states. Join us as we connect with industry leaders and regulators to navigate the complexities of cannabis policy together.
The Equity Workshop Tour: Impactful Conversations with Regulators
by Mike Lomuto, NCIA’s DEI Manager
Part 1 of a Blog Series Recapping the Equity Workshop Tour – Spring 2023
I believe that the cannabis industry needs intimate and dynamic events, particularly if we are to build in an equitable and diverse fashion, and that’s why I embarked on the Equity Workshop Tour, navigating countless obstacles along the way.
After completing the four workshops that comprised the Tour, that belief has been validated, with several additional takeaways.
As part of each workshop, we conducted panel discussions with representatives of state and city regulatory agencies and advocacy organizations.
These conversations were especially illuminating for me, as I got to witness firsthand the ways in which regulators and advocates have been working together in each of these states, with the same mission of equity front and center.
NEW JERSEY
In New Jersey, the Cannabis Regulatory Commission (CRC) recognizes the need for input from stakeholders, and our intimate panel discussion, with a high level of audience participation, offered exactly that.
Hearing the “origin stories” of CRC Vice Chair Samuel Delgado and CRC Commissioner Charles Barker is a large part of why I believe we have a chance at an equitable industry. Because at the end of the day, we have solid allies within the halls of government, who share our mission.
I was very encouraged to learn about a state that appears to be outpacing other states in the drive to stand up an equitable industry. There does, however, appear to be a lot of work that needs to be done on the municipal level. This is where advocacy organizations, like NCIA, and stakeholders must work together to educate local regulators in order for expeditious and equitable permitting processes to unfold. I believe that NCIA’s committees can provide support in this area, as we have previously, by providing written or verbal testimony on specific matters that municipalities are still unaware of.
It was also illuminating to understand the role that service-disabled veterans play in the industry, as pointed out by Osbert Orduna (of NHCC and SDVICA). Nichelle Santos (M4MM) also contributed valuable insights to this panel discussion.
ILLINOIS
Illinois is a state that has drawn the ire of many. While the legislation was the first to include equitable provisions, the implementation has been challenging, and many people have lost a lot.
That said, as opposed to the nascent and scattered approach of advocacy I witnessed here a few years back, it’s very encouraging to see advocacy organizations working together on the same page, developing a collaborative working relationship with one another and the regulators. A big shoutout to Cannabis Equity Illinois Coalition (CEIC) for their role in this. (check out this recent Catalyst Conversation to learn more about their work)
It seems that a consolidation of Cannabis oversight into a singular agency with its own power to regulate the industry is needed. There are currently 17 agencies with a role in Illinois’ industry, and the state’s Cannabis Regulatory Oversight Officer serves as a limited version of a centralized agency, without the power to enact the implementations everyone seems to know are needed.
I encourage you to tap in with CEIC, SEEN, and ULCIA to learn more about how you can help with the priorities they’ve identified are necessary to create an equitable industry in Illinois.
NEW YORK
In New York, there is a need for more transparency, which it seems the Office of Cannabis Management recognizes and is headed in that direction. I’ve said this before, and I’ll say it here. OCM has a difficult job, balancing the directives from those above it, with the needs of the stakeholders. As Tabatha Robinson, OCM’s Deputy Director for Economic Development Policy and Research, pointed out during the panel, OCM is made up of several dedicated people who go above and beyond because they believe in creating an equitable industry. As advocates, our challenge lies in balancing the above understanding while also ensuring that the government is held accountable for its promises
Shanduke McPhatter, a CAURD licensee who represented the NY CAURD Coalition on the panel, said it best when he advocated for greater transparency in the process. He reminded us that patience is not the issue for those who have served time, as they’ve learned patience the hard way already. But while being patient, there is a need for greater transparency from the state. A large part of this has to do with the major lack of transparency from the Dormitory Authority of the State of NY (DASNY), which also impacts OCM and their ability to operate properly. It seems like it’s time for Ruben McDaniels and DASNY to stop playing games, but I’m not stating anything that everyone in New York doesn’t already know.
Lastly, I appreciated Dr Adrian Adams (M4MM) and Scheril Murray Powell (JUSTUS) pointing out the importance of the industry to work together to find creative solutions. These types of discussions are a great starting point, but it’s how we collaborate on action items moving forward that will define our path forward.
MICHIGAN
In Detroit, our panel included NCIA Board Member Rebecca Colett, who has founded the Detroit Cannabis Project (DCP) as a mentorship group to support cannapreneurs on their journey. Thus far, that journey has mostly consisted of staying relevant and advocating properly while the myriad of municipal challenges have unfolded.
What stood out to me was the way in which Kim James and the City of Detroit’s Homegrown Cannabis Office have partnered with DCP, recognizing the need to support mentorship from the municipal level. As Detroit comes online, and as capital markets open back up to fund these new cannapreneurs, the participants in Detroit’s cannabis program will have a leg up on where they would’ve been without this type of holistic support.
Another interesting topic of conversation was led by Scheril Murray Powell, who provided an update on the work to support Legacy operators being conducted by ASTM and the JUSTUS Foundation. This includes advocating for a universal definition of “Legacy operator”, of which NCIA’s DEI Program is very supportive:
“An individual who: 1) Commercially for the majority of their income, or sacramentally, or ceremonially distributed cannabis; 2) Outside of the Legal Framework; 3) During the period of Prohibition; 4) For a minimum of 5 years before legalization.”
As part of the beginning of what will hopefully be a robust dialogue on this topic, NCIA Cultivation Committee member Joseph Smith pointed out the potential challenges for adopting such a standard in the state of Michigan, which had a caregiver program for a decade or so prior to legalization.
I can’t wait to get back out to Michigan to see this constantly-evolving program.
WHAT IT ALL MEANS
My biggest takeaway is that no matter how many of these types of conversations we have, we need to continue having them and to continue pushing the ball forward. Cannabis is going to take several years to stand up properly, and equitably, so dialogue between advocates, business owners, and regulators is invaluable at this stage in the game.
And the more cannabis entrepreneurs realize the importance of advocacy at this early stage, the more an equitable industry is possible.
My hope is that these panels, in the setting of the workshops, provide a forum for the right type of conversations, as well as inspiration for business owners as to how to advocate for themselves and others in a successful manner.
It Takes A Village: NCIA’s Equity Workshop Tour is Developing an Ecosystem
by Mike Lomuto, NCIA’s DEI Manager
The depth and cohesiveness of our networks are what will carry us through to the other side of cannabis prohibition, positioned for ultimate success.
When I started my transition from the legacy space into regulated cannabis about a decade ago, I did so in the silo of the Bay Area. After failing to make that transition successfully, I took a step back and recognized that my network wasn’t what it needed to be in order for me to build the type of long-lasting business I dreamt of.
In order to turn the dream of generational wealth into an actionable plan, I needed to expand my network. That’s when I started getting involved with NCIA. I saw access to a national network as a priceless resource on this journey. So I set out to not only access the network myself but I was also provided the opportunity to build out the DEI Program so that we could create a structure that would allow everyone to plug in.
Like any other network, not everyone is for everyone. But my legacy days taught me all I needed to navigate the network and find the people who were real, and who actually care about the industry’s potential to create a new paradigm, distinct from the normal corporate, colonial systems we see rampant in other industries.
But creating a new paradigm isn’t easy. It takes a village. And then some.
And that’s why I believe the Equity Workshop Tour is so important. It’s an opportunity for us to continue to grow our networks, and to do so with intention in a structured and curated environment, designed to facilitate and accelerate network development, so that real can find real, and folks can not only get the info and insights they need to succeed but make those valuable connections.
The Spring 2023 Tour is four stops – Chicago, Detroit, Jersey City, and Brooklyn. But this is just the beginning. We’re planning something more expansive for our Fall and Winter tours. And we also have some virtual events in the works in between, so that folks who attend the workshops can continue to build together, as well as with fellow attendees from the other workshops across the country.
Partner Organizations Who Are With Us for the Long Haul
You’ll notice that we have several organizational partners signed on for the tour. This isn’t just some slapped-together list. These partners are all organizations that we’ve been building with for some time now and intend to do so for a long time coming.
In Chicago, some of these conversations go back several years to the rollout of adult use. We hosted a Catalyst Conversation in February with Cannabis Equity Illinois Coalition on the power of Community Benefit Agreements. We’ve intersected with SEEN countless times. The United Latino Cannabis Industry Alliance is a new organization, but one whose founders we’ve been building relationships with for years.
And in Detroit, we have to show some love to the Detroit Cannabis Project, as they were also an integral part of our very first Equity Workshop at our Cannabis Business Summit in Detroit in September 2021.
NCIA proudly represents Main Street Cannabis, and this Spring Tour consists of cannabusinesses that reflect that.
Several of our sponsors are represented in NCIA’s committee structure. Meaning they have been volunteering their time, experience, and insights to the movement in more ways than one already. So much of my success in building the DEI Program comes from my regularly leaning into support from our committees.
Grow America Builders and Etain both came on as gold sponsors, and both have been contributing to our committee work for some time now.
I’m also proud to say that Dao Mastery (the coaching & consulting company I co-founded) is the official platinum sponsor for the tour.
All of these companies understand the importance of DEI in cannabis as an integral part of what we’re building toward in this industry in the first place. It’s not an afterthought, but rather something that informs the decisions we make.
It All Culminates In D.C.
This Spring Equity Workshop Tour has also been designed to provide me and our DEI Delegation with lots of insight and fuel as we head to Washington, D.C. for NCIA’s 11th Annual Cannabis Industry Lobby Days, May 16-18. We’ll be bringing with us the stories and the collective power of everyone we workshop with over the coming days. In fact, two of our DEI Delegates, Osbert Orduna and Adrian Adams, have been an integral part of planning this round of the Equity Workshop Tour. Not to mention the fact that two of our other DEI Delegates, Raina Jackson and Anthony Jenkins, were a part of planning the original round of workshops back in 2021.
I hope to see folks while I’m out here on the road this month. This is just the next step in the building of our ecosystem, and it’s an important one.
Anyone who qualifies for Social Equity is eligible to attend these FREE workshops. And if you don’t qualify for Social Equity, but you believe in what it means and stands for, we’d like to connect with you too, so don’t be shy.
Cultivating Community in a City Near You: Announcing NCIA’s 2023 Event Calendar
It’s been a year of big change for NCIA. As we come to the end of 2022, we want to take a moment to send a message to our members and supporters about these changes, and most importantly, get excited for what’s next for the future of NCIA events.
The End of An Era
The events industry has faced unforeseen challenges these last couple of years, and NCIA was not isolated from these issues. Outside of needing to postpone our large tradeshows until late 2021, we also had to postpone a whole calendar of approximately 40+ events nationwide which was our primary way of connecting our community and meeting with our members face to face. Our team overcame these challenges by building our expansive digital presence and online events program to continue to provide education and exposure opportunities to our members, however this did still require a significant pivot in organizational strategy. Due to the residual hardships brought by the pandemic, we learned earlier this year that the Cannabis Business Summit & Expo was not going to be able to be produced on the scale or quality that we or our members had come to expect throughout the years. So, in tandem with our previous tradeshow co-producers, we made the difficult decision to dissolve our existing partnership and accepted an offer from them to acquire our tradeshow portfolio. For those who have been attending our tradeshows since 2014, we can’t thank you enough for your participation in those events and making them so impactful for the industry. There are too many good memories to revisit, and hope you take a moment to remember some of your personal highlights throughout the years as we look forward to coming together for new events in 2023.
Looking Ahead to 2023
For now, we will be taking a hiatus from the tradeshow space. This will allow our team to refocus our efforts into other impactful networking and educational opportunities. We’re excited to get back to our roots and focus our efforts on intentional and innovative gatherings that connect Main Street cannabis businesses with each other and with NCIA’s advocacy efforts.
We’ve listened to the feedback from our members, and know that in-person networking remains essential to building your business and growing your network. In these uncertain economic times, every dollar spent and any time away from your business impacts your bottom line. As the leading cannabis trade association representing small-business owners, we’re committed to making the investment to meet our members where they are, and to continue facilitating experiences where our members can make key connections with fellow business owners. Moving into 2023, we’re reinvigorating our events program starting with our regional Industry Social and Cannabis Caucus event series, leading into the cannabis industry’s biggest policy and advocacy event of the year: NCIA’s 11th Annual Cannabis Industry Lobby Days.
We invite you to move forward with us as we enter a new chapter in our history. Without further ado, we are excited to announce the lineup of events for the first half of 2023!
Join NCIA to Take Advantage of Complimentary Tickets
As always, NCIA members receive complimentary access to all of these events based on membership level. Looking to have an expanded presence at each event? Consider upgrading your membership today in order to include your entire team or prospective clients.
Huge thanks to the initial sponsors of these events which have made a significant investment in NCIA’s community building efforts moving into 2023! Learn more about each of these pioneering businesses helping drive our mission forward and reach out to schedule a meeting with their team surrounding the upcoming events.
Gold Sponsor
Silver Sponsor
Bronze Sponsor
Support These Events Through Sponsorship
Has your company had trouble breaking through the noise on a crowded expo floor this past year? Is your brand looking for quality B2B connections with market leaders? Want to play a larger role and align your business with NCIA’s community building and educational efforts?
Consider one of our affordable sponsorship packages, starting for as low as $500, which will allow you to reach thousands of leading cannabis businesses while supporting NCIA’s advocacy work on behalf of small cannabis businesses. Contact our team at sponsorship@thecannabisindustry.org to learn more.
The cannabis industry is one of the fastest-growing sectors in Michigan. It’s also an ever-changing industry, leading to myriad challenges for businesses operating within this space. One issue licensees face is a significant gap in vital business intelligence that’s needed to remain relevant in an extremely competitive market.
To help fill this gap, Rehmann partnered with A&K Research, Inc. of Northville, Mich. to survey cannabis operations within the state and to create the 2022 Michigan Cannabis CFO Outlook. As one of the leading professional advisory firms serving the cannabis industry in Michigan, Rehmann spearheaded this project to help cannabis licensees make empowered business decisions based on peer feedback.
The 2022 Michigan Cannabis CFO Outlook shares findings from the survey, including top challenges the cannabis industry faces in Michigan. Top-of-mind concerns: managing the financial side of the business; deciding whether it’s time to sell the business and how best to go about it; staying on top of compliance requirements; navigating federal legislation and resulting tax burdens; and understanding potential changes in lending laws that impact relationships between banking institutions and legitimate cannabis-related businesses.
In addition, this report features industry spotlights highlighting current cannabis businesses facing these issues in real-time. They share how they’re navigating this ever-evolving industry and economic landscape.
Michigan Marijuana Sales
Just how quickly is this industry growing? Michigan saw $21 million in medical cannabis sales and $188 million adult-use marijuana purchases in July 2022 – a total that is about $15 million greater than the previous monthly record set in April 2022. Most of the marijuana sales for both medical and recreational use were for flower products, followed by vape cartridges. Data also shows a continuation of a sales trend in Michigan’s marijuana market, with medical cannabis purchases decreasing and adult-use sales increasing.
Report Takeaways
Here’s a snapshot of report insights and some of our takeaways. You can download the full 2022 Michigan Cannabis CFO Outlook here.
Tax and M&A Activity
39% of companies are considering or are in the process of selling their business. This could be due to the current challenges of operating within the Michigan cannabis market or for a variety of other reasons. Many licensees are entrepreneurs who enjoyed starting and growing the business from the ground up and are ready to move on.
Half of the companies are paying an effective tax rate between 20% and 30%. One in five currently show a loss from operations. This was surprisingly much lower than we expected. It’s not uncommon to see tax rates of over 50% within the industry depending on where the business falls in the vertical chain and how aggressive you can be with your structure or costing model.
Cannabis Business Operations
Just over one-quarter (28%) of businesses have been subject to some level of federal, state, or reporting audits. The industry is still young, and as we continue to look at this data year over year, we expect this number to drastically increase. It’s important to have your finances in order to be prepared for that time to come.
Almost two-thirds (65%) use QuickBooks for their accounting system, with the remainder being dispersed between Sage, SAP, Dynamics, and Xero. Accounting for the cannabis industry can be extremely complex. Many cannabis businesses started with QuickBooks and are now outgrowing that system and ready for more powerful systems to meet their unique needs.
Perceptions of the Current Michigan Cannabis Industry
The majority (56%) expect retail pricing needing another 1-3 years to stabilize. One of the biggest concerns within the industry is pricing of cannabis. We’ve seen a significant drop in retail pricing over the past several years and there is concern that it may drop even more.
Nearly half (42%) think that between 26% and 50% of wholesalers are losing money at current retail prices. Given the struggles with pricing, growers who are selling wholesale are facing a lot of challenges at this point. As more and more operations start up within Michigan (a state without a license cap), the market continues to move toward oversaturation.
What some of the survey respondents had to say about the state of the industry:
“As a small-sized grower focusing on high-end quality, we are impacted greatly by falling retail prices. The rampant increase in licenses/grows caused a glut in the market that has yet to subside. We are focusing all our efforts on lowering costs to keep up with falling prices.” [Grower]
“The industry is currently in a very fragile state. The testing numbers are overinflated for potency, customers are going back to the black market and the current pricing is not sustainable. In addition, new businesses for all areas are opening and believe there is enough capacity for everyone to make money.” [Testing Facility]
“If 280E would go away, things would be much better. Limited licensing for cultivation and processing would also help.” [Grower, Processor & Provisioning Center / Retailer]
To download your digital copy of the full report today, click here.
Chris Rosmarin manages the commercial audit practice in Grand Rapids and also leads the Firm’s cannabis practice. He provides audit and other assurance services, due diligence services and accounting advisory services to various companies both large and small.
Chris understands that clients expect and deserve a partner that is responsive, invested in the relationship and dedicated to helping them respond to their challenges. He strives to deliver on those expectations by meeting deadlines and being available and present throughout the relationship.
Rehmann is a professional advisory firm that provides accounting and assurance, business solutions and outsourcing, specialized consulting, and wealth management services. For over 80 years, Rehmann has provided forward-thinking solutions to our clients. With nearly 900 associates in Michigan, Ohio, and Florida, we are the momentum behind what’s possible. We focus on the business of business — allowing companies and individuals to focus on what makes them extraordinary. We help you look to the future with confidence, thanks to our unrivaled expertise and integrity. Through our partnerships with our clients and communities, we drive impact that empowers our world. Find us online at rehmann.com.
Committee Blog: Cannabis Lounges – Coming to a City Near You?
Although the concept of state-legal cannabis has been around in some shape or form since 1996, cannabis remains illegal to consume in most public places. In other words, legal cannabis consumption remains relegated to back alleys, derailing efforts to “normalize” cannabis use. Tourists visiting popular cities where weed is legal are caught in the unenviable Catch-22 of being able to purchase, but not publically consume, the product. And those who attempt to use cannabis in public still face criminal penalties in some states, with minorities three times more likely to be targeted for arrest, perpetuating racial disparities at a tremendous social cost.
Enter the cannabis lounge. Cannabis lounges — also known as “consumption lounges,” cannabis cafes, or some variation on that theme — are in simplest terms the cannabis equivalent of a bar or restaurant. Depending on state and local regulations, lounges offer users the chance to congregate in a public place and smoke a joint, try out a $500 gravity bong, or sip on a cannabis drink. With any luck, consumers may enjoy their cannabis with a snack or dinner, but mixing with alcohol is typically not allowed.
As with any “new” risks, some cities, states, and insurers are… concerned. Despite some obvious tax and social benefits, detractors cite a host of reasons to prevent lounges from coming to a city near you, including at the forefront: fears of public nuisance (odors, theft, and disruption) and overconsumption — especially because most states insulate cannabis cafes from liability for harm caused by obviously intoxicated or underage users, unlike dram shop laws for alcohol.
As another NCIA member recently pointed out, even in states that do allow cannabis cafes, regulatory bodies continue to struggle with how to shape the laws and regulations governing lounges to afford adequate consumer protection while allowing businesses to thrive. Moreover, without a better understanding of the regulatory landscape, some insurers — whose business model hinges on the ability to accurately price a risk — may be unwilling to play in this new cannabis lounge market.
A Sampling of State Approaches to Cannabis Lounges
Alaska led the country in 2019 in licensing on-site consumption. A handful of states and localities have followed Alaska’s guide, and more are anticipated to join this year, including Michigan and New York. We compare a few regulatory schemes below and also consider the impact of dram shop legislation on risks faced by the industry.
California
California, governed on the state level by the Medicinal and Adult Use Cannabis Regulation and Safety Act, delegates to localities the right to open consumption lounges. Put simply, cities have to affirmatively “opt in” to allow lounges. With a few contingencies — including that patrons must be 21 or older and no alcohol or tobacco can be sold on premises — “a local jurisdiction may allow for the smoking, vaporizing, and ingesting of cannabis or cannabis products on the premises of a” licensed retailer. SeeBPC § 26200(g).
To date, only a few localities have opted in to allow cannabis lounges, including San Francisco, Oakland, and Palm Springs. West Hollywood, in efforts to create an epicenter for canna-tourism, plans to allow up to 16 lounges within its jurisdiction. Because state law provides little regulatory guidance for lounges, localities generally provide more specific guidance. As an example, West Hollywood’s local municipal code requires security guards on site, as well as within a two-block radius surrounding the business during operation, and allows the sale of cannabis to an individual “in an amount reasonable for onsite consumption.” West Hollywood Municipal Code §5.70.041. Only one lounge is currently open in West Hollywood, the Artist Tree’s Studio Cannabis Lounge, which offers not only lounge access but cannabis yoga, live music, and comedy shows, along with a revolving selection of local art. The Woods, another West Hollywood dispensary with a soon-to-open courtyard lounge space, is also slated to open in 2022.
Although California law significantly limits third-party liability for alcohol-related accidents, it does not afford cannabis owners the same protection. For example, California Civil Code §1714explicitly states that furnishing alcohol “is not the proximate cause of injuries resulting from intoxication,” which has essentially absolved bars, restaurants, party hosts, and most others of potential liability for selling or furnishing alcohol to customers and guests with an exception for liability arising from the furnishing of alcohol to an “obviously intoxicated minor.” SeeCalifornia Business & Professions Code § 25602.1. Without similar protections for cannabis lounges, injured parties could attempt to sue under a negligence theory if a business or employee serves an intoxicated patron who causes harm.
Colorado
As of January 1, 2020, local jurisdictions in Colorado can opt-in to the state’s cannabis hospitality business license regime (Colo. Rev. Stat. § 44-10-609), and as of March of 2022, the City of Denver has approved cannabis hospitality businesses for operation. Denver operators include the first social equity applicant in Denver approved for a hospitality license, the Tetra Lounge, although from its website Tetra Lounge’s website describes itself as “a private lounge,” requiring a monthly or annual membership fee and a liability waiver to gain access.
As to dram shop liability, although Colorado law authorizes damages against a licensee for willfully and knowingly selling or serving alcoholic beverages to a visibly intoxicated person, the Colorado Legislature caps liability at $150,000 (Colo. Rev. Stat. § 12-47-801 (3)(II)(c)). This damages cap improves (i.e., reduces) the ISO hazard grade, resulting in the improvement of insurance options available for liquor liability. The legislature has not adopted the same or a similar damages cap on liability for cannabis consumption establishments.
Nevada
In June 2021, Nevada’s Governor signed Assembly Bill 341 into law, authorizing the Nevada Cannabis Compliance Board (“CCB”) to license and regulate consumption lounges across the state, subject always to local approval. The State plans to issue up to 65 lounge licenses (40-45 for lounges attached to existing dispensaries, 20 for independent lounges) with 10 reserved for social equity applicants.
Most recently, on June 28, 2022, the CCB voted to unanimously approve a host of regulations for cannabis consumption lounges. Nevada’s extremely detailed state regulations prohibit the sale of “single use cannabis products” with more than 3.5 grams of “usable cannabis” and 10 mg of THC for edibles; prohibit the removal of any cannabis products from a lounge; require a mitigation plan for impaired driving and detailed employee training for overconsumption; and require consumer education and warnings to customers, among other things. As with other states, Nevada allows local jurisdictions to prohibit consumption lounges and to implement more stringent regulations than state law.
Unlike other states, however, Nevada law carves out protections for cannabis lounge operators just as it does for alcohol. Nevada law already protects businesses that serve or sell alcoholic beverages from injuries inflicted by an intoxicated person. And while any person who knowingly furnishes an alcoholic beverage to any person under 21 years of age is guilty of a misdemeanor, the law provides only for criminal penalties, not civil liability. The Nevada Supreme Court has repeatedly refused to impose responsibility on vendors selling alcohol absent a legislative provision. SeeSnyder v. Viani, 885 P.2d 610 (Nev. 1994) (holding consumption is the proximate cause of alcohol-related injuries and dismissing the negligence claim against a tavern owner for alcohol service). The same rules will apply to cannabis operators.
Illinois
Over two years after full legalization of adult-use commercial cannabis in Illinois, cannabis lounges in Illinois are still relatively rare, with the first Chicago-area marijuana consumption lounge opening on April 20, 2022. Like other states, the State of Illinois does not directly license lounges, but it allows local governments to opt in.
Illinois creates a cause of action against sellers for injury by an intoxicated person. § 235 Ill. Comp. Stat. 5/6-21. The standards for liability under the Illinois dram shop law include: (1) sale of alcohol to any person who, while intoxicated, causes injury, and (2) any person owning, renting, leasing, or permitting the occupation of any building or premises with knowledge that alcoholic liquors are to be sold therein, severally or jointly, along with the person selling or giving liquor. In Illinois, the Dram Shop Statute provides the exclusive remedy for alcohol related injuries. See Charles v. Seigfreid, 65 NE.2d. 154 (Ill. 1995). The Statute also provides stringent limitations on recovery of damages. There is no equivalent in Illinois for cannabis entities.
The Takeaway for Business Entities and Insurance Providers
As with cannabis law generally, lounge operators face a patchwork of state and local regulations that vary tremendously by jurisdiction. In most places, cannabis lounge owners are not protected by dram shop/gram shop laws that otherwise insulate bars and restaurants from liability for overconsumption. This means that companies must be vigilant in protecting themselves from liability by instituting compliance and risk-management procedures.
In some instances, such as California’s West Hollywood, which has far fewer safeguards and guidelines than Nevada, operators are largely left to their own devices in implementing adequate risk transfer and risk management, compliance, employee training, and consumer education to limit risk of liability. While the West Hollywood municipal code requires lounges to limit cannabis sales of cannabis “in an amount reasonable for onsite consumption,” the “reasonableness” standard is rife with ambiguity and could lead to disputes regarding liability and assumption of risk if a patron overconsumes.
Evaluating and preventing overconsumption and intoxication will be particularly difficult for cannabis when: patrons have varying experience levels with cannabis; products can be sold in more than a single serving, and no specific consumer education is required. Thus, even in locations that have more stringent regulatory oversight, companies would be wise to consult with experienced counsel and consultants to avoid or limit potential risks associated with regulatory uncertainty, civil liability, and government penalties for non-compliance.
This brings us full circle to the question of insurance. Even in the states that allow consumption lounges, very few insurance companies provide coverage for on-site consumption (although some do). If an exclusion prohibits coverage, the company may not have coverage for important and sometimes catastrophic events, such as property damage by fire, theft/robbery, cyber events, sexual harassment or discrimination claims by employees or others, and bodily injuries to, or caused by, patrons (on and off premises).
Most existing property, general liability, products liability, and other insurance policies — including those written for the cannabis industry — expressly exclude coverage for on-site consumption or bodily injury caused by intoxication. In fact, some existing cannabis insurance companies include a “health hazard” exclusion in their policies, which exclude coverage for any bodily injury arising in any way from the use of cannabis, including any health injury. Cannabis insurance policies may also exclude coverage for intentional or illegal acts, which some insurers may try to apply to any claim involving cannabis on the basis that the sale of cannabis violates federal law (the Controlled Substances Act), even if it is state legal.
For current licensees that are planning to open an attached or adjacent consumption space, current insurance policies may not cover injuries arising in the lounge space. Further, any failure to identify a change in business type could prompt an insurance carrier to deny coverage for subsequent claims based on a theory of misrepresentation.
In closing, cannabis owners should attempt to negotiate separate and/or broader coverage that carves out coverage for their cannabis-related activities, including on premise consumption, with their current insurer or seek to obtain coverage from a different carrier. Experienced insurance coverage counsel can assist with identifying reputable insurance brokers and negotiating policies that provide such coverage. Because of the limited options, companies would be wise to begin the process of identifying experienced insurance coverage advisors at the beginning of their licensing journey.
Equity Member Spotlight: Puff Couture LLC – LaVonne Turner
NCIA’s editorial department continues the 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.
Tell us a bit about you, your background, and why you launched your company.
I am LaVonne Turner, President of PUFF COUTURE LLC. Before my interest in cannabis, my career was focused on marketing, communications, public relations, event management, and community advocacy. After working for non-profit and for-profit organizations, I became increasingly interested in public policy and community advocacy to help the underprivileged and unrepresented. I hold a bachelor’s degree in executive leadership/marketing, a master’s in public administration, and currently working on a master’s degree in clinical mental health counseling. I am a block club president and serve on a couple of boards and committees. I have spent many years mentoring children and youth.
My journey into the cannabis industry as an entrepreneur started when my mother began experiencing debilitating pain, and her only relief was prescribed medication. While I still haven’t found the right product to deal with her pain, I have taken great interest in the industry and the incredible products born from seeds. I plan to open a microbusiness and consumption lounge in Detroit, MI, that serves aromatic, exotic strains and infused products.
What unique value does your company offer to the cannabis industry?
PUFF COUTURE LLC is a minority-woman-owned cannabis company slated to open a microbusiness and consumption lounge in Detroit. We want to bring a sophisticated community-driven cannabis business that offers a contemporary atmosphere for clients. It will convey the importance of the cannabis flower by providing a chilled environment for clients to consume unique, flavorful, and aromatic cannabis. PUFF COUTURE will support mental health counseling, volunteerism, public policy, and minority representation in the cannabis industry, especially among women. According to a recent special report by MJBbizDaily Women and Minority Report, only 3.8% of Blacks or African Americans are cannabis business owners, the percentage of minority women in Michigan is even smaller; our responsibility is to open doors for future female entrepreneurs and people of color.
What is your goal for the greater good of cannabis?
PUFF COUTURE LLC would like to change the face of cannabis through participation and contributions to critical public issues that affect the community values of our clients and neighbors, as well as giving back through donations and mentoring. The organization will support issues affecting women who suffer from traumatic situations through our community advocacy campaign. Still, there will be plenty of time for spoken word, intimate art shows, parties, etc. PUFF COUTURE will take care of our people, support the cannabis industry, and create an atmosphere of excitement.
What challenges do you face in the industry, and what solutions would you like to see?
A few years ago, I couldn’t get anyone to advise me or take the time to mentor me. However, after many no’s, I have been blessed to partake in the City of Detroit’s Homegrown cannabis program and training by the Detroit Cannabis Project. LUME’s Vice President of Retail Operations, Michael Dowdell, has taken the time to speak with me and allowed me to observe the business sales and operations of one of the company’s recreational and medical stores. That first opportunity let me know I could continue to grow in the cannabis industry given a chance.
I have continued to expand my knowledge about cannabis, staffing, and cultivation through a mentorship provided by one of the award-winning co-owners of Oak Canna, LLC/CannaBoys, Jason Tueni. Mr. Tueni has devoted a great deal of time to educating me about caring for the flowers at every growth stage. I am currently interning at the cultivation center, which allows me to see everything first-hand, e.g., flowers, business, human resources, all aspects of creating and running a successful microbusiness and consumption lounge. These types of opportunities should be more readily available. I often hear people complain about not having access to mentors, which I completely understand. I joined the CRA DEI workgroup and from there was able to make a connection to LUME and Mr. Dowdell, who by the way is African American, and I asked for the opportunity. I did the same thing with Mr. Tueni. I was at a Weedmaps event and started talking to people and let them know I was looking for a mentor and from there, introductions were made. We met a few times for two to three hours, a couple of months after, and I asked if I could intern at the cultivation center and he said yes. We continue to meet, although not as often, and I see him on a regular basis. Hopefully, when the time is right, we will partner on a project.
Both of these events have provided a great deal of information for me in preparation for my future cannabis venture and I won’t stop reaching out for more knowledge and advice. Knowing how mentorship has helped me, I will continue to look for opportunities to build my business and while doing so pay it forward by mentoring future Detroiters interested in the cannabis industry. As important is my need to stay involved in public policy and community advocacy.
Why did you join NCIA? What’s the best or most important part about being a member of the Social Equity Scholarship Program?
I joined the NCIA to learn and network. Through the social equity scholarship, I serve on the DEI Committee and am also serving on the Cannabis Regulatory Agency-DEI Workgroup for the state of Michigan. The weekly social equity meetings held by the DEI Director are informative and build camaraderie among social equity entrepreneurs. The added weekly conversations help push to get to the finish line. I believe many social equity members will have an opportunity to work together in the future.
I look forward to growing with the National Cannabis Industry Association.
Equity Member Spotlight: Exspiravit LLC
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.
Tell us a bit about you, your background, and why you launched your company.
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.
What unique value does your company offer to the cannabis industry?
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.
What is your goal for the greater good of cannabis?
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.
What kind of challenges do you face in the industry and what solutions would you like to see?
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.
Why did you join NCIA? What’s the best or most important part about being a member of the Social Equity Scholarship Program?
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.
Committee Blog: Ending The Ban On Interstate Commerce (Part 1)
Oversupply and shortages, high prices and lack of choice for patients and consumers, illicit markets, tainted products, and the inability to access banking and capital all plague the burgeoning cannabis industry. While cannabis advocates and industry leaders are working on each of these problems, there is one solution that would ease the burden on all of them. Allowing for interstate trade between states with legal cannabis markets would improve each of these issues while supporting the individual solutions to each that the industry has been working on. This is the first post in a series that explores the benefits and barriers to setting up a legal framework for interstate trade, even before wholesale legalization at the federal level.
Since the beginning of legal, adult-use cannabis, when Colorado and Washington passed the first ballot measure allowing for adult-use, the industry was guided by the Cole Memo, which laid out the parameters for the federal government staying out of the states’ cannabis experiments. Among other things, the Cole memo stated that the DEA could crackdown on cannabis moving from states with well-regulated systems to states that do not allow cannabis. This statement has been interpreted conservatively to mean that no cannabis should cross state lines for any reason, ever, based on the fact that at the federal level, cannabis is still a Schedule I drug under the Controlled Substances Act.
Today, there are 10 states which have legalized adult-use, another 19 which allow for medical use, and six more which allow the use of CBD products only. Many of these states share borders, and producer states could serve several nearby markets without ever entering a state that does not allow cannabis in any form. Furthermore, the Cole Memo, which was rescinded by Jeff Sessions in 2018, has not been replaced by any guidance whatsoever. This means that each U.S. Attorney’s office is free to set their own enforcement priorities around state-legal cannabis activities, and there is no official overriding policy at the DOJ on interstate trade between states with medical or adult use. Corresponding guidance from FinCEN, however, remains in effect and similarly discourages the transfer of cannabis between states.
Cannabis markets vary widely from state to state with regard to the underlying market dynamics and challenges that they face. Some states produce too much while other states experience shortages. Meanwhile, new states pass legislation or have voter initiatives that allow medical or adult-use every year without any infrastructure in place to supply that state’s demand. In each new legal market, the vast majority of demand had long been met through illicit market supply, and generally from outside of the state’s boundaries.
The artificial boundaries around cannabis markets have far-reaching impacts for local economies, patient access, illicit market activity, and social equity. Later posts in this series will take a deep dive into each of these issues, and in this post, we will look at how this has impacted states, the industry, and consumers so far.
Lessons Learned:
Washington State chose to take the strictest possible reading of the Cole Memo, and insist that not only must cannabis not cross state lines but also sources of funding must come from within the state. Combined with their high capitalization requirement for licenses, the result was a disaster from an equity standpoint: only wealthy and well-connected individuals in the state (which are overwhelmingly white males) were able to even attempt a license. This decision was based substantially on the fact that interstate trade was not allowed.
In Oregon, which has an ideal growing climate and a long tradition of exporting cannabis (albeit in the illicit market), the artificial boundaries created by the ban on interstate trade lead to a massive oversupply for its small population, which crippled the industry and tanked many small businesses. Despite the fact that Oregonians consume more cannabis per capita than any state, their climate and culture have led to growing massive quantities of world-class cannabis that cannot reach patients and consumers, even in neighboring states that might have under-supply issues. The result is that hundreds of small, mom-and-pop shops and family farms have gone out of business, eradicating millions of dollars of local capital, and accelerating mass consolidation of the industry into the hands of a few foreign corporations. Meanwhile, in medical markets like Illinois and Michigan, patients have had sporadic access to quality cannabis-based medicines.
When Nevada originally launched, due to the influence of local liquor distributors, it was almost impossible to get products to market, and the state’s dispensaries sold out on the first day of sales. After ironing out some of the kinks, sales are going strong, but the practice of growing thirsty plants indoors in the desert is of dubious value when the same plant can be grown with a fraction of the inputs in northern California and southern Oregon.
California’s legal system is a perfect example of how over-regulation fuels illicit market activity. Because of the structure of their regulatory framework and high taxes, the state is served by only 800 licensed dispensaries, whose prices are double and triple those found on the illicit market for similar products. This has led to the emergence of thousands of “pop-up” or unlicensed dispensaries, selling untested products tax-free in a thriving illicit market. The booming illicit market in California has also led to massive wholesale markets of hardware, branded packaging, and flavoring and cutting agents (all technically legal) to supply the illegal operators with everything they need to look legitimate. This is a major contributing factor to the wide-spread vaping related illness cases popping up all over the country, as many illicit market operators purchase their supplies in downtown Los Angeles.
The ban on interstate trade promises to continue to create new and novel problems as well. If New York, the 4th most populous state in the union, legalized adult-use (which seems likely in the near future), and interstate trade were still banned, it would require a massive investment, on the order of billions of dollars, to create enough indoor and greenhouse grow facilities to supply the demand created by its 19 million inhabitants. The recent legalization of hemp under the last Farm Bill has created a number of legal dilemmas as well, as some individual states that do not recognize any difference between hemp and cannabis flower have seized products and arrested individuals taking hemp legally grown in one state to a market where it is legal to sell.
Some suggest that these issues will be sorted in local markets, and in each state individually this approach might seem to make sense. When you add these problems together, though, a much more elegant, efficient, and obvious solution emerges: let states that have always exported cannabis send it to states that have always imported it. A set of different and seemingly unconnected problems become each other’s solutions.
Historically, people across the country have consumed cannabis, and the vast majority of it was grown in a few locations that are particularly well-suited to the plant. It is highly likely that a fully-matured nationwide legal market (one which must account for not only interstate, but also international competition) will ultimately be best served by the same general market dynamics. The only question is: how long will we allow the artificial market boundaries around each state to decimate local capital, curb access for patients and consumers, encourage investments that are attractive short-term but disastrous long-term, and prop up the illegal markets that pose a public health risk?
Interstate trade between states that allow some form of legal cannabis would provide much-needed relief on a number of fronts for cannabis businesses, and could be structured in such a way to support social equity efforts. With a little guidance on enforcement and thoughtful programs and agreements between states, there is a path to legal interstate commerce even before cannabis is removed from the Controlled Substances Act. The state of Oregon has already passed legislation allowing for the export and import of cannabis products provided that the Federal Government allows it. This could be either through legislation such as the proposed Blumenauer/Widen State Cannabis Commerce Act, or though DOJ enforcement guidance (whether from the Attorney General or the relevant local U.S. Attorney’s). There are multiple paths that can lead to the end of banned interstate trade, and it seems increasingly inevitable that we will see legal cannabis trade across state borders in the near future. For most operators in the cannabis industry, and for all patients and consumers, this will be a good thing, and can’t come soon enough.
Gabriel Cross is a Founder and CEO at Odyssey Distribution, LLC, a distributor for locally-owned craft cannabis producers and processors in Oregon. Gabe worked in the sustainable building industry for a decade before starting Odyssey and brings his experience with sustainability and systems thinking to his work in the cannabis industry. Odyssey manages logistics, sales and marketing for boutique producers so they can focus on creating great craft cannabis products for the Oregon market.
Watch The Webinar: Michigan’s Adult-Use Market – What Comes Next?
In case you missed the December 3 webinar: The Midwest is becoming a major player in the cannabis industry and Michigan is now accepting applications for its adult-use cannabis licenses with the launch date fast approaching. Join our expert panel as we provide insights into the Michigan adult-use market: an update on what has transpired so far, what potential operators need to know about this key market, and how Michigan’s market will compare to others around the country. It’s an exciting time for our industry with the Midwest on the verge of launching adult-use sales. Watch this webinar from NCIA’s State Regulations Committee as they explain what you need to know.
VIDEO: Member Spotlight – Om Of Medicine
In this month’s video member spotlight, get to know Om of Medicine, a cannabis dispensary based in Ann Arbor, Michigan. Learn about their role in fostering a politically engaged and friendly community in their state of the art facility. Om of Medicine also collaborated with the University of Michigan conducting an IRB-approved pain study with hundreds of its patients which displayed a significant decrease in opioid use and an increase in quality of life.
VIDEO: Member Spotlight – ArborSide Compassion
Based in Ann Arbor, Michigan, ArborSide Compassion is a medical marijuana dispensary that has been operating since September 2011. Founder and CEO Rhory Gould has been a cannabis activist for over 35 years. The staff at ArborSide services over 1,200 patients per week and has won over 22 HIGH TIMES Cannabis Cup awards. Learn more about their products and services, and how they are navigating the licensing changes for medical and adult-use cannabis in Michigan as new laws are rolled out.
As “4/20” Ends, Advocacy Ramps Up
This last weekend, cannabis advocates and supporters gathered in cities across the country to celebrate what is known as “4/20,” a cultural celebration of cannabis.
Michigan’s Hash Bash
In several states like Michigan, the celebration was particularly exciting because of recently passed adult-use laws. Earlier this month, NCIA’s Business Development Manager, Clarissa Kriek, attended the 48th annual festival in Ann Arbor called “Hash Bash.” Since 1972, activists have gathered on these grounds to rally and demand policy reforms. Considering this was the first Hash Bash since legalization, it was a particularly memorable occasion Clarissa gave an inspirational speech on stage about the long, hard battle to legalize cannabis in Michigan, which culminated in the passing of Prop 1 in November 2018. Approximately 15,000 people gathered to celebrate this historic event at the University of Michiganʻs Diag, including Congresswoman Debbie Dingell, who spoke about her late husband and how she believed he could have benefitted from cannabis to help treat his prostate cancer but that federal prohibition has stifled research.
National Cannabis Policy Summit
In the nation’s capital, advocacy was as prominent as celebration at the 4th annual National Cannabis Festival, which was preceded by its sister event, the National Cannabis Policy Summit. These events brought thousands of people from around the country to the District of Columbia to bring attention to the harms caused by prohibition but also to celebrate the victories of the movement in an atmosphere of cooperation, innovation, and culture. Dozens of lawmakers, industry leaders, and policy experts – including NCIA’s Michelle Rutter – shared opinions and advice about how we can make cannabis legal in a way that incorporates fairness and justice.
Advancing the reform of outdated cannabis laws is building in momentum, and public support for medical and adult-use cannabis is at its highest levels ever. In the halls of Congress, we’re seeing the reform measures that are important to our industry gain co-signers on both sides of the aisle. It’s an exciting time for ending the war on drugs.
Whether the date is April 20 or September 20, every day is an opportunity to be an advocate of the legal, regulated cannabis industry. From access to banking and tax reform, to social equity and veterans access, now is the time to speak up and tell your stories about how these key pieces of legislation will help your business thrive.
NCIA’s 9th Annual Cannabis Industry Lobby Days
While NCIA’s government relations team works year-round on the industry’s behalf to advocate for access to banking, fair tax policy, and states’ abilities to determine their own cannabis policies, for example, NCIA’s Annual Lobby Days is the most impactful opportunity to participate in democracy. As we prepare for hundreds of meetings on Capitol Hill on May 21-23, it’s crucial that cannabis industry professionals come together to send a powerful message to lawmakers. The industry is here to stay, and it is our industry’s responsibility to keep it that way.
WEBINAR: Michigan Voted to Legalize Adult-Use Cannabis – What You Need To Know Now
On Election Day, Michigan voters resoundingly approved Prop 1 to legalize and regulate adult-use marijuana under state law. It’s an exciting time with great possibilities, but what does this mean for the future state of Michigan’s legal cannabis landscape?
Watch this recording of the webinar from NCIA’s State Regulations Committee, presenting its first-ever interactive webinar designed to help you answer the pressing questions about Michigan’s new adult-use market.
Join NCIA’s State Regulations Committee members, including Chair Maureen McNamaraof Cannabis Trainers, Committee Vice Chair Michael Cooperof MadisonJay Solutions, and Barton Morris of Cannabis Legal Group, as they help us fill in the blanks for adult-use regulations in the state of Michigan. The webinar helps answer what we currently know about the laws, any key open questions that remain, and what potential market entrants should be doing now to get ready.
Watch the webinar “Michigan Voted to Legalize Adult-Use Cannabis: What You Need To Know Now” hosted by members of NCIA’s State Regulations Committee.
Top Five Memorable Marijuana Moments In 2018
by Michelle Rutter, NCIA Government Relations Manager
As 2018 draws to a close, our Government Relations team in Washington, D.C. is feeling especially thankful this year – both for all of our members, and for all of the strides forward that cannabis policy made this year! Before 2019 begins, let’s take a look back on marijuana’s top five most memorable moments of 2018:
Cannabis wins big at the ballot box
There’s no doubt about it: America experienced a green wave on election night as voters all over the country cast their votes in favor of reforming cannabis laws and electing candidates that share those values. Voters in Michigan cast their votes for the legalization of adult-use cannabis, increasing momentum of our movement. At the same time, voters in Missouri and Utah were successful in legalizing medical cannabis, becoming the 32nd and 33rd states to do so, and despite significant hurdles. In addition to the ballot initiatives that were passed, Democrats took control of the House of Representatives, while Republicans maintained their control of the Senate. While this development surely means that cannabis policy will progress further than ever in the House in 2019, it also means that anything passed through that chamber will face significant hurdles in the more conservative Senate.
Shake-up at the Department of Justice and the rescission of the Cole Memo
On January 4, then-Attorney General Jeff Sessions announced the Department of Justice’s decision to rescind the “Cole Memo” and two additional memos related to marijuana enforcement policy. These memos, issued in 2013 and 2014, helped to clarify the Department’s response to state-legal cannabis activity. The rescission of the memo has not resulted in any major change in enforcement policy, rather, this continues to be a matter of prosecutorial discretion. On November 6, the day after the midterm election, Jeff Sessions resigned as Attorney General at the President’s request.
Congressional banking and 280E bills gain record co-sponsorship
As the momentum for cannabis reform grows, so has the number of cosponsors on marijuana bills in Congress. Most notable is legislation that would provide safe harbor to financial institutions that choose to service the cannabis industry. At the end of the 114th Congress in 2016, the House’s Marijuana Businesses Access to Banking Act had 39 cosponsors, while the Senate version had just 10. As we finish the 115th Congress, the House’s SAFE Banking Act (H.R. 2215) has 95 cosponsors, while the Senate version (S. 1152) has 20. That’s nearly a quarter of the House of Representatives and a fifth of the entire Senate! Bills to reform IRC Section 280E have seen a similar spike. At the end of 2016, the House’s Small Business Tax Equity Act had a mere 18 cosponsors, while the Senate version had four. Today, the Small Business Tax Equity Act (H.R. 1810) has 46 cosponsors, while the Senate’s version (S. 777) has six.
Canada implements adult-use cannabis laws
In October, Canada’s laws making marijuana legal for adults went into effect and licensed retail stores opened throughout the country. This move made Canada the second country in the world, after Uruguay, to formally legalize the recreational use of the plant. Canada is the first G7 and G20 nation to do so. Federal prohibition has effectively locked American cannabis companies out of legitimate financial markets and, in doing so, has provided a significant advantage to publicly traded Canadian firms. Changes to federal law are needed to enable American small businesses to compete on the emerging multi-billion-dollar global cannabis market. Without legislative action, U.S. cannabis entrepreneurs will miss out on opportunities to develop innovative new products, attract global investment funding, and expand their reach to capitalize on expanding international business opportunities.
NCIA’s 8th Annual Cannabis Industry Lobby Days
This year, 225 cannabis industry professionals descended on Washington, D.C. to lobby congressional offices on some of the issues they and their businesses are facing. In total, NCIA members met with nearly 300 offices on Capitol Hill! The cannabis industry has seen exponential growth in the mainstream support for regulated cannabis markets from both sides of the political aisle. This progress is a direct result of the uncountable number of personal stories told by our members each year at our annual Lobby Days events in Washington, D.C., so don’t forget to mark your calendars for May 21-23, 2019, so that you can join us for our largest event yet!
The 116th Congress will arrive in Washington, D.C. in January. With the change in leadership in the House of Representatives and the momentum at our backs, 2019 is shaping up to be one of the cannabis industry’s best years yet. Our Government Relations team looks forward to all of the opportunities we will be faced with in the new year, and we wish you a very happy holiday season!
NCIA’s 2018 Post-Election Webinar
Watch this webinar recorded on Thursday, November 8, for NCIA’s recap of the midterm elections and what they mean for cannabis policy reform nationally.
Hear from representatives of the statewide cannabis campaigns in Michigan, Missouri, North Dakota, and Utah to find out what went right, what went wrong, and what happens next for regulators, businesses, and consumers. NCIA and the Marijuana Policy Project discussed the next states to watch and key federal legislation to follow in 2019.
From The Ballot Box: Post-Midterm Election Analysis
by Michelle Rutter, NCIA Government Relations Manager
Last night, Americans all over the country let their voices be heard at the ballot box. Voters in Michigan cast their votes for the legalization of adult-use cannabis, increasing momentum of our movement. At the same time, voters in Missouri and Utah were successful in legalizing medical cannabis, becoming the 32nd and 33rd states to do so, and despite significant hurdles.
MICHIGAN
Appearing on the ballot as Proposal 1, this initiative passed by a whopping 55% and made Michigan the first state in the Midwest to legalize adult-use cannabis for those over the age of 21. The proposal outlined an excise sales tax of 10%, which will be levied on sales at retailers and micro-businesses, and then be allocated to local governments, K-12 education, and road and bridge maintenance. In the future, municipalities will be given the authority to to ban or limit cannabis businesses and establishments within their boundaries. Michigan’s prominent Midwest location, as well as the size of the projected adult-use market, make it a game-changing initiative to watch for cannabis reform. Michigan is the only adult-use state that also gave it’s electoral votes to President Trump in the 2016 election.
NORTH DAKOTA
In North Dakota, Measure 3, or the Marijuana Legalization and Automatic Expungement Initiative, appeared on the ballot and failed by only receiving 40% of the vote. This measure would have made cannabis legal in the state of North Dakota for people 21 years of age or older and, unlike other initiatives, also created an automatic expungement process for individuals with convictions for a controlled substance that has been legalized. Advocates and policy organizations were initially stunned when the campaign submitted enough signatures to appear on the ballot, and immediately recognized the importance of a staunchly, dependably conservative state choosing to legalize the adult-use of cannabis. Both of the candidates who ran for Senate in the state, Rep. Kevin Cramer (R) and Sen. Heidi Heitkamp (D) stated that they opposed the measure.
UTAH
In Utah, the Medical Marijuana Initiative (Proposition 2) appeared on the 2018 ballot and passed with 53% of the vote. This initiative legalized the medical use of marijuana for individuals with qualifying medical illnesses such as epilepsy, HIV, and and multiple sclerosis, among others. In October, the proponents and opponents of the measure, Mormon church leaders, and elected officials met to discuss the possibility of passing a medical cannabis law through the state legislature– regardless of the result for Proposition 2, which it was determined, would remain on the ballot. State lawmakers plan to hold a special session to work out details for how to make Utah the next medical cannabis state. Utah is a perfect example of a traditionally conservative state choosing to reform their cannabis laws to be more compassionate — Utah has given its electoral votes to Republican presidents in every election since 1968.
MISSOURI
In Missouri, three separate medical cannabis initiatives appeared on the ballot last night– including two proposed constitutional amendments and one statutory measure– with Amendment 2 triumphing with 65% of the vote. The other two medical cannabis initiatives failed. The winning Amendment 2, backed by New Approach Missouri, was favored by national advocacy groups such as NCIA, MPP, and NORML. The initiative legalized cannabis for medical purposes, creates a licensing system for cultivation, testing, and dispensing of medical cannabis and sets up a 4% tax on cannabis sales. State tax revenue garnered will be spent on healthcare services for veterans. Voters in Missouri also elected Josh Hawley (R) to replace sitting Sen. Claire McCaskill (D). Interestingly, Amendment 2 received over 300,000 more votes than Senator-elect Hawley — proving that cannabis is a winning issue across partisan lines.
OUTLOOK: 2019 AND THE 116TH CONGRESS
These stunning victories have implications in Washington, D.C. and set the stage for federal reform in the 116th Congress. In addition to the ballot initiatives that were passed last night, Democrats took control of the House of Representatives, while Republicans maintained their control of the Senate. While this development surely means that cannabis policy will progress further than ever in the House, it also means that anything passed through that chamber will face significant hurdles in the more conservative Senate.
HOUSE
This year’s midterm election was one of the most highly anticipated in modern American history.
Last night, the House of Representatives switched from a Republican majority to a Democratic majority: as of Wednesday morning, Democrats held 220 seats, while Republicans held 194.
Republican leadership in the House of Representatives over the last two years has blocked even popular reforms such as banking access from receiving hearings or votes. With a Democratic majority in the House of Representatives, cannabis legislation will likely move at an unprecedented rate. Because Democrats have traditionally been more friendly to cannabis reforms, there is the possibility that hearings will be held, bills will move through committees, and even possibly be voted on and passed on to the Senate.
Most, if not all, of last night’s House races will have implications for cannabis policy in the 116th Congress. Notable cannabis opponent and chairman of the powerful Rules Committee Pete Sessions was defeated in a stunning victory by Colin Allred, who has stated his clear support for medical cannabis. At the same time, cannabis advocates saw the loss of longtime cannabis champion Rep. Dana Rohrabacher (R-CA), marking the end of an era. While the loss of Rep. Rohrabacher will be felt by many, his challenger Harley Rouda has stated his unequivocal support for adult-use cannabis.
SENATE
As polls indicated prior to Election Day, Republicans maintained their control of the Senate, and in fact strengthened their majority. As of Wednesday morning, Republicans had gained two members in the Senate, holding a total of 51 seats, with three races still in play. While the Democrat-controlled House of Representatives may be able to move pro-cannabis amendments and legislation through that chamber, anything that moves on to the more conservative Senate will face significant hurdles.
One of the most closely watched Senate races in the country was in Nevada, where sitting Sen. Dean Heller (R) faced Rep. Jacky Rosen (D). While Sen. Heller has signaled his support for cannabis reform in the past, he currently does not co-sponsor any pro-cannabis legislation in the Senate. Rep. Rosen, however, is a co-sponsor of multiple bills in the House, including the SAFE Banking Act (H.R. 2215), the Small Business Tax Equity Act (H.R. 1810), and the STATES Act (H.R. 6043), among others. In addition, Rep. Rosen replied to an NCIA candidate survey and stated, “I was proud to support Nevada’s marijuana ballot initiative in 2016 and our state has already seen the positive impacts of this industry, including thousands of jobs and millions of dollars in tax revenue.”
With more on the line than ever before, political donations and investments in our industry are vital. NCIA’s political action committee (NCIA-PAC) is proud to have donated to 41 of the winning candidates on election night.
The 116th Congress will arrive in Washington, D.C. in January. With the change in leadership in the House of Representatives, cannabis policy and reforms will be able to advance in a way never seen before. At the same time, any pro-cannabis bills or amendments sent to the Senate will still face challenges, but as recent elections have proved, anything is possible.
Campaign Update From Michigan’s Coalition To Regulate Marijuana Like Alcohol
NCIA recently spoke with two key figures in the state of Michigan to get an update from the boots on the ground about the efforts to legalize cannabis for adults this year. Mark Passerini is the founder of a medical dispensary based in Ann Arbor, Om of Medicine, and was also recently elected to serve on NCIA’s Board of Directors. Josh Hovey is the spokesperson for Michigan’s Coalition to Regulate Marijuana Like Alcohol.
Mark, how will adult-use legalization in Michigan affect your business and your community?
For the past eight years, we attempted to make all our decisions from the experience and perspective of a new patient that has never used cannabis previously. This translates to individual consultation rooms so patients may feel free to discuss their medical conditions, symptoms, and concerns in a private space rather than standing shoulder to shoulder at a retail counter.
We believe that when legalization is passed there will be many adults that may want to try cannabis but won’t know where to start, may be afraid, or unsure of the options and our unique consultation process may help them as much as it has helped our medical patients make the best choices for their health and their life. When cannabis is legalized, we plan to continue serving as a resource and education hub with a focus on scientific research.
What are the positive impacts of legalization in Michigan?
Positive change starts with one individual who shares with another who in turn shares with another and so on. Our communities have garnered a better understanding of cannabis, its history, medicinal use, and are actively rejecting the failed policies surrounding its use.
Locking people up for growing or consuming a plant is simply not the best use of critical and limited tax dollars. Many municipalities and states across the country have recognized this fact and passed decriminalization ordinances in order to use law enforcement resources on serious crimes. Communities and states that embraced legalization have also witnessed economic development through the creation of new jobs and much needed tax revenues.
Our research with the University of Michigan showed a 64% decrease in opioid use amongst patient participants. Continued research into the medical efficacy of cannabis will benefit not only the existing patient base, but the community at large.
By creating a whole new type of industry that operates in a responsible way and holds itself accountable to its community, everyone benefits.
Josh, how have you achieved success so far in the Coalition’s Michigan campaign?
True success will come when we pass legalization in November, but we’ve achieved some significant milestones. The first was creating a unified coalition of cannabis reform and social justice advocates to develop ballot language that borrows from the best practices used by the states that have legalized before us as well as Michigan’s medical marijuana licensing law. We also collected more than 360,000 signatures to place the issue on the November ballot. We’re proud of what we achieved so far, but the “vote yes” campaign has only just begun and there a lot more to do to make sure our initiative passes.
What do the prospects look like for the initiative passing this November?
Multiple opinion polls have shown that 60 percent of Michigan voters want to end cannabis prohibition and create a legalized and regulated system, so that’s a very strong starting position as we head into the campaign season. However, we know we can’t just rely on polls and we know the prohibitionists will continue to spread “Reefer Madness” era misinformation about the initiative.
That’s why we’re working hard to raise every dollar we can to make sure we can get the facts to voters across the state. We want to make sure voters know Michigan is wasting millions of taxpayer dollars on the failed policy of prohibition and that creating a legal and well-regulated marijuana market can raise hundreds of millions for three of our state’s most underfunded areas: roads, schools, and local governments.
Anything specific we should know about the program?
Full details of the proposal are available on our website at www.RegulateMI.org. But in short, our initiative learns from the best practices from other states that have gone before us while also borrowing licensing language established under Michigan’s Medical Marijuana Facilities Licensing Act. That law was passed with bipartisan support in 2016 and the first medical marijuana businesses are just starting to be licensed under that program. We believe our very reasonable and well-thought out business regulations combined with sensible personal possession limits will make Michigan’s adult-use law the new model for the country.
What is needed to ensure Michigan passes adult-use legalization?
We need people to get out and vote, plain and simple. Beyond that, there are a few other things people can do to support the campaign:
Make sure your friends and family are registered to vote and, of course, make sure they VOTE YES in November.
Share the facts about the initiative and about the need for legalization on your personable social media pages. You can find the campaign has pages set up on Facebook, Twitter and Instagram.
Don’t allow prohibitionist misinformation to spread. Correct your friends and family (politely) by giving them the facts on the issue.
Donate to the campaign at RegulateMI.org/donate. We need to get our message out every way possible, including television, mail and social media. All of those things costs money and we can’t win without your support.
The Michigan Coalition to Regulate Marijuana Like Alcohol will host a fundraiser on October 17, 2018 in Ann Arbor, MI. For more information, please contact Robin Schneider, Finance Director.
Phone: 517-974-2265
Email: Robin@RegulateMI.org
2018 NATIONAL CANNABIS INDUSTRY FORECAST
Michelle Rutter, NCIA
by Michelle Rutter, NCIA Government Relations Manager
With the beginning of 2018, we start another election year. Multiple states in the midwest are running medical cannabis ballot initiatives, while Vermont is set to become the first state to legalize adult-use cannabis through the state legislature. In Washington, D.C., policy moves at a slower pace, but with Attorney General Jeff Sessions in office, it’s important to remain vigilant. Let’s take a look at what may happen in cannabis policy across the country:
MEDICAL CANNABIS POLICY
UTAH
The Utah Patients Coalition (UPC) is leading a 2018 ballot campaign to establish a medical cannabis program. The initiative seeks to protect terminally and seriously ill patients with specific debilitating medical conditions, including HIV/AIDS, PTSD, and chronic pain, among others. In addition, the initiative allows for caretakers to administer medical cannabis and would issue four types of licenses if passed: cultivation facilities, processing facilities, independent testing laboratories, and dispensaries.
The Chairman of the Senate Finance Committee, Orrin Hatch (R-UT) has introduced a medical cannabis research bill, and has even said on the Senate floor that medical cannabis can be an alternative to opioids. Passing the 2018 ballot initiative in his home state of Utah will be critical to furthering advocates’ work at the federal level.
A recent poll done by the Salt Lake Tribune found that 3 in 4 Utahns support legalizing medical cannabis. The campaign must collect 113,143 signatures from registered voters in order to qualify for the ballot. As of October 2017, the coalition had already garnered 20,000 signatures.
MISSOURI
A group called New Approach Missouri has formed and is in the process of collecting signatures for a proposed constitutional amendment to their state constitution that would legalize medical cannabis. The initiative would create a statewide system for production and sale of medical cannabis and provides for limited and regulated patient cultivation. Interestingly, the initiative levies a four percent retail tax, but all revenue in excess of the cost of regulating the medical cannabis program will go towards Missouri’s veterans.
New Approach Missouri must to collect 160,199 valid signatures from registered voters in order to be placed on the ballot. As of December 2017, the campaign had collected roughly 100,000 signatures. A poll done in 2015 showed that 85% of Missourians support implementing a medical cannabis program.
OKLAHOMA
Oklahomans for Health is the proponent of the upcoming state question SQ788, which would create a medical cannabis program. Obtaining a state-issued medical marijuana card would require a board-certified physician’s signature, though there are no specific qualifying conditions. The measure would enact a seven percent tax on marijuana sales, with revenue financing regulatory costs. Any surplus would be distributed: 75% to the General Fund to be used for education, and 25% to the Oklahoma State Department of Health to be used for drug and alcohol rehabilitation.
The initiative has already qualified, and will appear on the ballot in November 2018. Polling data is scarce, however, a 2013 poll showed that 71% of Oklahomans supported legalizing medical cannabis.
SOUTH DAKOTA
A group known as New Approach South Dakota is behind an effort to legalize medical cannabis in 2018. The group was also hoping to submit signatures to legalize adult-use cannabis, but was unsuccessful. The measure would set an excise tax on marijuana that would include a $50 per ounce tax on cannabis flower for buyers, and would have other taxes apply to buying immature plants and other parts of the cannabis plant.
In November 2017, New Approach South Dakota submitted roughly 15,000 signatures to qualify for the ballot- that’s just 1,000 more than required. The state hopes to review submitted ballot initiatives in the coming months.
ADULT-USE CANNABIS POLICY
MICHIGAN
The Coalition to Regulate Marijuana Like Alcohol has officially submitted ballot language to the State of Michigan that would legalize consumption and possession of marijuana for adults 21 and over in Michigan. The proposal enacts an excise tax on marijuana at the retail level in addition to the standard state sales tax and provides for state regulators to grant business licenses for cultivators, processors, testing facilities, secure transporters, retail stores and microbusinesses.
In November 2017, the Coalition to Regulate Marijuana Like Alcohol turned in more than 360,000 signatures to qualify for the ballot– that’s 100,000 signatures beyond the 252,000 required by the state. Polling done in early 2017 showed that 57% of Michiganders would support legalizing cannabis.
VERMONT
Vermont is poised to make history and become the first state to legalize adult-use cannabis through the state legislature in early 2018. In December 2017, Vermont House Speaker Mitzi Johnson (D) said, “It will be up for a vote in early January. I expect that it likely will pass in early January.”
The state came incredibly close to passing language that would have legalized adult-use cannabis back in 2017, however, the legislature was unable to make changes Governor Phil Scott (R) requested before the session ended. The Governor has since stated that he is “comfortable” with signing legalization legislation.
OHIO
The group that unsuccessfully ran a ballot initiative in 2015 to legalize cannabis in Ohio is making a comeback in 2018. In December 2017, a team announced that they will work to place a cannabis legalization measure on the ballot in 2018. Known as the Regulate Marijuana Like Alcohol Amendment, the measure would allow people over the age of 21 to purchase and use cannabis legally. The amendment would also create a taxed and regulated cultivation, processing, and sales system.
Valid signatures from 305,592 registered voters are required before July 4, 2018, in order to qualify the measure for the ballot.
NEW JERSEY
Unlike New Jersey’s Governor Chris Christie (R) , Governor-Elect Phil Murphy (D) is setting a positive tone on cannabis in the state. Murphy has advocated for legalization multiple times, and even made one of his campaign promises to legalize adult-use cannabis in his first 100 days in office.
Democrats in the state legislature have already introduced multiple bills to tax and regulate adult-use cannabis, predicted to be worth more than $1 billion in the state. The full legalization bill currently being considered is S3195, sponsored by state Senator Nicholas Scutari (D). Sen. Stephen Sweeney (D), the state senate’s president, has already promised to pass the bill within the first three months of Murphy’s administration.
Recent polling shows that over 60% of New Jersey residents support legalizing cannabis.
CANNABIS DECRIMINALIZATION
VIRGINIA
In November 2017, voters in Virginia elected Ralph Northam (D) as their next Governor. Northam made cannabis decriminalization a centerpiece of his gubernatorial campaign, and has even spoken about the hemp cultivation and the medical benefits of cannabis.
Virginia lawmakers considered but did not act on decriminalization legislation during the 2017 session. However, with the State Crime Commission conducting a study on the effects of decriminalization in the state at the request of the Republican Senate majority leader, advocates remain hopeful in 2018.
FEDERAL CANNABIS POLICY
While 2018 is shaping up to be a busy year for cannabis policy at the state level, things will likely move slowly in Washington, D.C. NCIA will be working to ensure language protecting medical cannabis patients (the Rohrabacher-Blumenauer amendment, formerly known as the Rohrabacher-Farr amendment) remains in federal law. NCIA will also be lobbying to expand that language to apply to adult use states (McClintock-Polis amendment) and to include a banking amendment that would allow cannabis businesses access to financial services (Heck amendment).
As leadership in both houses of Congress continue to negotiate the final version of the tax reform bill, there will be opportunities next year for Congress to make additions and changes on future individual tax legislation. NCIA will be looking at any possible avenues to have 280E legislation be included in future bills if the opportunity arises. Action on the cannabis banking bill is unlikely in 2018, however, NCIA will continue to advocate for a committee hearing, gather more cosponsors on HR 2215: The SAFE (Secure and Fair Enforcement) Banking Act, and work to identify a Republican lead sponsor for the bill in 2019.
NCIA will also be working to ensure that the Cole Memo remains in place. Attorney General Jeff Sessions has recently said that the Department of Justice will be reviewing current memos, and that “Guidance documents can be used to explain existing law… but they should not be used to change the law or to impose new standards to determine compliance with the law… This Department of Justice will not use guidance documents to circumvent the rule-making process, and we will proactively work to rescind existing guidance documents that go too far.” While Attorney General Sessions is very clearly personally opposed to cannabis, it’s important to note that personal feelings are not official Justice Department policy.
In addition, NCIA is working behind the scenes to educate the Trump Administration on cannabis policy, maintain the Cole Memo, protect cannabis patients and consumers, and make positive remarks regarding medical cannabis in 2018.
Member Blog: The Future of Michigan’s Cannabis Industry
In 2008, Michigan voters voted to legalize marijuana for medicinal use. Since 2008, dispensaries have been regulated for operation on a city or township level, and the city of Detroit was more welcoming to the cannabis industry than any other city in Michigan. On the busy street of 8 Mile in Detroit it seems like the neon green cross is on every other building for miles. The dispensaries have not been allowed to apply for a business license and so were not paying state taxes. This put the dispensaries in a gray area with the state. Legal or not, the cannabis industry in Michigan and especially in Detroit has been very lucrative.
In September of 2016 a bill was passed to grant licenses to dispensaries, cultivators, labs, extractors and transporters. Due to this bill, the Licensing and Regulatory Affairs (LARA) is accepting applications on December 15, 2017 for business licenses. The state passing a bill to accept licenses is great news for both the dispensaries and the state. The dispensaries will no longer have to look over their shoulder in fear of being shut down due to operating without a license and the state will receive tax revenue from the industry. However, the honeymoon came to an end when LARA also required dispensaries to shut down their operations effective on that same date of December 15, 2017 or risk being denied a business license. Even still with this plan the licenses will not be granted until the first quarter of 2018. This leaves a potential 3 month gap where the dispensaries will not be generating any revenue and more importantly patients can’t get their medication.
A number of dispensaries have shut their doors already in an attempt to curry favor with the state. Most dispensaries are remaining open to try and make as much revenue as they can before being out of business for an undetermined amount of time. While being out of commission for a few months will temporarily hurt Michigan’s cannabis industry, it is very important that if you are looking to re-open or start a cannabis operation that you fully understand the regulations. Unfortunately many cannabis operations may not be granted licenses and for some dispensaries December 15th will be their last day in business.
On September 21, 2017 the state did answer a big question that many in Michigan’s cannabis industry has been asking since 2016 when the state passed the bill to grant licenses: can one location have multiple licenses?
LARA made the decision that a location is allowed to operate multiple licenses if it meets the following criteria;
The Department authorizes the licenses to operate at the same location
The facility must have separate working areas, entrances, exits, point of sale operations and record keeping systems in place for each license.
The co-location is in keeping with local ordinance or zoning regulations.
The licensees comply with all local and state regulations for building inspection, fire safety and public health standards.
This is great news for Michigan’s cannabis businesses. This means a business can buy just one building and as long as it fits the above requirements their whole operation with multiple licenses can be ran out of one location instead of multiple locations. This will reduce cost and increase profits making the industry more attractive to businesses and investors.
As the December 15th deadline approaches, it is slowly being revealed and realized how the future of Michigan’s cannabis industry will look. As chaotic and uncertain Michigan’s cannabis industry is presently, I am excited about the direction it is headed and the possibilities and opportunities it can provide to my home state.
Please be prepared and don’t wait until the last minute to enter into this exciting new chapter of Michigan’s cannabis industry!
If you are to apply to any of the five licenses, please make sure you review House Bill 4209.
Kefentse Mandisa is a broker at Mandisa Risk Advisors.MRA is an insurance agency and risk management consulting group that provides superior service and products to their clients.
As a specialized insurance agency they provide services to the cannabis industry. This includes dispensaries, cultivators, processors, landlords and physicians to name a few.
MRA being narrowly focused on the industries they have a strong expertise, allows them to better serve their clients.
2016: What’s Next?
by Michelle Rutter, Government Relations Coordinator
This year is arguably the most crucial yet for the burgeoning cannabis industry, especially as it relates to policy. Although NCIA primarily advocates for cannabis reform at the federal level, what happens in each individual state is vital to the stances Members of Congress take on our issues.
Members of Congress care deeply about issues that directly affect their specific state or district. It’s imperative that more states enact cannabis reform legislation so that more Members have a vested interest in protecting their constituents. While cannabis reform is sweeping the nation at an almost unprecedented rate, it takes time for politicians in Washington, D.C., to catch up with public opinion back home. If all of the federal lawmakers representing just the 15 states mentioned below were to vote positively on pro-cannabis legislation, it would add up to more than 180 Representatives and nearly 30 Senators.
Take a look below and see what’s coming up next in 2016. Remember that by becoming a member of NCIA, you are adding your voice to the coordinated and unified campaign at the federal level to allow cannabis businesses access to financial services, fix tax section 280E, and ultimately end federal cannabis prohibition.
The United States of Cannabis
Arizona activists remain ahead of schedule and have nearly gathered the 150,000 signatures needed to put the state’s Campaign to Regulate Marijuana Like Alcohol initiative on the November 2016 ballot. (The campaign ultimately aims to collect 230,000 in order to insure against signature drop-off.) It’s estimated that Arizona’s adult-use market could be worth up to $480 million.
With a multi-billion-dollar cannabis industry in California alone, passing an adult-use legalization initiative in the state is vital to ending federal prohibition. The most prominent full retail initiative gathering signatures for the November 2016 election is the Adult Use of Marijuana Act, which is backed by billionaire Sean Parker and the Marijuana Policy Project.
Legalize Maine and the Marijuana Policy Project have joined forces to legalize adult-use cannabis in 2016. Legalize Maine has already collected 80,000 signatures. Only 61,000 signatures are necessary to place the measure on a statewide ballot, but the organization’s goal is 95,000, to insure against drop-off. The deadline to submit signatures is February 1st.
Last August, a pair of cannabis advocacy groups separately filed paperwork to get adult-use legalization on the 2016 ballot in Massachusetts. The state recently confirmed that a measure to legalize recreational cannabis next year has enough valid signatures to force the legislature to consider the measure. If the legislature decides to pass, then the campaign will have to collect another 10,792 signatures to formally make the November ballot.
There’s no question that adult-use legalization will be on the ballot this year in Nevada. Initiative Petition 1, which would tax and regulate marijuana similarly to alcohol, has been certified for the 2016 ballot. Backers had previously collected nearly 200,000 signatures to either force legislators to enact their initiative or put it on the ballot. When state lawmakers abstained from voting on the issue, the measure was automatically forwarded to this year’s ballot for a popular vote.
In Florida, the group United for Care received clearance from the state Supreme Court for a 2016 ballot measure that would legalize medical marijuana. The group nearly succeeded in legalizing medical marijuana in 2014, garnering 58% of the vote but falling barely short of the state’s constitutionally mandated 60% margin needed to pass,
The nation’s capital continues to debate cannabis. In December’s federal budget bill, the taxation and regulation of marijuana in Washington, D.C., was blocked by Congress again, though possessing and gifting cannabis remains legal in the city.
This month, Hawaii will begin accepting applications for medical cannabis businesses. The bill signed into law last summer opens the door for up to 16 dispensaries on the islands.
It was recently announced that Illinois saw approximately $1.7 million in medical cannabis sales during November and December of 2015. There are already petitions being circulated in the state that would expand the law’s qualifying conditions.
Maryland will award cannabis cultivation, processing, and dispensary licenses this summer. Industry advocates were pleased with the amount of interest the state’s program garnered: more than 1,000 applications were submitted.
Officials in Michigan have approved language for three different adult-use cannabis legalization initiatives for the 2016 ballot. In order to have the best chance of passing, it’s important for these groups to coalesce behind one initiative.
At the end of 2015, New Hampshire began issuing medical marijuana cards to qualifying patients. It’s expected that the state will open medical dispensaries in 2016.
After a long and arduous journey, New York’s medical cannabis program became operational this month. The cannabis industry expects the program and the law’s qualifying conditions to expand this year.
In the first week of 2016, Oregon began accepting adult-use cannabis business license applications. The state has no limit on how many licenses they will decide to award.
Vermont may become the first state to legalize adult-use cannabis through the legislative process in 2016. The proposed bill would allow for up to 86 storefronts and five different business license types.
Bonus: Election 2016 – Yes, We Canna
As we all know, a new president will be elected this November, and with that a new administration will assume power next January. It is very crucial that Congress pass more pro-cannabis legislation before then.
It’s probable that Attorney General Loretta Lynch will be replaced in 2016 or early 2017. This is important because it is the Department of Justice that enforces and prosecutes federal marijuana laws.
Another possibility for 2016 is that the acting head of the Drug Enforcement Administration, Chuck Rosenberg, could be replaced as well. Rosenberg is notorious for his gaffe last year when he called marijuana “probably” less dangerous than heroin.
On New Year’s Eve, officials from the Substance Abuse and Mental Health Services Administration posted a notice on the Federal Register that calls for a report “presenting the state of the science on substance use, addiction and health” to be released in 2016. Industry advocates are hopeful that this report could be the first sign of re- or de-scheduling cannabis from the Controlled Substances Act.
During 2016, NCIA will continue working with D.C.-based public affairs firms Heather Podesta + Partners, and Jochum Shore & Trossevin PC to magnify our efforts to address the industry’s top federal priorities: access to basic banking services and fair federal taxation.
In addition to NCIA’s lobbying and advocacy efforts, NCIA exists to connect and educate our members on all facets of the cannabis industry. Our industry supports tens of thousands of jobs, tens of millions in tax revenue, and billions in economic activity in the United States.Our core mission is to ensure that our members are treated like businesses in any other American industry. Join NCIA today to get involved and be a part of the cannabis revolution!
(As with all Guest Posts on NCIA’s website, this post solely represents the views and opinions of its author and does not represent an NCIA endorsement or official position. ~ eds.)
by Matthew Abel, Cannabis Counsel P.L.C.
Michigan is poised for change, as it has been for years. Almost seven years of the Michigan Medical Marihuana Act (sponsored by MPP in 2008) has brought plenty of litigation, but no legal dispensaries. That seems likely to change in 2016, one way or another.
Matthew Abel speaks to the crowd at Hash Bash in Ann Arbor, MI
It is possible that the Michigan legislature, which has done nothing to improve the stalemate on dispensaries and the questionable legality of anything other than “dried leaves and flowers,” may finally move forward. The dispensary and extracts bills now are joined by a seed-to-sale tracking system. That finally may overcome the objections of those coddling law enforcement, who see enforcement having to move on to other things (like violations of the new regulations).
Multiple legalization petitions are afoot. One would set up a three-tiered system like the clumsy, expensive, and oligopolistic Michigan liquor control framework. It has taken years to allow brewpubs in this state. Even now, a small local brewery is prohibited from selling directly to retail outlets; everything must go through one of the few beer and wine wholesalers, who take a cut (of course). Even that, however, is not the worst part of the ballot initiative being circulated by the Michigan Cannabis Coalition. The worst part is that any violation of the law still would be a crime. Growing more plants than allowed (two flowering plants, or potentially four if the municipality allows it) would be a felony. Selling to anyone without a license would still be a felony.
The proposal I favor (and which I helped draft) is sponsored by MILegalize. Aside from allowing distribution directly from cultivator to retailer, the main benefit of this legalization proposal is that it no longer criminalizes marijuana except for providing to minors or for driving under the influence. As we move from prohibition to legalization, we need to remember that much of the benefit of legalization is the concept of generally removing marijuana from the illegal market, with the huge savings of lives and money which accompany the move to put cannabis distribution into the legal market.
MILegalize is the right form of legalization. It removes most criminal penalties for cannabis. Eliminating crime by design of our drug laws and treating it as a public health issue, rather than a criminal justice issue, is a healthy change. That is the best reason to support the model put forward by MILegalize, as opposed to the three-tiered system proposed by the Michigan Cannabis Coalition.
For those who need to see a direct economic benefit before considering financially supporting this initiative, don’t be shortsighted. Michigan has a population twice the size of Colorado. MILegalize has no residency requirement, no financial bars to entry, and no caps on size or number or growers, processors or retailers (that is left up to each municipality, who stand to recover 20% of the excise tax imposed at the retail level).
Marijuana legalization in the face of continued criminal punishment in not nearly as sweet. I cut my teeth as a criminal defense attorney, and have had the unfortunate opportunity to see, up close, the negative unintended consequences of a medical marijuana law which is far too restrictive and fails both in providing necessary products and access, while also failing to protect those who are intended to benefit from the law. We need to not continue to make the same mistakes in the progression toward full legalization.
As a person who wants to see government work for the people, we need to recognize that the law itself is most of the problem, and leaving criminal penalties in place only perpetuates the problem.
For more information on MILegalize or to make a contribution, visit www.milegalize.com.
Matthew Abel, Cannabis Counsel, PLC, based in Detroit, MI
Matthew Abel is Executive Director of Michigan NORML and Senior Partner of the Detroit law firm Cannabis Counsel, P.L.C. He has been a member of NCIA since July 2013. Mr. Abel has been a criminal defense lawyer with a special focus on marijuana cases for more than 20 years. Mr. Abel’s Detroit-based law office capably handles marijuana possession, trafficking and distribution cases throughout the state of Michigan. His marijuana-specific practice areas include smuggling issues on the U.S.-Canadian border, asset forfeiture that victimizes clients, and questionable drug testing procedures.
He is a lifetime member of the NORML Legal Committee and the National Association of Criminal Defense Lawyers, and a member of Criminal Defense Attorneys of Michigan, the National Lawyers Guild, Americans for Safe Access, and the legal committee of the ACLU of Michigan. He has lectured on Michigan Medical Marihuana Law for Oaksterdam University in Michigan, the Michigan Cannabis College, MedGrow Cannabis College, the Michigan Institute for Continuing Legal Education, the Cannabis Career Institute, and to bar associations throughout Michigan. Mr. Abel was Director of the Committee for a Safer Michigan, sponsor of an unsuccessful 2012 Michigan Constitutional Amendment Ballot Question Committee, to repeal marijuana prohibition in Michigan for adults 21 and over. www.repealtoday.org
NCIA Member Profile: The Om of Medicine
NCIA recently had a chat with Mark Passerini, co-founder of Om of Medicine, a provisioning center and non-profit organization in Ann Arbor, Michigan, founded to assist their members in safely and securely obtaining medical cannabis in accordance with the Michigan Marihuana Act of 2008.
Mark Passerini, co-founder of Om of Medicine
Cannabis Industry Sector:
Medical Cannabis Provider
NCIA Member Since:
2013
How do you uniquely serve the cannabis industry?
The Om of Medicine uniquely serves the cannabis industry by offering a state-of-the-art members-only facility that provides an unparalleled experience of service, amenities, and information/education pertaining to all things cannabis. Located in downtown Ann Arbor, Om is where the art is, providing a place for local artists to display and make their work available for purchase. Om is a major participant in the Michigan medical cannabis movement by following and supporting local and state political issues affecting cannabis laws, lobbying on behalf of patients, as well as educating through social media. In a broader sense, the Om of Medicine is a cannabis headquarters for the community by staying up-to-date on new research, informing patients on political issues that require action, and by offering seminars from leading experts in the field. We offer a safe, enjoyable, and inspiring experience for our patients supplemented by free comedy shows, cultivation classes, political activism workshops, guest lectures, and much much more. The Om of Medicine is deeply committed to environmental responsibility and has implemented a robust sustainability action plan for the past four years of the facility’s operation. This commitment has included dedicating funds to energy efficient investments throughout the facility, as well as investments in off-site renewable energy generation to produce the state’s first and only carbon-neutral dispensary.
Why should patients looking for medical cannabis services go to Om of Medicine?
The Om of Medicine is not just an entity, it represents an ideal. Om was founded in 2010 in order to provide the safest and most secure access to the highest quality medicinal cannabis for qualified patients. Both founders and all employees subscribe to the underlying principle of compassion coupled with excellence.
The Om of Medicine. Ann Arbor, MI
We provide the optimal visiting experience for patients that are either familiar or new to cannabis by personalizing each visit to fit the individual’s medical needs. We offer a private, one-on-one consultation that ensures each patient gets the time and attention they deserve. Our selection of medicine is unparalleled and the variety of delivery mechanisms we offer are wide-ranging and ever-changing. Our knowledgeable staff welcomes and assists patients with any questions and provides aid with the state’s patient registration process. Our commitment to individualized healing combines lab-tested therapeutic remedies with patient-based research to achieve holistic lifestyle wellness. Our member lounge is enhanced by local art. Cannabis can inspire creativity and the Om of Medicine is a testament to this. There truly is no place like Om.
What is the medical marijuana community like in Michigan?
There are more patients in Michigan than in any other state besides California. Michigan was the 13th state to pass MMJ laws and now there are 23. Every state after Michigan has implemented some type of distribution/dispensary model yet Michigan State Legislature has been slow to act on this issue which leaves many patients without a safe place to acquire their medicine. The past six years have been difficult on the community due to some unfortunate court decisions as well as reductions in protections for patients. Despite several setbacks, the medical cannabis community in Michigan is a persistent bunch and we’re confident that the more we engage in the political process and educate and advocate for transparent, reasonable and accountable laws, the quicker patients will have permanently secure and safe access to their medicine.
Where do you see it going?
Over the past couple of years, with the help of several advocacy groups and our full time lobbyist in Lansing, there has been much progress. There are two bills awaiting passage in the State Senate. The first, HB 4271, will allow a local option for licensed dispensaries. The second bill, HB 5104, will provide alternative delivery methods other than smoking. Both bills overwhelmingly passed the State House 95-14 and 100-9, respectively. We have no doubt that the State Senate and Governor will do the right thing and pass these two important pieces of legislation.
You recently began helping to form the Illinois Cannabis Industry Association (ILCIA), a state-affiliate of NCIA. What led you to step up your involvement in this way across state lines?
Our experience in Michigan has made it clear that political involvement and education early on is key to moving this issue forward. The law narrowly passed in Illinois with 78 House and Senate members voting “NO” on HB 1 with the House only passing the bill by a marginal 4 votes. There is clearly much work to be done! In terms of state population, Illinois is the second largest [medical marijuana state] after California and has a chance to lead on this issue. The state has touted its medical cannabis law as the most restrictive and closely monitored law in the country. We want to make sure that the rights of the patients are not infringed upon and that the 4-year ‘pilot program’ becomes a permanent option for the patients of Illinois. As the state’s affiliate to NCIA, ILCIA will provide a voice for businesses, patients, and other key stakeholders by advocating for laws, regulations, and public policies that foster a healthy, professional, and accountable medical cannabis industry in our state.
Why did you join NCIA?
We joined NCIA because we realize that there is power in numbers. NCIA has been the country’s only industry-led organization engaging in legislative efforts to expand and further legitimize the legal cannabis market in the United States. The members we have met through NCIA and its leadership are second to none and we are confident that they will push this issue over the finish line. The work they are doing to reform tax laws and allow access to banking is of the utmost importance for our industry to survive. It is difficult work but in order to succeed, we must work together!
If you are a member of NCIA and would like to contribute to the NCIA blog, please contact Development Officer Bethany Moore by emailing bethany@thecannabisindustry.org.
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by Mike Lomuto, NCIA’s DEI Manager
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I am 
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My name is Michael Webster, and I am the Founder & Managing Member of 
Gabriel Cross is a Founder and CEO at 
MICHIGAN
These stunning victories
For the past eight years, we attempted to make all our decisions from the experience and perspective of a new patient that has never used cannabis previously. This translates to individual consultation rooms so patients may feel free to discuss their medical conditions, symptoms, and concerns in a private space rather than standing shoulder to shoulder at a retail counter. 
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