weed

California bill encourages banks to work with pot businesses

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California legislators considered a plan Monday intended to encourage more banks to do business with marijuana companies that have been frozen out of thousands of financial institutions.

Most Americans live in states where marijuana is legally available in some form. But most financial institutions don't want anything to do with money from the cannabis industry for fear it could expose them to legal trouble since the federal government still considers marijuana illegal.

The conflict between state and federal law has left businesses in California's emerging legal pot industry in a legal dilemma, shutting many out of everyday services such as opening a bank account or obtaining a credit card. It also has forced many businesses to operate only in cash — sometimes vast amounts — making them ripe targets for crime.

An Assembly bill would authorize state regulators to share detailed sales, cultivation and shipping information collected from cannabis companies with banks, a step supporters hope will provide additional assurances to financial institutions that a pot shop or grower is operating within the law.

During the Obama administration, the Justice Department issued guidelines to help banks avoid federal prosecution when dealing with pot businesses in states where the drug is legal.

But most banks don't see those rules as a shield against charges that could include aiding drug trafficking. And they say the rules are difficult to follow, in effect placing the burden on banks to determine if a pot business is complying with all legal rules.

Cara Martinson of the California State Association of Counties told members of an Assembly committee that the bill represented an incremental step until a solution is reached at the federal level.

"This could help move the ball," she said.

The number of banks and credit unions willing to handle pot money is growing — it's over 400 nationally — but they still represent only a small fraction of the industry.

California state marijuana excise tax could go up July 1

California state marijuana excise tax could go up July 1

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Although the California marijuana industry has hoped for tax relief as it struggles to compete with a thriving illicit market, a tax increase could be on the way.

A tax hike would hit cannabis companies’ bottom line and could drive more consumers into the illicit market in search of cheaper marijuana products.

But an increase isn’t a foregone conclusion. Moreover, a tax cut could occur.

The California Department of Tax and Fee Administration (CDTFA) uses a 60% markup rate, along with the average market price of wholesale marijuana, as a basis for the state’s 15% marijuana excise tax.

That markup rate has to be recalculated every six months, and CDTFA Director Nicolas Maduros told an industry conference this week in Sacramento the excise tax may go up this summer.

“We’re responsible for resetting that markup rate every six months, so it will be reset July 1,” Maduros said, when asked during a panel with other MJ regulators.


“It’s based on market data, and I think particularly once …track-and-traceis more fully utilized, that we’ll have some better pricing data to figure out what that markup rate should be,” Maduros said.


The state track-and-trace system launched in January but is only used by cannabis companies with annual business licenses.

And so far just a fraction of the legal companies have obtained those permits, which means most of the industry isn’t feeding data into the track-and-trace system.

“We’re administrators, so it’s not up to us to sort of use that as a way to lower or increase the tax burden. We’re simply looking at what the facts are. It’s up to the legislature … to determine what the actual tax rate is,” he said.

When asked if the markup rate – and therefore the excise tax – could increase, Maduros said: “It could.”

It’s worth noting, however, that the rate also could either decrease or stay the same.

A CDTFA spokesman said in an email that there’s also no cap on how much the markup rate could increase – or decrease.

What a markup could mean

Maduros said after the panel that any decision on the markup rate and the excise tax will not be made until June at the earliest.

The markup recalculation would not affect the state cultivation tax, which is $9.25 per ounce of flower, $2.75 per ounce of leaves and $1.29 per ounce of fresh plant.

California Cannabis Industry Association Spokesman Josh Drayton said that a tax increase “would only further damage the supply chain as it competes against the illicit market.”

But, Drayton emphasized, it’s possible the excise tax may either stay the same or even decrease, and said it’s too early to tell what will happen with the CDTFA’s recalculation.

“I think we need full implementation of Metrc and track-and-trace before we consider any increase,” Drayton said.

“We have not seen any data that would support an increase in the excise tax for any part of the supply chain.”

Separately, a state bill to temporarily reduce state cannabis taxes is awaiting hearings in the California Legislature.

If successful, Assembly Bill 286 would reduce the excise tax from 15% to 11% and suspend the cultivation tax until 2022.



California only made half as much on 2018 marijuana taxes as expected

When California, the most populous state in America, legalized recreational marijuana last year, many had high hopes for the industry, writes Joseph Misulonas. But unfortunately, it appears initial projections for the success of the industry were a little off.

The California Department of Tax and Fee Administration announced that in 2018 the state collected $345.2 million from marijuana taxes. While that is a huge number, it's actually only slightly more than half of the state's initial projections of $643 million in tax revenue that they predicted they would receive in 2018. 

Many have argued why the state didn't make more money off of legal sales. The biggest reason seems to be the tax rate. California has some of the highest cannabis taxes in the nation, and customers can sometimes pay tax rates up to 45 percent on their marijuana purchases. These high prices are forcing many cannabis users to continue purchasing black market marijuana. This would also explain why California cannabis sales actually decreased between 2017 and 2018, despite it being legal recreationally last year.

Despite the fact that almost everyone acknowledges the tax rate is an issue, California legislators continue dragging their feet on the issue and not passing bills to lower the rate, despite several proposals to do so.

Wall Street Analyst Estimates US Cannabis Market Will Reach $47 Billion

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For years, “$20 billion by 2020” was an oft-heard refrain from market analysts who saw a bright and prosperous future for the legal cannabis industry. Now, with that horizon fast-approaching, analysts are setting their sights on what the next decade has in store. And one analyst, RBC Capital Markets’ Nik Modi, is seeing green.

Analyst Says Concentrates and Edibles Could Propel Sales To $47 Billion Annually

RBC Capital Markets, an investment bank that’s part of Royal Bank of Canada, issued a memo to clients outlining the rapid growth of the U.S. marijuana sector. The memo, authored by Nik Modi, shows how cannabis sales in the U.S. are gaining ground on beer and wine sales.

Projecting a compound annual growth rate (CAGR) of 17 percent, Modi estimates that the legal cannabis category could reach $47 billion in sales annually in the United States within the next decade, according to Business Insider.

Yet the cannabis market in the U.S. faces uncertainties that Canada does not. Regulatory environments are constantly and rapidly shifting as states implement legalization and adopt different approaches to dealing with federal prohibition. Investing in the industry still carries risk.

 

But RBC Capital Markets analyst Nik Modi brushed off concerns about the unpredictability of legal cannabis in the U.S.. Instead, he drew clients’ attention to a shift in consumer trends that is already having a major impact on domestic retail markets.

Data from BDS Analytics, included in Modi’s memo, shows that the margin on cannabis flower has steadily declined since the beginning of recreational sales in Colorado in 2012. That’s indicative of a larger national move away from flower and toward cannabis edibles and concentrates.

In Colorado, flower made up 70 percent of legal sales when shops opened in 2014. By the end of Q4 2017, flower accounted for just 46 percent of total sales. Picking up the slack were edibles and concentrates. Both are surging in popularity everywhere, and Modi thinks those forms of cannabis can propel total sales beyond $47 billion a year by 2027.

 

Including Illegal Cannabis Sales Drastically Shifts Financial Forecasts

Another eye-catching aspect of Modi’s analysis is another BDS Analytics chart showing the estimated U.S cannabis market size. The chart compares cannabis sales to spirits, wine, cigarettes, and beer. From spirits at $58 billion to beer $117 billion, all four categories best cannabis at $50 billion. But interestingly, the chart includes total legal and illegal cannabis sales to arrive at the $50 billion figure. It’s unclear what proportion of that amount is made up by illegal sales.

Other cannabis market analysts say that illegal sales still account for the majority of total marijuana purchases in the U.S. But as legalization continues to channel consumers into the legal market, illegal sales are slowly declining.

While access to legal cannabis expands nationwide, the size of the illegal market remains difficult to measure. So does predicting how much of it will move aboveboard in the coming years.

 

RBC Capital Analyst Praises Big Investment in Canadian Cannabis

The letter RBC Capital Markets sent to clients also lauded Constellation Brands’ recent $4 billion investment in one of Canada’s largest medical cannabis producer Canopy Growth Corp. Constellation Brands is the firm behind the popular beverage companies Modelo, Corona and Svedka. The company has been moving incrementally into the Canadian cannabis market, upping its stake each time. Nik Modi says he’d like to see more companies make similar moves in the cannabis space.

Commonwealth of the Northern Mariana Islands Votes to Legalize Marijuana

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5,871 miles of open Pacific Ocean waters separate the Commonwealth of the Northern Mariana Islands (CNMI) from the coast of California. But the 15-island chain that makes up the United States’ westernmost territory is poised to do something no U.S. state has ever done.

On Wednesday, 18 of CNMI’s 20 legislators voted to approve a bill to legalize cannabis for adult use. The bill would also legalize medical cannabis and industrial hemp. And if CNMI Governor Ralph Torres enacts the bill, the territory will make legalization history—twice.

CNMI Would Be First U.S. Jurisdiction to Go From Total Prohibition to Full Legalization

This isn’t the first time CNMI lawmakers attempted to legalize cannabis. As recently as May, the CNMI Senate approved a piece of legislation nearly identical to the House-approved bill. Procedural issues, however, stymied the bill’s progress.

After another false start in the Senate, the House opted to file its own bill. It took less than a week for the full chamber to vote to approve the proposal.

 

That act alone makes CNMI unique among the 9 U.S. states that have legalized adult-use marijuana. Vermont comes closest, having legalized marijuana through a legislative process rather than a ballot initiative. But unlike CNMI’s proposed legislation, Vermont’s law doesn’t establish a retail market. The Mariana Islands’ legislation would.

There’s a second way CNMI would make legalization history if the bill becomes law. Every U.S. state that has legalized adult-use marijuana did so only after establishing a medical cannabis program. But in CNMI, there is no medical marijuana. The territory would be the first U.S. jurisdiction to go from total prohibition to full legalization.

What’s Next for Legal Cannabis in U.S. Territories?

Despite the tremendous distance between the Commonwealth of the Northern Mariana Islands and the continental United States, the territory has been closely watching legal cannabis unfold there. Indeed, the overwhelming support for the proposal in the House is due to lawmakers’ recognizing the significant benefits of legal weed.

 

The full text of the legislation, SB 20-62, cites how states with regulated markets for marijuana “have observed real and significant benefits to public health, safety and quality of life for all residents,” and goes on to list medical benefits like treatments for pain, epilepsy and PTSD, social benefits like a reduction in overdose deaths and lowered crime and economic benefits like tax revenue and job growth.

But the bill still has a couple more hurdles to clear before it becomes law. The CNMI Cannabis Act of 2018 is currently on its way back to the Senate for approval. After that, it will head to the desk of Gov. Ralph Torres, a Republican who has expressed concerns about legalization.

In response to House passage of the bill, Torres stressed the importance of taking “a look at both sides of the coin.” Torres wondered about the crime statistics in states with legal weed and other public safety issues.

 

Whether those reservations would ultimately lead Gov. Torres to veto the legislative effort and oppose the will of CNMI residents, however, remains to be seen. Public hearings about the act had higher attendance than any hearings senators could remember. Initially, legislators had designed the bill as a voter referendum before adopting it in the Senate.

Marijuana festivals, and businesses that benefit from them, are hurting now that cannabis is legal in California

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Marijuana festivals, and businesses that benefit from them, are hurting now that cannabis is legal in California

July 5, 2018 

Marijuana festival organizers were banking on this to be their biggest year yet, now that recreational cannabis is legal in California and the state is legitimizing such events by licensing them for the first time.

Promoters say they planned to stop operating under the loose protections of the state’s medical marijuana laws, where they’d force attendees to get doctor’s recommendations for cannabis before entering the gates. Instead, they hoped to have licenses that would allow anyone 21 and older to buy and smoke cannabis, just like they can buy and drink beer at other festivals.

But with local authorities now able to block such festivals even from the limited venues where they’re permitted by new state rules, there weren’t any state-sanctioned events in Southern California during the first half of the year. And none are on the horizon for the rest of 2018.

The picture is a bit brighter in Northern California. The state licensed marijuana festivals this spring in Sacramento and in Santa Rosa, where the massive Emerald Cup is also expected to go off in December without a hitch.

Oklahoma Legalizes Medical Marijuana

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Marijuana is now legal in Oklahoma for medical purposes.

Voters approved State Question 788 in Tuesday’s primary, which makes it legal to grow, sell and use marijuana for medicinal purposes. The law provides no outlines on qualifying conditions, giving physicians broad latitude to determine why they recommend medical marijuana to patients. Under the law, adults with a medical marijuana license would be authorized to possess up to 8 ounces of marijuana, six flowering plants and various weight of edibles and marijuana concentrates derived from the plant.

“The passage of State Question 788 highlights the strength and diversity of public support for laws allowing the medical use of marijuana,” said Karen O’Keefe, director of state policies for the Marijuana Policy Project, a drug policy reform group. “Most Oklahomans agree that patients should be able to access medical marijuana safely and legally if their doctors recommend it. It is noteworthy that this measure passed in such a red state during a primary election, when voter turnout tends to be older and more conservative than during a general election.”

Oklahoma becomes the 30th state to legalize cannabis for medical use. Legal recreational marijuana has been approved in nine states and Washington, D.C., which continues to ban sales, unlike the state programs. Despite the states’ efforts to scale back on criminalizing the plant over the past few years, marijuana remains illegal under the federal Controlled Substances Act.  

Former President Barack Obama’s Justice Department allowed states to forge their own way on marijuana policy with guidanceurging federal prosecutors to refrain from targeting state-legal marijuana operations. But in January, Attorney General Jeff Sessions rescinded the Obama-era guidance, a move that has possibly paved the way for a federal crackdown on legal marijuana. But states that have legalized medical marijuana retain some protections from federal interference under a budget rider known as the Rohrabacher-Farr amendment, which must be renewed every time Congress passes a government-funding bill.

In order to more fully protect marijuana states from the policies of federal prohibition, Sens. Cory Gardner (R-Colo.) and Elizabeth Warren (D-Mass.) introduced a bill earlier this month that would allow businesses and individuals working in the burgeoning legal marijuana industry in states around the nation to operate without fear of Department of Justice prosecution. The bill would also protect banks that work with state-legal marijuana businesses. President Donald Trump has said he will “probably” support the bill.

Marijuana is the most commonly used illicit substance in the United States, and the trend of states bucking prohibition in favor of legal regulation of the plant reflects a broad cultural shift toward greater acceptance of marijuana. National support for the legalization of the drug has risen dramatically in recent years, reaching historic highsin multiple polls. And states like Colorado, the first to establish a regulated adult-use marijuana marketplace, have seen successes that have debunked some lawmakers’ and law enforcers’ predictions that such policies would reap disaster.

Texas Republicans Come Out in Support of Marijuana Decriminalization

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Texas Republicans have come out in support of marijuana decriminalization in their official party platform. State GOP delegates also approved an expansion of medical marijuana access and support for industrial hemp at their convention.

Nearly 10,000 delegates attended the state Republican Party convention last week. Before Saturday’s vote on the platform, delegates had the opportunity to learn about cannabis policy and regulation. In a first for the convention, three pro-pot groups and one anti-pot group had booths in the exposition area.

The platform approved by delegates contained more than 330 planks covering policy issues ranging from gay rights to immigration. Of those, four are related to the regulation of cannabis.

One plank calls for a change in state law to remove criminal penalties for cannabis possession. Instead, civil penalties would apply to adults caught with an ounce or less.

 

“We support a change in the law to make it a civil, and not a criminal, offense for legal adults only to possess one ounce or less of marijuana for personal use, punishable by a fine of up to $100, but without jail time,” .

Currently, adults possessing up to two ounces of pot can receive a six-month jail term and a fine of $2,000.

Another platform item seeks a federal rescheduling of marijuana under the Controlled Substances Act. “Congress should remove cannabis from the list of Schedule 1 and move to Schedule 2,” according to the document.

 

Republicans also support an expansion of the state medical marijuana program with a call for “the Texas Legislature to improve the 2015 Compassionate Use Act to allow doctors to determine the appropriate use of cannabis to certified patients.”

Additionally, GOP delegates voted to “recognize industrial hemp as a valuable agricultural commodity.” They also urged “the Texas Legislature to pass legislation allowing cultivation, manufacture, and sale of industrial hemp and hemp products.”

Cannabis Activists React to GOP Platform

Cannabis activists applauded the party’s stance on cannabis issues. Heather Fazio of Texans for Responsible Marijuana Policy told Forbes that the proposals would be positive changes for the state.

 

“Texas Republicans, like the majority of Americans, are ready to see more sensible marijuana policies enacted,” said Fazio. “Our state wastes valuable criminal justice resources arresting between 60,000-70,000 Texans annually. Delegates took a stand this week for a better approach. While it would be preferable for cannabis to be de-scheduled entirely, this call by the Texas GOP signifies a very positive shift in opinion. Outright prohibition is not working and Texas Republicans want to see Congress take action to make cannabis more accessible.”

Fazio also said that more Texans would be able to access medicinal cannabis if the GOP proposals become law.

“Under the current [medical cannabis] program, most patients are being left behind,” she said. “Texas conservatives are seeing the value of medical cannabis and want to see more inclusive access. Now we will take this to the Legislature for action during the 2019 legislative session.”

Under current law, only patients with intractable epilepsy may use low-THC cannabis oil after receiving approval from two doctors. The new platform calls for doctors, not lawmakers, to decide which patients might benefit from medical marijuana.

 

 

 

Feds Hammer San Francisco Brewer for Making Beer with CBD

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SAN FRANCISCO (AP) — U.S. officials have ordered a San Francisco brewery to stop producing beers containing cannabidiol, the hemp-derived compound known as CBD.

The U.S. Alcohol and Tobacco Tax and Trade Bureau is allowing Black Hammer Brewing to sell off the rest of the beer it has produced with CBD, including one called Toke Back Mountain.

CBD is a non-psychoactive cannabinoid. The beer’s drinkers can’t get high, but users say CBD is calming.

The San Francisco Chronicle reported Wednesday, May 23, 2018, that the order was not issued because the federal government says marijuana is illegal, but because the trade bureau requires special approval for non-standard beer ingredients.

The brewery’s owners are applying for permission to use hemp and terpenes, the compounds that give cannabis its aroma and flavor.

Sen. Kamala Harris Joins the Ranks of Marijuana Justice Act Sponsors

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Sen. Kamala Harris (D-Ca.) is undeniably a rising star in the Democratic party. Her announcement Thursday that she would back federal marijuana legalization has quickly propelled her to the ranks of progressive heavyweights like Sens. Kirsten Gillibrand (D-N.Y.) and Bernie Sanders (I-Vt.). A potential 2020 contender for the White House, Harris’s recent statements signal she is ready to move the country toward progressive marijuana and criminal justice reform.

Sen. Kamala Harris Vows To Support Federal Marijuana Legalization

As Sen. Kamala Harris joins the ranks of Marijuana Justice Act sponsors, she moves alongside progressive Democrats like Cory Booker, the bill’s sponsor, and Kirsten Gillibrand, who champion marijuana legalization as a social justice issue.

Sen. Booker’s legislation would remove marijuana from the federal government’s list of Schedule I controlled substances. But the justice component goes much further. The Marijuana Justice Act would additionally expunge the criminal records of any American with prior marijuana use or possession convictions.

It’s a radical proposal that would dramatically alter the criminal justice landscape in the United States. And that’s something for which Harris, former attorney general of California, has long fought.

“It’s the right thing to do. And I know this as a former prosecutor. I know this as a senator,” Harris said in a video posted by NowThis announcing her decision. “I just look at what we want as a country and where we need to be instead of where we’ve been.”

 

And where we’ve been, according to Harris and many who support cannabis legalization, has been a nightmare of racially disparate drug enforcement and incarceration. Where we’ve been, Harris says, is the failed war on drugs.

“The war on drugs was a war on communities. Not somebody smoking a joint,” Harris says in the video.

Making Good On Her Progressive Credentials

While Sen. Harris’s record on criminal justice reform is laudatory, her action on legal cannabis has been less so. Even so, Harris’s coming out to support Sen. Booker’s Marijuana Justice Act fits in with her long-standing critique of the criminal justice system.

As San Francisco’s district attorney and later as California’s attorney general, Harris adopted a number of progressive stances. The list is admirable, and includes significant measures like sentencing reform and adopting measures to reduce recidivism in California’s over-populated prison system.

Harris was also a vocal supporter of the Affordable Care Act and defended the rights of same-sex couples to marry. And she was responsible for getting California’s justice department to adopt body cameras and mandate implicit racial bias training for its police officers. She’s even gone after polluters and corporate fraudsters.

 

With Trump in office and Jeff Sessions as Attorney General, Kamala has become an even more outspoken progressive. She has supported single-payer healthcare along with Bernie Sanders and is a backer of free college tuition for low-income households.

All of that is impressive and praiseworthy, even if critics of Harris point out that her deeds have not always follow her words.

Unfortunately, those criticisms seemed especially valid when it came to Harris’s stance on marijuana. While she frequently blasted the war on drugs as a failure, as California AG she took no meaningful action on drug reform. In fact, in some cases, she endorsed the “tough on crime” policies of her conservative colleagues.

Of course, that was then and this is now. And politicians have pivoted more rapidly toward legalization than Harris. Whatever disappointments Harris’s past record on marijuana may cause, her statements Thursday make clear that in 2018, the senator is completely on board with justice for cannabis users.