COVID-19 Will Change How Consumers Purchase Cannabis

Despite some studies showing us that THC is actually bad for those fighting off COVID-19, during this great American lock-down cannabis sales are thriving, providing an opportunity for the industry as many states have deemed marijuana essential, just like grocery stores and gas stations.

This has been a boon for retailers and also an uptick for the brands they carry, but also gives the cannabis industry a window to gain larger acceptance with the consumer public.

Cannabis Deemed Essential

Millions of Americans are looking for something today to provide some mental relief, and meanwhile, medical marijuana can be used to help ease anxiety and help manage an uncertain world.

“What’s important is that cannabis is considered medicine, and people need access to medicine during this time,” said Chanda Macias, of the Washington, D.C. based National Holistic Healing Center, and a board member of the National Cannabis Roundtable advocacy group.

Marijuana home delivery surges in California amid Coronavirus outbreak

One company rushed to expand its delivery fleet. Another has seen sales triple. The global coronavirus pandemic has left millions of people locked out of bars, restaurants and theaters, but it’s been an unexpected boost for some U.S. pot shops.

Marijuana users in the nation’s largest legal pot shop, California, and elsewhere are on a buying binge, as they stock up for potential quarantines or simply light up in search of relief during anxious times and government lockdowns. New York, San Francisco and Palm Springs, California, are among the cities labeling dispensaries “essential” businesses that can remain open during virus lockdowns, in some cases with limitations.

Sales increases also are being witnessed in Colorado and Washington, according to cannabis data company Headset.

Dispensaries, meanwhile, have been quick to accommodate virus-wary customers, boosting delivery and pickup options.

Immigrants Can Be Denied Citizenship for Working in Legal Marijuana Industry

U.S. Citizenship and Immigration Services (USCIS) issued guidance a day before the unofficial marijuana holiday that makes clear working in the marijuana industry, or even just possessing cannabis could be grounds to reject a citizenship application—regardless of whether it is done in a state where it is legal.

Violations of federal marijuana laws “are generally a bar to establishing good moral character for naturalization, even where that conduct would not be an offense under state law,” according to the guidance issued Friday. Merely being “involved in certain marijuana-related activities” could be sign that an applicant for citizenship “may lack good moral character” regardless of whether “such activity has been decriminalized under applicable state laws,” according to the USCIS statement.

California bill encourages banks to work with pot businesses

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.

$350,000 in cash? California marijuana taxes still make growers - and tax collectors - nervous

On tax days, it’s not hard to spot marijuana growers waiting to exhale in downtown Eureka.
They haul cash in grocery bags and boxes, making their way to a state office where they can pay their taxes.

One grower “holds his breath as he walks into the building,” said Terra Carver, executive director of the Humboldt County Growers Alliance. The distance is “no more than 20 yards, but the fact that he was holding $350,000 (makes it) ... a public safety issue.”

California still doesn’t have a better way to collect taxes from its burgeoning, licensed marijuana industry three years after voters passed an initiative to legalize recreational cannabis and 23 years after they sanctioned medical marijuana.

Bill Allowing Locals to Ban All Cannabis Deliveries Defeated in Committee

A bill that would have allowed local jurisdictions to ban cannabis deliveries originating outside their jurisdictional borders, was defeated in its first committee hearing today after cannabis activists and industry representatives objected to the bill.

Cal NORML wrote to the committee and testified against the bill, and promulgated an Action Alert that generated hundreds of letters to lawmakers in opposition. Thanks to all of our members and supporters who took action!

In introducing the bill, Asm. Cooley noted that he has been involved in both cannabis and local control issues for many years, citing his success as mayor of Rancho Cordova in enacting a local tax on cannabis businesses (however, that tax is overly high and was objected to by Cal NORML). Several times he referred to locals getting past a "parade of horribles" and tried to argue that passing the bill would somehow encourage locals to license cannabis businesses. He conceded that Prop. 64 allowed locals to ban adult-use cannabis businesses, not medical ones.

Los Angeles hiring cannabis social equity program manager

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The Department of Cannabis Regulation (DCR) in the city of Los Angeles is looking for someone to run its social equity program.

The project is part of a handful of efforts in California intended to get minorities and those negatively affected by the war on drugs involved directly in the state’s legal marijuana industry.

According to an online job posting, the position pays $95,776 to $140,021, requires a master’s degree and at least three years of experience with either economic and community development or providing services to low-income, minority or underserved communities.

The L.A. social equity program has been a point of contention for many in the city’s struggling legal cannabis market and has not yet been fully rolled out.

Other California cities that have social equity programs include Oakland, Sacramento and San Francisco.

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.

Employers May Lose Cases for Firing Medical Marijuana Users

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 Health-care worker Katelin Noffsinger told a potential employer that she took medical cannabis to deal with the effects of a car crash, but when a drug test came back positive, the nursing home rescinded her job offer anyway.

A federal judge ruled in September 2018 that the nursing home, which had cited federal laws against cannabis use, violated an anti-discrimination provision of Connecticut‘s medical marijuana law.

It was the latest in a series of clashes between U.S. and state laws around the country that came out in favor of medical cannabis users trying to keep or obtain jobs with drug-testing employers.

The Connecticut decision was the first ruling of its kind in a federal case and followed similar recent rulings against employers by state courts in Massachusetts and Rhode Island. Earlier rulings had gone against medical cannabis users in employment cases by state supreme courts, including those in California, Colorado, Oregon, and Washington, over the past few years.

Advocates hope new the new decisions are a signal of growing acceptance of cannabis’ medicinal value.

“This decision reflects the rapidly changing cultural and legal status of cannabis, and affirms that employers should not be able to discriminate against those who use marijuana responsibly while off the job, in compliance with the laws of their state,” said Paul Armentano, deputy director of the National Organization for the Reform of Marijuana Laws (NORML).

Medical marijuana, like the cannabis cuttings growing in a Sira Naturals cultivation facility in Milford Massachusetts, is reshaping employment law. A U.S. District judge in New Haven, Connecticut, ruled in favor of a woman who alleged a prospective employer discriminated against her when she sought a health-care job and informed the company she used medical marijuana to treat post-traumatic stress disorder (PTSD) resulting from a car crash. The judge found that the nursing home violated Connecticut’s anti-discrimination law protecting medical cannabis users despite marijuana remaining illegal at the federal level. (Associated Press File Photo/Steven Senne)

 

Noffsinger sued Bride Brook Health and Rehabilitation Center in Niantic in 2016. She had been offered, and accepted, a job as recreation therapy director at the nursing home, contingent on her passing a drug test.

She told the nursing home that she took synthetic marijuana pills — legally under state law and only at night — to treat the post-traumatic stress disorder (PTSD) she developed after the 2012 car accident. But the company rescinded the job offer after the drug test came back positive for THC, the chemical in marijuana that gets people high.

As a federal contractor, the nursing home worried that it could be cut off from that revenue if it employed somebody who tested positive for drugs.

On Sept. 5, 2018, U.S. District Judge Jeffrey Meyer in New Haven ruled Bride Brook discriminated against Noffsinger based solely on her medical cannabis use in violation of state law. He denied her request for punitive damages. The case is now heading to a trial on whether Noffsinger should receive compensatory damages for lost wages from not getting the job.

A lawyer for the nursing home, Thomas Blatchley, declined to comment.

Noffsinger’s attorney, Henry Murray, said his client would not comment on the lawsuit. He said Noffsinger has taken another job in the health-care industry that doesn’t pay as much as the Bride Brook job.

In his ruling, Meyer said the federal Drug Free Workplace Act, which many employers including federal contractors rely on for policies on drug testing, does not actually require drug testing and does not prohibit federal contractors from employing people who use medical cannabis outside the workplace in accordance with state law.

The decision will likely be used in arguments in similar cases elsewhere, said Fiona Ong, an employment attorney with the Baltimore firm of Shawe Rosenthal.

“This is a very significant case that throws the issue in doubt for many of these federal contractors,” Ong said. “It’s certainly interesting and may be indicative of where the courts are going with this.”

Thirty-one states, Washington, D.C., Puerto Rico, and Guam now allow medical marijuana, while 15 others have approved low-THC products for medical reasons in certain cases, according to the National Conference of State Legislatures. Nine states and Washington, D.C., have legalized recreational marijuana.

Only nine states including Connecticut, however, specifically ban employment discrimination against medical marijuana users, who could continue to face difficulties in obtaining or keeping jobs in the 41 other states, employment lawyers say.

In Massachusetts, the state’s highest court ruled in 2017 that a sales and marketing company wrongly fired a worker after her first day on the job after she tested positive for cannabis, which she used under the state’s medical marijuana law to treat her Crohn’s disease. Also in 2017, the Rhode Island state Supreme Court said a college student was wrongly denied an internship at a fabric company where officials refused to hire her after she acknowledged she could not pass a drug test because she used medical marijuana.

In both cases, the two women told the companies during the hiring process that they used medical marijuana, but would not consume it while on the job.

The American Bar Association called the Connecticut, Massachusetts, and Rhode Island cases “an emerging trend in employment litigation” and cautioned employers to consider state medical cannabis laws when analyzing their drug use and testing policies.

Several bills are pending before Congress that would undo marijuana’s Schedule I classification as a controlled substance with no medicinal value. But Armentano of NORML said it is unlikely they will go anywhere while Republicans control Congress.

Some employers, though, have dropped marijuana from the drug tests they require of employees, saying the testing excludes too many potential workers in a challenging hiring environment.