Cannabis Legalization & The Presidential Campaign: How They Overlap

Katelin EdwardsRegulatory NewsLeave a Comment

marijuana legalization

The 2020 presidential campaign will be a competitive one, with President Donald Trump running for re-election and 535 other candidates (as of February 19, 2019) running against him. Major issues that candidates will be running on include the economy, immigration policy, healthcare, climate change … the usual. But as I read through endless articles about the 2020 presidential race, one particular campaign issue keeps popping up: cannabis legalization.

Is cannabis legalization going to be the top issue candidates run on? Will it be what a candidate needs to win the primary and even the general election? No, probably not. But in a primary race where candidates are fighting to set themselves apart, advocating for cannabis legalization may be an option for doing so.

With polls showing that two out of three Americans support cannabis legalization, it is a no-brainer to run on this issue. The 2018 midterm elections proved this to be true, when a record number of gubernatorial candidates embraced the issue. The data gathered in the 2018 midterms will help us predict what we can expect to see from presidential candidates in 2020. Aside from polls and data from 2018, we can also look at candidates’ voting records regarding cannabis legislation.

Let’s take a look at some of the more prominent candidates’ current stances on cannabis legalization, including their bill sponsorships.

Sen. Cory Booker (D-NJ)

  • From a cannabis-friendly state;
  • Sponsored the Marijuana Justice Act of 2017, which proposed to remove marijuana from being included as a Schedule I substance, eliminate criminal penalties for those handling marijuana, expunge convictions for marijuana use or possession, amongst other progressive elements;
  • Championed the CARERS Act of 2015, which would deschedule marijuana, protect states that have legalized medical marijuana from federal intervention, legalize industrial hemp, and promote the research of cannabis; and  
  • Decried the war on drugs from as far back as 2012, when he was mayor of Newark.

Sen. Bernie Sanders (I-VT)


Sen. Elizabeth Warren (D-MA)

  • From a cannabis-friendly state;
  • Sponsored the STATES Act, a bipartisan bill, released on June 7, 2017, that would recognize a state’s right to legalize cannabis and protect states with legal cannabis from federal intervention;
  • Co-sponsored the Marijuana Justice Act of 2017; and
  • Co-sponsored numerous other pieces of cannabis reform legislation, such as bills aimed at providing cannabis businesses access to banking.

Sen. Kamala Harris (D-CA)

  • From a cannabis-friendly state;
  • On her personal cannabis use, stated: “Half my family is from Jamaica; are you kidding me? And I did inhale.”
  • Co-sponsored the Marijuana Justice Act of 2017

Sen. Kristen Gillibrand (D-NY)


And let’s not forget, President Donald Trump   

  • Signed the 2018 Farm Bill, which legalized industrial hemp;
  • Issued a signing statement on the medical marijuana provision of the most recent federal spending bill – seeking to strip the Department of Justice of funds used to interfere in the implementation of state medical marijuana laws – making clear that he will reserve the right to ignore the provision; and
  • Made a “solid commitment” to fix marijuana regulation according to then-Rep. Dana Rohrabacher (R-CA).

Although President Trump’s cannabis agenda is unclear, it is clear that the most prominent of the current Democratic candidates are pro-pot as of now.

Cannabis is evolving into a mainstream political issue. If presidential candidates choose not to vocalize their opinions on it, whether they are Democrats or Republicans, it is highly likely they will be pressed about it in the interviews, political rallies, and debates to come.

In the 1970s, 1980s and 1990s, presidential candidates ran on the platform of a “war on drugs,” with cannabis being one of the main targets of this “war.” Now, only a couple of administrations later, presidential candidates are not only open to legalization, but are making cannabis reform a focal point of their campaigns.

Regulators send message that compliance matters

Taylor Hart-BowlanRegulatory NewsLeave a Comment

cannabis regulations

Knock Knock! Who’s There? Your Licensing Authority.

State agencies across the country are revving up cannabis law enforcement efforts, and the number of businesses now bearing the hefty cost of non-compliance is growing as a result.

In Different States

In just the last month, administrative agencies in Massachusetts, California, and Colorado have all cracked down on cannabis companies. Violations ranged from storing cannabis-infused beverage products in an employee refrigerator to operating without a state license.

cannabis business

In January, the Massachusetts Cannabis Control Commission conducted two unannounced inspections of a single dispensary in the same week. After discovering a bevy of issues that posed “an immediate or serious threat to public health, safety, or welfare” — such as inadequate sanitation controls and products that did not meet pesticide standards — the agency ordered the business shuttered until further notice.

Around the same time in California, the Bureau of Cannabis Control aided in the shutdown of two Los Angeles dispensaries operating without state licenses. Search warrants served on the two retailers resulted in the seizure of more than $250,000 worth of cannabis and cannabis products alone.  

cannabis business

In Oregon, the Oregon Liquor Control Commission ordered two processors to either pay fines or serve suspensions; one must either pay a $2,310 fine or serve a 14-day license suspension for two violations, and the other must choose between a $7,620 fine or a 44-day suspension as a result of three offenses. The Commission also revoked the licenses of two testing labs for allowing employees to take samples of cannabis home, failing to document the transfer in the inventory tracking system, destroying evidence, and encouraging employees to lie to investigators.

Finally, on January 25th, three owners of the now-closed Colorado grower and dispensary chain Sweet Leaf were each sentenced to one year in prison for their involvement in a highly publicized multi-million dollar “looping” sales scheme, which involved taking advantage of a controversial ambiguity in the state’s retail daily purchase limits.

Regulators Are Cracking Down

Clearly, regulators are paying attention — and they’re sending a message to businesses that compliance matters in the process.

cannabis business

Notably, many cannabis-legal states have also enacted regulations that allow them to penalize a cannabis business for non-compliance that stems from another business. For example, although retailers generally don’t (and often are forbidden to) package and label edible products for retail sale, a retailer can nevertheless still be fined by its licensing agency for selling products that were improperly labeled when they received them from the manufacturer or distributor.

With agency enforcement on the rise in a number of states, the importance of compliance measures is arguably at an all-time high as well. Nearly all agencies can cite violations on a “per-instance” basis, too, which means that one small infringement can easily add up to thousands of dollars, even if the infraction itself is minor. For instance, if a business’s delivery sales receipt template doesn’t include a required component — such as the time the driver left the facility — an agency may fine the business individually for literally every single delivery sale that occurred using the non-compliant template. Ouch.

So, if you’re involved in a cannabis business and have not made compliance a priority, now is a good time to ask yourself a single, important question:

If your licensing agency comes knocking, how prepared are you?

2019 Cannabis Industry Developments: Tracking Cannabis Bills Part 1

Bill GunnisonRegulatory NewsLeave a Comment

cannabis compliance

Welcome to Bill’s first legislative roundup of 2019!

The 2019 legislative session is only a few weeks old, but plenty of cannabis bills are already on our radar. In the first legislative roundup of 2019, we’ll look at the most significant cannabis bills that have been introduced (so far) in Colorado, California, Oregon, Maryland, Pennsylvania, and Massachusetts:

COLORADO

HB19-1090 – Publicly Licensed Marijuana Companies

Summary: The current regulatory structure for the cannabis industry in Colorado creates substantial barriers for out-of-state investment and prohibits publicly traded companies from holding a license. This bill would remove those barriers and restrictions, potentially opening the floodgates for investment in Colorado’s cannabis industry. The bill would repeal provisions that require passive investors to go through an initial background check, would repeal provisions that limit out-of-state owners to 15 natural persons, and would repeal the provision that prohibits publicly traded companies from holding a marijuana license.

Introduced: 01/14/2019

Status: In Committee Process

Upcoming: Hearing in the House Finance Committee on 02/25/2019 @ 1:30p

CALIFORNIA

AB 286 – Reduce Excise Tax Rate, Suspend Cultivation Tax

Summary: To inject some life into the legal cannabis market in California and to combat the black market, lawmakers are considering a bill that would cut taxes on consumers and cultivators for three years. The goal is to reduce the disparity in prices between legal cannabis sources and black market sources to encourage consumers to purchase from the legal market. The bill would reduce the excise tax imposed on retail purchases of cannabis from 15% to 11% and would eliminate the cultivation tax of $9.25 per ounce of flower ($2.75 per ounce of cannabis leaf; $1.29 per ounce of fresh cannabis plant) until June 1, 2022.

Introduced: 01/28/2019

Status: In Committee Process

Upcoming: No hearing scheduled


AB 37 – Deducting Business Expenses (IRC Sec. 280E Relief)

Summary: This bill would allow cannabis businesses to deduct ordinary and necessary business expenses like rent, salaries, employee benefits, utilities, and advertising from income subject to state income tax. These types of expenses are currently disallowed under IRC Section 280E and cannot be deducted from income subject to federal income tax. The bill would take effect immediately on passage and would apply to tax year 2019 and beyond.

Introduced: 12/03/2018

Status: In Committee Process

Upcoming: No hearing scheduled


SB 51 – Cannabis Limited Charter Banks and Credit Unions

Summary: In an effort to reduce the cannabis industry’s reliance on cash, Sen. Hertzberg (D-Los Angeles) introduced a cannabis bill to bring banking services to California’s cannabis industry. The bill provides for the licensure and regulation of cannabis limited charter banks and credit unions. These banks and credit unions would be able to issue special purpose checks to account holders that would be valid for specified purposes like paying state and local taxes, paying rent, and paying contractors.

Introduced: 12/04/2018

Status: In Committee Process

Upcoming: No hearing scheduled

OREGON

SB 582 – Interstate Transfer of Marijuana Products

Summary: To combat the state’s massive oversupply of marijuana, Sen. Proznanski (D-Eugene) and Rep. Helm (D-Beaverton) introduced a bill that would allow Oregon marijuana businesses to export products across state lines to other legal cannabis states around Oregon (Washington, California, and Nevada). The bill would prohibit Oregon marijuana businesses from exporting to another state unless the Governor has entered into an agreement with that other state “for the purpose of cross-jurisdictional coordination and enforcement of marijuana-related businesses”. If this bill is passed, Oregon will become the first state to allow marijuana exports across state lines.

Introduced: 01/14/2019

Status: In the Committee Process. Senate Judiciary Committee held hearing on 02/07/2019.

Upcoming: No hearing scheduled


SB 365 – Local Governance of Marijuana Producers

Summary: This cannabis bill would protect marijuana producers located in cities or counties that adopt bans on marijuana production. It would allow premises used for marijuana production to continue to be used for marijuana production as long as they were licensed prior to the city or county prohibition.

Introduced: 01/14/2019

Status: In Committee Process

Upcoming: No hearing scheduled


SB 585 – Responsible Cannabis Retailer Program

Summary: This bill would direct the Oregon Liquor Control Commission to establish a Responsible Cannabis Retailer Program to assist marijuana retailers in maintaining compliance with cannabis laws and rules. It would prohibit the commission from imposing discipline on marijuana retailers that participate in the program.

Introduced: 01/14/2019

Status: In Committee Process

Upcoming: No hearing scheduled


SB 639 (HB 2233) – Consumption Lounges, Delivery to Hotels, Grow Facility Tours

Summary: This cannabis bill would allow the Oregon Liquor Control Commission to regulate and license marijuana consumption lounges but would allow cities and counties to opt-out. It would allow retailers to deliver marijuana items to hotels- but not to dorms- and would allow marijuana producers and marijuana processors to offer tours of their licensed premises to members of the public who are 21 years of age or older. Producers and processors would be allowed to contract with retailers to sell marijuana items during tours.

Introduced: 01/22/2019

Status: In Committee Process

Upcoming: No hearing scheduled


HB 2909 – Marijuana Deliveries to Adjacent Cities, Counties

Summary: Currently, a marijuana retailer can only deliver to consumers located within the city or unincorporated areas of a county in which the retailer is licensed. This cannabis bill would allow marijuana retailers to deliver to consumers located in adjacent cities and counties, provided those cities or counties have adopted an ordinance allowing for such deliveries.

Introduced: 02/07/2019

Status: Awaiting Referral to Committee

Upcoming: No hearing scheduled

MARYLAND

HB 17 (SB 857) – Repeal Ban on Edibles

Summary: Medical cannabis patients in Maryland who would prefer to medicate with edibles like brownies and chocolate bars might be in luck. HB 17 (cross-filed with SB-857) would repeal Maryland’s ban on “food containing medical cannabis”. Edibles could soon be available to patients in the Old Line State.

Introduced: 11/20/2018

Status: In Committee Process. House Health and Government Operations Committee held hearing on 01/29/2019.

Upcoming: No hearing scheduled


HB 568 (SB 9) – Deducting Business Expenses (IRC Sec. 280E Relief)

Summary: This bill would allow medical cannabis businesses to deduct ordinary and necessary business expenses like rent, salaries, employee benefits, utilities, and advertising from income subject to state income tax. These types of expenses are currently disallowed under IRC Section 280E and cannot be deducted from income subject to federal income tax. The bill would take effect July 1, 2019, and would apply to tax year 2019 and beyond.

Introduced: 02/04/2019

Status: In the Committee Process

Upcoming: House Ways and Means Committee Hearing on 02/20/2019 @ 1pm


HB 0632 – Constitutional Amendment to Legalize and Regulate Recreational Cannabis

Summary: This cannabis bill would amend the Maryland Constitution to legalize recreational cannabis. If it is approved by the legislature, it will be placed on the state ballot and Maryland voters will decide on the issue in November. If voters approve the measure, adults (at least 21 years old) in the Old Line State would be allowed to use cannabis, possess up to an ounce, cultivate up to six plants, and the state would be required to establish a regulation and taxation system for recreational cannabis.

Introduced: 02/06/2019

Status: In the Committee Process

Upcoming: House Judiciary Committee Hearing on 03/05/2019 @ 1pm


HB 0656 (SB 0771) – Legalize and Regulate Recreational Cannabis

Summary: This bill would also legalize recreational cannabis but, unlike HB 0632, would not require voter approval. The cannabis bill would establish a Cannabis Regulation Division that would be responsible for licensing and regulating retail cannabis stores, on-site consumption establishments, cultivation facilities, product manufacturing facilities, testing facilities, and transporters.

Introduced: 02/06/2019

Status: In the Committee Process

Upcoming: House Judiciary Committee Hearing on 03/05/2019 @ 1pm

PENNSYLVANIA

HB 50 – Legalize and Regulate Recreational Cannabis

Summary: This bill would legalize recreational cannabis in Pennsylvania. It would amend the state’s Medical Marijuana Act to require the Department of Health to license and regulate recreational growers/processors and dispensaries. The bill would allow the Department to issue up to 50 grower/processor permits and up to 100 dispensary permits (3 locations allowed per permit) to serve the adult-use market.

Introduced: 02/06/2019

Status: In the Committee Process

Upcoming: No hearing scheduled

MASSACHUSETTS

HD 843 – Increase Legal Age to Purchase Cannabis from 21 to 25

Summary: This bill would require consumers to be at least 25 years old to purchase cannabis for recreational use.

Introduced: 01/15/2019


HD 3351 – Transparency in Approval of Marijuana Facilities in Cities and Towns

Summary: This cannabis bill would establish continuity in the local approval process for marijuana facilities. It would require all cities and towns to adhere to the same process for approving Host Community Agreements with marijuana facilities.

Introduced: 01/18/2019


SD 2142 – Local Approval of Social Consumption

Summary: Currently, the only way a city or town can authorize on-site consumption at a marijuana facility is through a local ballot measure. This bill would authorize a city or town to bypass the ballot measure process and authorize on-site consumption through ordinance or by-law.

Introduced: 01/18/2019


HD 2526 – Deducting Business Expenses (IRC Section 280E Relief)

Summary: This bill would allow cannabis businesses to deduct ordinary and necessary business expenses like rent, salaries, employee benefits, utilities, and advertising from income subject to state income tax. These types of expenses are currently disallowed under IRC Section 280E and cannot be deducted from income subject to federal income tax.

Introduced: 01/17/2019


BCC Regulations: What Retailers Should Know!

Michael WilliamsonRegulatory NewsLeave a Comment

BCC regulations

You’ve read our blog about the new rules for California’s cannabis cultivators. Then you were rapt by our summary of California’s new cannabis manufacturing regulations. But we’re not done telling you about the new cannabis regulations in California yet!

Those on the front line of the cannabis industry, retailers and distributors, have a bevy of dense regulatory language to unpack, thanks to new rules from the Bureau of Cannabis Control (BCC) that recently took effect.  If you’re in either of those businesses in California, you undoubtedly have some questions. Let me take this opportunity to offer some insight on the updated BCC regulations.

Some Background on BCC regulations

The three state agencies overseeing California’s marijuana industry, the BCC, California Department of Food and Agriculture (CDFA), and California Department of Public Health (CDPH) issued their so-called permanent regulations for cannabis businesses in December 2018. Those new regulations went into effect in mid-January 2019 and replace the emergency rules the industry had been operating under since the adult-use market became legal.

The BCC’s regulations cover cannabis retailers, distributors, and microbusinesses. The CDFA’s regulations affect cannabis cultivators and the CDPH’s rules apply to manufacturers of various marijuana products. Simpifya’s regulatory analysts diligently worked to update our platform so it was ready for the changes by the time the new rules became mandatory.

Home Deliveries!

You may be asking yourself, what exactly changed?  Retailers saw some clarification from the BCC in the new regulations, especially concerning deliveries to customers.

In particular, the BCC’s new regulations outline a specific process that allows technology platforms to arrange for deliveries. The rules specify that the technology platforms may not make the actual cannabis delivery to customers. However, a BCC-licensed entity must conduct the delivery. These rules may mean certain licensed operators in the cannabis delivery space will need to rethink their business models.

BCC regulations

Advertising and Promotions

The new regulations cover so much more than deliveries. Any California retailer or distributor that advertises their products must take care to not advertise within 15-miles of certain roads or highways that cross a state border.

In addition, retailers must end any “buy one, get one free” promotions and ANY contests, sweepstakes, or raffles under the new regulations.

Commitment to Clients

We know the regulatory changes affect our clients in countless ways. I won’t go into the positive or negative consequences of the changes, but Simplifya’s regulatory analysts worked long hours to update our audit questions, SOP content, and Smart Cabinet documentation storage tool to make the transition as easy as possible.

We’re proud of our work and if you need an easy-to-use compliance platform for your California cannabis business, please request a demo. To our existing clients, if you have any questions or feedback about our updated California content, we would love to hear it!

New CA Regs: What Cannabis Manufacturers Need to Know

Tyler ElderRegulatory News2 Comments

cannabis product manufacturers

After a year of confusion and change, The Golden State has finally adopted permanent regulations for the industry. This is a bittersweet victory for many California operators as they now have a stable set of rules to follow; but many are still left wanting more. And in that same vein, making changes to the new rules will now be a longer and more arduous process than before.

If you’re still wondering what the new CDPH regulations have changed for your business, don’t worry. I’ve done the hard work and identified a few things you should know for cannabis manufacturers in California:

Temporary licenses are being phased out

Temporary licenses will soon be a thing of the past. As of January 1, no agency in California will issue temporary licenses to cannabis businesses. Existing temporary licenses will be valid until they expire, generally 120 days after their issuance. Additionally, the Department of Public Health will no longer offer extensions for these licenses.

Current temporary licensees will be able to get a provisional license from the Department, so long as they have already submitted an application for an annual license. Annual license applicants who weren’t able to get a temporary license before the end of 2018, will not be able to qualify for a provisional license. You’ll have to wait until your application is approved to begin operations.

Additionally, while temporary licensees are not required to use the track-and-trace system, annual and provisional licensees are. If you are still operating on a temporary license and are not yet using the track-and-trace system, it might be a good idea to begin the process of transitioning to the system soon.

Contract manufacturing will be allowed

When the agencies dropped an updated version of their proposed regulations back in October, there was a lot of concern about what appeared to be a ban on white labeling, also known as contract manufacturing. This is a common practice that allows manufacturers to produce and package products on behalf of another business, such as an out-of-state company or celebrity brand.

The new rules seem to allow contract manufacturing, but with a few restrictions. Unlicensed brands won’t be allowed to run the show, but will be able to contract the use of their intellectual property to licensed businesses for a share of the profits. White labeling manufacturers will need to disclose contracts with such companies, identifying them as financial interest holders in the business.

Manufacturers can label dried flower and pre-rolls

Along with distributors and cultivators, manufacturers in California are now allowed to roll and package pre-rolls and dried cannabis flower. The products will need to meet the packaging and labeling restrictions the Department has added to the new regulations before being released for distribution.

Child-resistant packaging won’t be required until 2020

The new CDPH regulations made a few changes to the packaging and labeling requirements for cannabis products as well. The most significant change is the delay on requiring products to be packaged in child-resistant packaging before being released to a distributor. Throughout 2019, cannabis products that are not placed in child-resistant packaging can be placed in child-resistant exit packaging when sold to consumers. However, effective Jan. 1, 2020, all products will need to be in child-resistant packaging when released to distributors.