CVIndependent

Tue10222019

Last updateTue, 18 Sep 2018 1pm

Cannabis legalization is sweeping the nation quickly by American standards, and industry growth has been rapid in states where cannabis has been legally accepted in one way or another.

The cannabis industry is projected to reach $44 billion per year in revenue by 2025. State budgets are being balanced in part due to tax revenues from the cannabis industry. Jobs are getting created locally, and potential marijuana businesses are looking with hope toward each state-legalization initiative on the horizon.

But even as states line up to reap the financial rewards of legalization, the continuing federal ban on marijuana may leave American startups scrambling to find the investment dollars needed once they get the green light on a state level.

One prime example of how federal foot-dragging on cannabis-law reform is inhibiting industry growth is Section 280E of the U.S. tax code. It prohibits the deduction of expenses related to controlled substances on federal tax returns. The means that cannabis businesses cannot deduct the basic business expenses allowed for any other retail, manufacturing or distribution business—even though the businesses are perfectly legal under state laws. One dispensary owner in Colorado estimates he pays the IRS an extra $600,000 a year because he is not allowed these deductions. That’s not a small chunk of change when you consider the exorbitant taxes already levied on cannabis businesses.

Issues like this, as well as the banking difficulties faced by the cannabis industry—federal law makes it very difficult for a marijuana business to even have a bank account—make the industry look like a less-than-safe investment. Rescheduling marijuana to anything but the Drug Enforcement Administration’s Schedule 1 would eliminate this hurdle, and would allow banking options and Federal Deposit Insurance Corporation coverage to the exploding industry.

Of course, there’s a hashtag for that: #Reschedule420, brought to you by DCMJ.org. That’s the organization that brought a 50-foot joint to the White House on April 2 of this year in protest of the president’s inaction on cannabis reform. (Get it? Reschedule 4/20?)

In a recent letter to Congress, the DEA hinted at rescheduling marijuana or (removing it from the schedules altogether) sometime this summer. We’ve heard that one before, but combine that with the administration’s recent approval of the first official testing for cannabis as a PTSD treatment, as well as massive shifts in public opinion, and there may be a ray of hope this time around. In addition to making cannabis research much more accessible to American companies, a change in DEA cannabis policy would remove most of the remaining hurdles to development of the cannabis industry nationwide: Section 280E would no longer apply to cannabis business, and banks would be able to fling their doors open to all those now-legit former narco dollars.

But in the meantime … here comes Canada.

Justin Trudeau, Canada’s liberal rock-star prime minister, has vowed to legalize recreational cannabis on a federal level in the Great White North—posthaste. This forward thinking provides an opportunity for more secure investment and less restrictive tax policy, and would allow banks to treat cannabis businesses as they do any other legitimate business. This offers cannabis investors another North American option in one of the fastest-growing industries in recent history.

In addition to the obvious business advantages Canada would enjoy over the United States, quick legalization would also put Canada years ahead of the U.S. in medical-cannabis research. This would allow Canadian companies to be first to market with breakthroughs in medical uses of a plant that seems to be effective in treating something new every week. While Canada has yet to legalize, it looks like it will do so on a federal level well before most U.S. states do. If or when that happens, American cannabis startups may find potential investors instead looking north for greener pastures.

One needs only to look at Desert Hot Springs to see how cannabis can help struggling local economies. What has historically been a city with perpetual economic struggles is now being praised as the future center of the cannabis industry in California; you probably saw the huge front-page article in the May 10 Los Angeles Times touting the city as Desert Pot Springs. So much pot will be produced in DHS that people are moving there from pot meccas like Amsterdam to supply those operations, as is the case with Grow Shop Hydroponics. GSH is located in North Palm Springs with easy access to what will be some of the largest commercial grows in the world. Real estate in DHS is now being snatched up for as much as twice the market value—and recreational use in California hasn’t even become law yet.

By dragging its feet, the DEA would send billions in investment dollars and revenue north of the border, and would further hinder the development of the cannabis industry here in the United States. It’s a fact: Legalization will happen in the United States. If we allow our government to delay the inevitable, that hesitation will cost us all dearly economically—and put us in a position of playing a desperate game of catch-up in medical cannabis research.

Published in Cannabis in the CV

Boy, this has been an ugly election cycle. The candidates and their supporters have been dragging some pretty dark parts of our society into the spotlight, and it has not been pretty.

But for me, there is at least one shining green light to be seen: Both parties appear ready to be getting ready to accept cannabis into our “legitimate” society in one form or another—although there are still some fairly stark differences in their stances.

So, with the California primary coming up in June, let’s look at where the remaining presidential candidates stand on cannabis.

The Red Team

A Republican administration is generally viewed as a setback to the legalization movement. But even the Red Team is getting on board with a wider acceptance of cannabis.

GOP front-runner Donald Trump is typically vague regarding marijuana, and has changed his publicly stated views on legalization several times over the years. In 1990, he said that all drugs should be legalized and regulated to end the failed War on Drugs. Now that he’s the GOP Golden Boy (Orange Boy?), he’s hedging his bets regarding legalization for recreational use. In a recent interview with Bill O’Reilly, when pressed on the issue, the closest Trump would come to supporting legalization was to say that “there are some good things about” it. However, Trump did not hesitate to assert his complete support of medical marijuana.

Running a distant second in the GOP race is Texas Sen. Ted Cruz. At the 2015 Conservative Political Action Conference, Cruz said he was opposed to legalization for adult recreational use. But earlier this year, he said he would not roll back the laws enacted in Colorado and Washington, so he appears to be softening a little on the topic. He told radio talk-show host Hugh Hewitt: “When it comes to a question of legalizing marijuana, I don’t support legalizing marijuana. If it were on the ballot in the state of Texas, I would vote no. But I also believe that’s a legitimate question for the states to make a determination. And the citizens of Colorado and Washington state have come to a different conclusion.” Cruz also says states should regulate medicinal use without federal interference: “I think it is appropriate for the federal government to recognize that the citizens of those states have made that decision.”

The GOP’s longest lasting also-ran, Ohio Gov. John Kasich, has been completely opposed to cannabis, even for medical use. But even he appears to be loosening up a little. While still generally opposed to legalizing marijuana for recreational use, he said at a town hall in Hollis, N.H., “Medical marijuana, I think we can look at it.” Kasich, who has admitted using marijuana himself several times, recently discussed the topic on The Late Show With Stephen Colbert. While he opposes incarceration in favor of treatment for drug-abusers across the board, he explained his opposition to legalization thusly: “The problem with marijuana is this: We don't want to tell our kids, ‘Don’t do drugs, but by the way, this drug’s OK.’”

Colbert fired back with a wry: “Isn't that what alcohol is?”

You can watch the exchange here.

The Blue Team

A Democratic White House is the great green hope for the legalization movement, with Bernie Sanders being wholly in favor of a complete end to the War on Drugs, and Hillary Clinton now stating 100 percent support for medical cannabis.

Clinton’s position is in an evolutionary phase. In 2011, she opposed complete legalization in favor of decriminalizing the possession of small amounts of marijuana. But on March 24 of this year, she told Jimmy Kimmel: “I think what the states are doing right now needs to be supported, and I absolutely support all the states that are moving toward medical marijuana, moving toward—absolutely—legalizing it for recreational use.” She continued: “Let’s take it off … Schedule I and put it on a lower schedule so that we can actually do research about it.”

Vermont Sen. Bernie Sanders is the only candidate to receive an “A” rating from the Marijuana Policy Project. Sanders has long expressed support for allowing states to make decisions regarding cannabis legalization, even going so far as to say that he, personally, would vote in favor of legalization in his state. On a national level, he staunchly supports marijuana decriminalization and medicinal use.

While other issues in the election cycle are causing wide rifts, it appears that marijuana’s time has come at last. It’s a new day for cannabis, America!

In Other News

• With California barreling toward expected legalization, the county of Los Angeles is giving itself a time-out, of sorts, to figure out how to handle cultivation in unincorporated areas. The county has banned dispensaries from operating on county land since 2011, and has temporarily banned all cultivation—even by patients. The current ban is in place for 45 days to let the county assess the best way to approach cultivation, including environmental impacts and possible criminal activity. Coupled with the long-standing ban on dispensaries, the ban leaves few options for patient access. The ban can be extended for a year if deemed necessary by the county Board of Supervisors.

• On the lighter side, pizza-delivery app Push for Pizza has teamed with Nikolas Gregory Studio in Queens, N.Y., to produce a pizza box than can be used to make a pot pipe. The brain-child of 25-year-old Nikolas Gregory, the box features a perforated cutout that serves as the body of the pipe. And, y’know that miniature plastic table thing that supports the middle of the box? Well, they’re making it a ceramic bowl that slides into the cardboard body from the box top.

Genius!

Published in Cannabis in the CV

Earlier this month, the 2016 Marijuana Business Factbook estimated the retail cannabis market would more than triple by 2010—becoming a $44 billion industry.

That will amount to a huge economic boost to the states that are legalizing weed. But which states will collect on the green rush first? And how will this all go down here in California?

Here's a look at what legalization may look like here in the Golden State, along with a breakdown of the states that are pretty much slam dunks to legalize this year.

California was first to legalize marijuana for medicinal use in 1996, when voters said yes to Proposition 215. Now, 20 years later, voters may very well legalize the recreational use of cannabis for adults. There are more than a dozen initiatives vying for the attention of California voters, but the one expected to get the job done is the Adult Use of Marijuana Act. Backed by venture capitalist and former Facebook executive Sean Parker, the act boasts the support of Lt. Gov. Gavin Newsom, the California Medical Association, Law Enforcement Against Prohibition, the National Organization for the Reform of Marijuana Laws (NORML), the California Cannabis Industry Association, Coalition for Cannabis Policy Reform and Students for Sensible Drug Policy.

Highlights of the AUMA:

  • Adults 21 and older can possess an ounce of flower and 4 grams of concentrates.
  • Localities may ban your personal outdoor grow, but not your indoor grow. However, your landlord can still prohibit indoor grows. Personal grows are limited to six plants per residence (not per adult).
  • Lighting up in public would still be illegal, well, just about everywhere. Except …
  • Localities can allow on-site cannabis use in designated public places (marijuana lounges!), possibly including private limos and buses.
  • The law preserves the right of employers to drug-test their employees if they desire.
  • The bill gets interesting when it comes to licensing: Cannabis-business licensing in California would begin Jan. 1, 2018. The bill puts safeguards in place to protect small businesses and artisanal growers: Cultivation licenses are tiered by square feet of canopy, and large-scale grows of more than 22,000 square feet are banned for five years in an effort to keep major corporate interests at bay. Also, anybody who was not a California resident as of 2015 would be ineligible for any kind of permit until 2020.
  • There is also a special licensing class for “microbusinesses,” meant for small artisanal operations that want to stay vertical with cultivation, extracts, distribution and retail.
  • Cannabis products will carry a 15 percent excise tax. The cultivation tax is $9.25 per ounce of flower, and $2.75 per ounce on leaves, plus any state and local sales taxes. Subject to ballot approval, counties have the option to impose an additional tax.
  • Other highlights include consumer protections including lab testing and organic certification standards; parental-rights protections for medical marijuana patients; and the expungement of marijuana crimes if the crimes would now be considered legal or misdemeanors.

Nevada and Vermont are also expected to legalize marijuana for recreational use this year, while legalization initiatives in Arizona, Connecticut, Michigan, Delaware, Maryland, Massachusetts, New York, Maine, Missouri and Ohio face tougher odds.

Regardless of the outcomes in these tougher battlegrounds, legalization is gaining momentum. The appearance of these initiatives on this many state ballots is a clear sign that national opinion and public policy are embracing legalization and the opportunities it presents.

Other Cannabis News

  • Pennsylvania is on track to become the 24th state to legalize cannabis for medicinal use, with the state House voting 149-43 in favor. As of this writing, the bill was moving to the state’s Senate—which passed a similar bill in 2015 by a comfortable margin.
  • Unionization is spreading through the cannabis world, offering protections for workers in this emerging and sometimes unpredictable industry. South Coast Safe Access in Santa Ana recently became the first dispensary in Orange County to unionize, as workers entered into an agreement with the United Food and Commercial Workers Union Local 324. The UFCW seems to be looking to bolster its ranks by representing cannabis workers is all states where the plant is legal.
  • Three-time Duke all-American and former Chicago Bulls guard Jay Williams is calling for the NBA and other sports leagues to loosen up where cannabis is concerned, claiming that 75-80 percent of NBA players use cannabis. Williams told FoxBusiness.com: "I’m not condoning for anyone under 18 to use cannabis or marijuana, but from a medical perspective, it’s about time some of these brands like the NBA and MLB become a little bit more progressive and start thinking forward instead of being held captive in the past."
Published in Cannabis in the CV

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