October 23, 2020
San Diego files first lawsuit seeking unpaid cannabis taxes
San Diego has filed its first lawsuit based on a failure to pay the city’s cannabis tax, a new stream of revenue that city officials expect to climb to nearly $30 million annually during the next five years. The city filed suit against Grizzly Peak Farms for failure to pay tax on cannabis products the company delivered to dispensaries within the city from its cultivation facilities in Oakland between January 2018 and June 2019. With penalties and interest, San Diego officials say the company owes nearly $10,000 to the city. The city’s tax rate on cannabis businesses increased from 5 percent to 8 percent in July 2019. The new revenue stream from cannabis taxes could help soften budget cuts the city is expected to face in coming months because of the COVID-19 pandemic, which has sharply reduced sales tax and hotel tax revenue because of decreased tourism. Dave Gash, a San Diego developer and the owner of Grizzly Peak, said Wednesday that failure to pay the tax was an oversight resulting from confusion, and that the company planned to pay its city tax bill immediately. “It really kind of slipped through the cracks,” Gash said. “It’s legitimate, but it’s a weird city tax. We never heard about it, so it was weird to us.” Gash is referring to San Diego’s cannabis tax extending beyond businesses selling and cultivating cannabis within the city. The tax also must be paid by cannabis businesses located elsewhere, if they supply cannabis products to businesses within the city. Leaders of the local cannabis industry say San Diego taxing out-of-town suppliers has led to lots of grumbling, but that Grizzly Peak appears to be the first company to fail to pay the tax. Gash said he only got one notice that his company owed cannabis tax to the city. “They haven’t been calling us about this or sending us notices,” he said. San Diego’s approach to cannabis taxes, which some other cities also use, forces cities to use a process called “apportionment” to divide up a cannabis company’s revenues so each city can tax the appropriate portion of the revenue. Jessica McElfresh, one of San Diego’s leading cannabis lawyers, said San Diego’s cannabis tax legislation has some confusing elements, partly because it was modeled on legislation from other cities. But McElfresh said the city treasurer’s office, which handles collection of the tax, has been friendly and helpful with cannabis businesses during the early years of the tax, which was approved by city voters in November 2016. Gash had been planning to open an indoor cannabis cultivation facility in Kearny Mesa, which would have allowed Grizzly Peak to supply the city’s dispensaries with cannabis grown locally. But he said delays and other problems prompted him to sell the site. Gash said he still plans to open a cannabis distribution facility in Kearny Mesa, possibly by this winter. In addition to out-of-town suppliers, the city’s cannabis tax applies to more than 20 licensed dispensaries in San Diego and more than a dozen licensed cultivation facilities. Dispensaries must charge a sales tax to recreational marijuana customers and remit that tax to the state, county and city. Medical cannabis customers with a state identification card don’t have to pay sales tax. In addition to Grizzly Peak, Gash also owns Gold Coast Design, which did notable remodels on the sports arena’s Arena Club in 2009 and the Spreckels Theatre downtown.
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October 23, 2020
This election, Americans will once again show their support for marijuana legalization
Millions of Americans will head to the polls in the coming days and cast votes on whether or not to legalize the use of marijuana in their states. If past is precedent, most — if not all — of these statewide ballot measures will be enacted into law. Beginning with California in 1996, voters in multiple jurisdictions nationwide have voted well over two-dozen times on Election Day in favor of marijuana legalization measures. Currently, 34 states and the District of Columbia have laws on the books regulating the production and dispensing of medical cannabis to qualified patients. Eleven of these states — encompassing one-quarter of the U.S. population — also have legalized the possession and use of marijuana by anyone over the age of 21. In nine of these 11 states, adult-use legalization measures were enacted by a direct vote of people. About half of all statewide medical cannabis laws were enacted via voter initiative. This long and consistent history of success at the ballot box should hardly be surprising. According to nationwide polling data compiled by Gallup, two-thirds of Americans — including majorities of Democrats, Republicans, and Independents — believe that marijuana consumption by adults ought to be legal in the United States. On the issue of legalizing cannabis for medical use, support is even stronger. National polling data compiled by Quinnipiac University found that 91 percent of voters believe that adults should access and use medical marijuana when their physician authorizes it.
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October 23, 2020
Possible N.J. marijuana legalization is focus of special Oct. 27 forum with lawmakers, insiders and regulators
As the Garden State heads into this pivotal election more than just the presidency hangs in the balance — this year, voters will finally have the chance to say whether the state should legalize adult-use cannabis. Polling continues to show strong support for legalization in New Jersey, but given the challenges of vote-by-mail and many voters unaware of referenda on the back of their ballots, nothing is certain. Still, if New Jersey does embrace legalization, the question of what it will look like will end up in the hands of legislators and regulators. With this in mind, on Oct. 27 NJ Cannabis Insider will host “Countdown to Legalization” presented by Brach Eichler, a virtual forum focused on the challenges and opportunities awaiting legislators, regulators, entrepreneurs, patients and consumers if legalization finally becomes a reality. Sponsors supporting this event include, The Cerealia Group, Foley Hoag and The BGill Group. The two-hour program begins at 1 p.m. Reserve your tickets here. State Sen. Nicholas Scutari, the state lawmaker who’s been advocating for the expansion of medical marijuana, legalization of adult-use cannabis and a force behind ensuring social justice prevails after the plant is legalized in the Garden State, will launch the program with prepared remarks and a Q&A with event host Justin Zaremba, NJ Cannabis Insider’s lead reporter. The remainder of the program are discussions framed around what New Jersey could learn from states where recreational cannabis is already legal, and where the industry can go once the state adopts regulations to sell cannabis to adult consumers.
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October 23, 2020
Arbitrary' THC limit causes consternation among Ohio's hemp farmers
April Curatti invested thousands of dollars into a plot of hemp at her Marysville farm only to be told she couldn’t sell the crop after a test showed its THC levels were too high. “We know all the risks involved,” Curatti said, but she still described the experience as devastating. Her story isn’t uncommon as Ohio’s first hemp crops approach maturity. Under state and federal law, hemp must contain less than .3% of THC, or Tetrahydrocannabinol, the intoxicating ingredient in marijuana. Otherwise, the crops must be destroyed. As of Oct. 13, the Ohio Department of Agriculture had tested 284 hemp samples, 20 of which came back “hot,” meaning they surpassed .3% THC level. Six samples were retested at the request of the farmer, and three of them tested under .3% the second time around.
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October 22, 2020
Where recreational marijuana is legal, data show minimal impacts on teen use and traffic deaths
Since 2012, 11 states have legalized marijuana use for adults — which voters nationwide are considering on their ballots this year. Researchers are just beginning to understand the effects of those laws. Colorado and Washington were the first states to legalize the drug, and California, the most populous state in the nation, followed them. Among the most pointed concerns with legalization are whether it has caused more young people to use the drug and whether more people are dying in auto crashes caused by impaired drivers. Data show little change in either area. Surveys of young people in Colorado, for example, show a slight decline in the percentage of middle and high school students using the drug. In Washington, the rates have remained the same. Opponents of legalization say the risk is too great if young people are given the impression that marijuana is not harmful, or if drivers become lax about getting behind the wheel when they are high. States with legalized marijuana are finding more drivers impaired by the drug, but that comes in part because they are looking harder for it. Colorado, for example, did not track the level of marijuana impairment of drivers suspected of using it until 2016. Washington saw an increase in drugged driving before legalization that continued after the drug was permitted, and has seen more fatal accidents with people on multiple substances. California data shows an increase in people driving while on drugs involved in fatal accidents.
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October 22, 2020
A Democratic wave could make things much easier for the marijuana industry, Jim Cramer says
The U.S. marijuana industry will take a turn for the better if Democrats find a way to sweep the November election, but investors should be selective about their stock picks, CNBC’s Jim Cramer said Tuesday. While Democratic presidential nominee Joe Biden is not in favor of legalizing cannabis, investors can expect the regulatory environment to be loosened for weed operations if he wins the White House and his party gains control of the Senate, the “Mad Money” host said. Biden calls for decriminalizing marijuana use and expunging all prior cannabis use convictions as part of his criminal justice plan. “If you want to bet on a blue wave in two weeks, a Democratic wave could make things much easier for the marijuana industry,” he said. As for the stocks to play in the space, Cramer recommends investors pass on most of the Canadian cannabis producers because he expects there would be a boom in domestic production. He did, however, recommend Ontario-based Canopy Growth, which is backed by alcohol giant Constellation Brands and has an interest in the U.S. grower Acreage Holdings. “Just remember, stick to the picks and shovels plays or the vertically integrated operators that are actually profitable,” Cramer said. A picks and shovels investment strategy is where investors buy stock in companies that supply tools and services that businesses use to produce products. The strategy is a play on suppliers.Cramer recommended GrowGeneration, which sells hydroponic equipment, and real estate investment trust Innovative Industrial Properties, which leases to medical marijuana facilities. “Basically it’s Lowe’s or Home Depot for anyone who’s looking to grow something indoors,” Cramer said of GrowGeneration. “If you think we’ll see a boom in cannabis production, don’t bet on a grower, bet on the grower’s landlord,” he said of Innovative Industrial Properties. Wall Street has upped its bets on the odds of a sweep since a controversial presidential debate between Biden and President Donald Trump, analysts have found. The former vice president has a 65% chance of winning the White House and there’s a 55% chance his party could take a majority in the Senate, according to research from Raymond Jones, to give Democratscontrol of the entire Congress for the first time since losing the chamber in the 2010 midterm election.
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New Jersey voters are deciding whether to add an amendment to the state constitution that will legalize “a controlled form of marijuana called cannabis” for adults 21 and over. The measure appears as a question on this year’s election ballot. The measure has overwhelming support by a ratio of 2 to 1, several polls show. But if the measure passes, then what? The ballot question provides no details about how legalization would be put into practice. A legal industry will take time to build, and will be determined by laws and regulations that have yet to be written. We spoke with advocates, attorneys, lobbyists, and state politicians about what to expect. There are several organizations that don’t think it’s a good idea. The New Jersey Association of Chiefs of Police is concerned that more people will be driving intoxicated. The New Jersey Psychiatric Association believes cannabis lowers cognitive performance in teenagers and disrupts processes for motivation. In a statement, the NJPA said marijuana impairs verbal learning, memory, and attention, and increases risk for psychosis. The New Jersey Council of Child and Adolescent Psychiatry (NJCCAP) warns that habitual users have “a greater risk of decreased academic performance, increased school dropout rates, decreased overall educational attainment and decreased workplace productivity.” The Medical Society of New Jersey agrees with NJPA and NJCCAP, but also worries that marijuana poses a risk to fetal development, and could aggravate respiratory diseases and other health conditions. If approved, what happens next? The state legislature must draft and pass a law — and then create regulations — that would govern the new recreational marijuana industry. New Jersey Gov. Phil Murphy, the Senate, and the Assembly must appoint a total of five members to a Cannabis Regulatory Commission that would oversee both the current medical program and the new industry. Legalization would officially occur on Jan. 1 2021, but that doesn’t mean arrests will end or that weed will be available for purchase by all adults.
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A handful of lawmakers from both sides of the aisle have asked that Massachusetts marijuana regulators scrap the proposed delivery license that would let operators buy marijuana wholesale from cultivators and manufacturers, store it in a warehouse and deliver it to consumers at home. The Cannabis Control Commission is expected Tuesday morning to consider feedback and hold a final discussion about its draft delivery policy, which would create two distinct delivery license types: a “limited delivery license” that would allow an operator to charge a fee to make deliveries from CCC licensed retailers and dispensaries, and a “wholesale delivery license.” But in a letter last week, 19 state lawmakers told the CCC that they “believe that the wholesale delivery license category proposed in the draft regulations was not contemplated, nor supported, by the enabling legislation” and asked the commission to reconsider its plan to take a final vote on the regulations next week. The lawmakers -- including former Marijuana Policy Committee co-chair Rep. Mark Cusack -- said the successful 2016 legalization question and the ballot law as amended by the Legislature in 2017 “deliberatively and intentionally created a license that made clear delivery of marijuana to consumers is directly and only linked to marijuana retail establishments” and that “a wholesale delivery license direct to consumers is clearly not contemplated in the law.” “Instead, the draft regulations create a shadow direct to the consumer marketplace not governed by the licensing requirements and regulations of marijuana retailers. These draft regulations also significantly change the landscape for cities and towns after many had already engaged in intensive community-wide conversations about the number and types of marijuana establishments their communities wished to host,” the lawmakers wrote. “Further, the proposed draft regulations have not had the opportunity to be sufficiently reviewed and may result in unintended consequences to our municipalities.” The concerns about local control mirror those raised in a letter from the Massachusetts Municipal Association, which told the CCC that it “is extremely concerned with the definition of marijuana wholesale delivery license within the draft regulations ... specifically that a marijuana wholesale delivery license is not considered to be a Marijuana Retailer.”
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After months of delays prompted by the COVID-19 outbreak, Cook County State’s Attorney Kim Foxx quietly started expunging 1,200 additional cannabis convictions. Starting Oct. 6, Foxx’s office began expunging roughly 300 minor pot convictions each week, according to spokeswoman Sarah Sinovic. Foxx’s push to wipe clean pot-related records comes as she’s locked in a contentious re-election fight with Republican Pat O’Brien, a former Cook County judge who’s outraising the incumbent. “Felony convictions can follow people long after their time has been served and their debt has been paid,” Foxx said in a statement. “As we work to reform the criminal justice system and develop remedies to systemic barriers, I am proud that justice continues to be served in Cook County, for one, by vacating these low-level cannabis convictions to help move individuals and communities forward.” Gov. J.B. Prtizker and fellow Democrats pushed recreational cannabis legalization as a conduit for change and a means to create diversity in the state’s cannabis industry, which is overwhelmingly controlled by white-owned firms. But the implementation of the watershed legislation, including the provisions to expunge convictions for possessing 30 grams or less, has largely been put on hold amid the coronavirus shutdowns. Foxx previously motioned last year to vacate just over 1,000 similar convictions. Now, her office is clearing additional cannabis convictions that stretch from Jan. 1, 2013, to Dec. 31, 2019, the day before recreational weed was legalized. Individuals with eligible convictions don’t have to take any action to set the process in motion and will simply receive a notice from the Clerk of the Circuit Court of Cook County saying their record has been cleared. Peter Contos, who hosts expungement events as the advocacy coordinator of the Cannabis Equity Illinois Coalition, lauded Foxx’s latest effort as he raised other concerns about how the process is playing out in Cook County. Contos noted that individuals currently petitioning for expungment are facing lengthy wait times because there aren’t enough judges to review cases. Contos added that the clerk’s office has also failed to provide resources for the public to track those cases, which he said “has a considerable impact on someone’s belief in the process.” “Frankly, for the second-largest county in the country, it’s unacceptable that we don’t have transparency and we don’t have a more expedient process,” he said.
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October 21, 2020
Marijuana Legalization In Texas Would Generate Billions In Tax Revenue, New Economic Analysis Shows
Texas stands to generate billions of dollars in marijuana tax revenue and create tens of thousands of jobs if the plant is legalized, according to a new economic analysis. While the legislature has been resistant to pursue the policy change, the report from Vicente Sederberg LLP makes a compelling case for legalizing and regulating cannabis sales in the state, at least from an economic perspective. It finds that, given the estimated adult-use marijuana market, there would be $2.7 billion in cannabis sales annually in Texas. And if the state followed Colorado’s tax model, it could bring in more than $1.1 billion in marijuana tax dollars per biennium. Further, the comparative analysis projects that 20,000-40,000 jobs would be directly created in the legal industry, in addition to ancillary positions for “contractors and construction firms, electrical and water service providers, HVAC manufacturers and installers, processing equipment producers and retailers, and other professionals.” “We also expect it would bolster the hospitality industry, which would benefit communities that rely on tourism; especially those that have recently been severely impacted by the novel coronavirus, such as San Antonio, Houston, and Corpus Christi,” the report states. Beyond tax revenue from cannabis sales, Texas could also see an extra $10 million annually if business licensing fees are set at $5,000. “In addition to generating revenue and creating jobs, regulating cannabis for adult use would also realize significant criminal justice savings,” the report says, adding that Texas would save an estimated $311 million per year in criminal justice resources if marijuana was legalized. “States across the country are seeing the benefits of legalizing and regulating cannabis,” Shawn Hauser, a partner at Vicente Sederberg, said in a press release. “It is inspiring lawmakers in prohibition states to reexamine the efficacy and costs of their current policies and take a closer look at the alternatives.”
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