Hot States With Legal Cannabis for Adult Use

Higher Yields Consulting Hot States With Legal Cannabis for Adult Use

States with legal cannabis for adult use are at the highest stage of legalization before the federal level. Upon full legalization, states can be categorized into three layers of adult use: up-and-coming, in-progress, and established.

Adult-use — our preferred term for recreational — cannabis speaks to an individual’s choice to make for themself, as an adult. And while adult-use cannabis is currently legal in 17 states and the District of Columbia, President Biden’s 2022 budget continues to uphold several bans on adult-use sales.

Higher Yields Consulting Hot States With Legal Cannabis for Adult Use

Read on to find out which states with legal cannabis for adult use are hot to enter in each of the three layers of full legalization.

Up & Coming States: New Jersey & New York

Up-and-coming states with legal cannabis, like New Jersey and New York, are fully legalized but have not yet begun adult-use sales. New Jersey has a slight lead over New York, as they’ve spent a lot of time on their social equity program and have already appointed their commission. 

Adult use in New Jersey was officially legalized on February 22, 2021, when Governor Phil Murphy signed three adult-use cannabis reform bills. As a result, New Jersey will have six license types

  1. Grower
  2. Processor
  3. Wholesaler
  4. Distributor
  5. Retailer
  6. Delivery service

So far, grower licenses are the only ones that have been capped in the entire state, at 37. It’s unclear whether the state will leave capping the other licenses up to the discretion of each municipality or the state will do so at a later date.

New York City, on the other hand, can thank its population of nearly 8.4 million (compared, for example, to the state of Colorado’s 5.7 million) for making it a hot state! Legalizing adult-use cannabis is a game changer for the East Coast since the region’s other adult-use states (Maine and Massachusetts) are much smaller.

In-Progress States: Massachusetts & California

An in-progress state has adult-use sales, but the state itself is still finding its footing in the industry. Massachusetts, for example, is hot because it’s still viable — the market is not oversaturated, has no cap on licenses, and isn’t volatile — due to the work of regulatory agencies.

In 2018, the state rolled out METRC inventory tracking in a very hands-on approach. Typically, states with legal cannabis leave things like METRC compliance and inventory tracking to the licensees to figure out on their own, but Massachusetts helped them every step of the way, even offering additional training and resources.

Higher Yields Consulting Hot States With Legal Cannabis for Adult Use

California, on the other hand, left its licensees floundering. Local jurisdictions have the power to make their own rules, creating disparities in operations across the state. The Emerald Triangle, for example, recently decided to ban cannabis altogether, forcing both medical and adult-use licensees to shut down after years of operating.

Despite its issues and thriving black market, California is an expensive market to enter (it’ll cost you roughly $6 million to open a dispensary). That said, it’s a great opportunity for someone who already has connections in their local municipality to make a lot of money, especially on the distribution and retail sides.

If you’re having trouble entering the California cannabis market, though, you might instead consider pivoting to Massachusetts, which has no residency requirement.

Established States: Colorado

Established states with legal cannabis have well-established regulations and operations. Take Colorado, for example. While it’s a fair and common assumption that Colorado is too saturated to enter, there are still pockets of opportunity available — if you know what you’re doing.

Denver is finally opening up a social equity program, with 72 licenses until 2024, which is a big deal as its licenses had been paused for a while. If you qualify for social equity in Denver, and have the experience and knowledge to set yourself apart from other licensees, now might be your chance to get into Colorado’s hottest market.

Experienced multi-state operators who have the capital and are looking to expand are great candidates, too, as long as they maintain the integrity of local mom-and-pop shops.

Other States With Legal Cannabis to Watch

The following states aren’t quite hot states with legal cannabis, but they are in the process of becoming fully legal and have the potential to become hotspots for cannabis businesses in the future.

Illinois

Illinois is currently delayed in their legalization process. Their few operators were originally medical-only, which meant they got the first crack at early application approval for adult-use. 

Unfortunately, this process has turned into a monopoly where those few operators are making a ton of money, which in turn has skyrocketed prices, caused product shortages, and lowered quality. On top of that, litigation issues on later application rounds for adult use have brought the state’s legalization process to a standstill.

However, there is great promise for the future. With record-breaking sales in the first year, Illinois will be a state to watch once all of the litigation and licensing issues are resolved.

New Mexico

As the most recent state to legalize adult use, New Mexico is on its way to becoming a hot state for adult-use cannabis. Although we don’t know exactly what the future has in store here, New Mexico is certainly worth keeping an eye on for future developments.

Knowing what states with legal cannabis are most suitable to enter — and when — can be crucial for the success of your medical marijuana dispensary. Contact Higher Yields Cannabis Consulting to determine which state is the best fit for you and how you can get in with the strongest application.

Hot States – Is Your State Hot or Not?: Cannabis Legalization Is Moving Forward in These Ballot States

Higher Yields Consulting Hot States: Cannabis Legalization Is Moving Forward in These Ballot States

Unlike lagging states, ballot states have either just passed cannabis legalization or have the ability to do so. These budding markets are a bit like pre-teens: They’re inexperienced and have little idea what they’re doing as they awkwardly navigate their space (in this case, the cannabis industry).

Higher Yields Consulting Hot States: Cannabis Legalization Is Moving Forward in These Ballot States

Many ballot states want to portray patience as they take time to determine the best way to address issues like social equity and regulatory structures. However, the true motivation behind such delays is often political in nature, despite the benefits of a legal marijuana market.

Here’s everything you need to know about states in which cannabis markets are coming to fruition. 

Cannabis Legalization Is on the Ballot

For voters across the country, marijuana legalization is on the ballot. Though being “on the ballot” doesn’t mean the same thing in each state. In particular, this refers to either a ballot initiative or a referendum. Although both ballot initiatives and referendums seek the opinion of the entire electorate, they aren’t the same. 

A ballot initiative is a process by which citizens can propose a statute or constitutional amendment to be voted on. Conversely, a referendum occurs when the legislature passes a law and then chooses to refer it to the voters to decide whether or not to uphold said piece of legislation.

In New Mexico, lawmakers continue to debate specific points of the state’s cannabis legalization bill before it heads to a final vote. Unfortunately, New Mexico cannot permit recreational use through a ballot initiative, so it must instead be done through the legislature.

Similarly, lawmakers in Kentucky and Alabama have introduced 420-friendly legislation. These bills seek to create new medical cannabis markets in previously THC-free states.

States With Recently Passed Legislation

Even in the face of a pandemic, some states have found ways to legalize cannabis. Many of these states have even recognized how a healthy market — and the associated taxes and fees — can help rehabilitate an economy crippled by COVID-19.

As a historically conservative Southern state, Georgia is a prime example. With 69% of Georgians in support of cannabis legalization, the state has begun reviewing license candidates for its medical marijuana program. Meanwhile, cities like Atlanta and Savannah have opted to decriminalize possession of certain amounts of cannabis.

The passage and implementation of a medical cannabis program in Georgia came as the result of heavy influence from industry leaders. Lobbyists and cannabis operators worked diligently to ensure the success of this bill, and it worked. Such pressure may be effective in other states as well.

Unfortunately, other states have put their rollouts on pause due to the pandemic. Although these programs have been guaranteed, it’ll take some time to get them up and running.

The Bright Future of Cannabis Legalization

The future of cannabis in the United States looks bright — but only if the push for legalization continues. In states looking to pass cannabis-friendly legislation, would-be operators shouldn’t sit idly by. 

Instead, connect with lobbyists and advocacy groups — such as NORML — to support proposed legislation. Doing so will give cannabis legalization a fighting chance when it comes to a vote.

If you’re in a state that’s legalized but hasn’t rolled out a program, make the most out of this time. Work with experts who can predict what your needs will be and help you prepare to meet them. Additionally, familiarize yourself with the statute and any known regulations. You’ll then have ample time to become and stay compliant.

Higher Yields Consulting Hot States: Cannabis Legalization Is Moving Forward in These Ballot States

Cannabis legalization has a promising future in ballot states. Whether laws have recently been passed or are being debated on floors of state senates, many states will soon see new and emerging markets.

Are you eagerly awaiting the rollout of your state’s cannabis program? Contact our team of experts so we can help you through the pre-application process and give your business the best chance of winning a license!

Not in a ballot state? Check out the other articles in our Hot States series to see where your state falls.

Hot States – Is Your State Hot or Not?: Marijuana Legalization Is Falling Behind in These Lagging States

Higher Yields Consulting Hot States: Marijuana Legalization Is Falling Behind in These Lagging States

On the long road to marijuana legalization, there are often bumps. For lagging states, these bumps may be substantial. As a result, the passage and implementation of 420-friendly legislation can be impeded.Higher Yields Consulting Hot States: Marijuana Legalization Is Falling Behind in These Lagging States

In a few states, it seems that all hope is lost. Lawmakers introduce bill after bill, with each seemingly destined for failure. Other states, however, show great promise. These hopeful states just need a gentle push to cross the finish line.

Here’s what we expect to see from these lagging states in the future.

Hope Remains for Marijuana Legalization 

There are states in which cannabis is still fully illegal. However, some of these states show promise due to their hemp and CBD markets. 

Wyoming, for example, doesn’t have a medical or recreational market, but the state does allow hemp products. Although Wyoming has yet to pass formal marijuana legalization legislation, the openness afforded to hemp and CBD products is a glimmer of hope.

Similarly, the state of Kansas has no laws in place to facilitate the use of medical cannabis. Fortunately, hope still exists. Lawmakers in the Sunflower State have begun pushing to introduce medical cannabis legislation. The fact that the issue has drawn bipartisan support suggests a 420-friendly 2021.

What Will It Take to Get These States Moving?

Kansas and Wyoming are just two examples of states where marijuana legalization is probable. But what will it take to turn these lagging states into ballot states?

In order to legalize cannabis, it first needs to win in the court of public opinion. Here at Higher Yields Cannabis Consulting, we understand this, and we’re taking action to increase public support and awareness.

In many states where cannabis remains outlawed, government officials and the public alike share misconceptions about marijuana legalization. Our efforts focus on correcting those false beliefs. By educating and collaborating with legislators, it’s possible to build communities that will welcome a medical — or even recreational — market.

States Without Hope

Unfortunately, some states show less promise and have simply lost all hope. Idaho, for instance, has recently struck a blow against marijuana legalization by advancing a proposed constitutional amendment that would prohibit legalization. 

Although Idaho is totally surrounded by medical and recreational states, lawmakers are determined to bar cannabis legalization. If the amendment passes the Idaho House and Senate, it would be up to the voters in November 2022 to make the final decision.

Not all no-hope states have failed to legalize any form of cannabis. In fact, Texas is technically a medical marijuana state. We still classify it as a no-hope state because its low-THC medical cannabis program — the Texas Compassionate Use Act — is really just a glorified CBD program. 

The Lone Star State requires that CBD products contain no more than 0.3% THC. With a medical cannabis card, patients are allowed to use products that contain — get ready for this — a whopping 0.5% THC.

According to the experts, these lagging states have no hope… for now. We’ll keep track of what’s going on in these states, and if something changes, you’ll be the first to know.

Marijuana Legalization Going Forward

Although hope may be lost in some of these lagging states, the same can’t be said for would-be operators that live there. Fortunately, there are plenty of out-of-state options to be explored.

When it comes to operating in another state, one of the biggest obstacles is the residency requirement. Some states don’t have such a requirement, so you can easily set up shop there. For states that do have a residency requirement, you can find a partner living in that state and go into business together.

Higher Yields Consulting Hot States: Marijuana Legalization Is Falling Behind in These Lagging States

In spite of these lagging states, medical or recreational programs have still become popular across the majority of the country. To see where your state falls, stay tuned for the rest of our Hot States series.

Does your cannabusiness need help to develop a winning strategy for future success? Contact us today and work with our national and international cannabis experts!

Bermuda Prepares for Legalized Cannabis

Bermuda Prepares for Legalized Cannabis

Crystal blue waters and pink sands may be the key to Bermuda’s charm, but thanks to a new proposal from the island’s government, Bermuda looks to be moving towards legalizing cannabis. On June 3, 2020, Attorney General and Minister of Legal Affairs Kathy Lynn Simmons announced the Bermudian government’s intention to fully legalize and regulate cannabis for adult use by the end of the year.

Higher Yields Consulting: From Pink Sands to a Green Rush: Bermuda Prepares for Legalized Cannabis

Simmons has released a draft of the Cannabis (Licensing and Regulation) Act 2020 for public comment. For anyone paying attention, this comes as no surprise. Change has come incrementally to Bermuda, first with a decriminalization bill in 2017, and then with a move to legalize hemp in 2019.

With full adult-use legalization on the horizon, a new world of opportunity is emerging in Bermuda. Here’s what you need to know.

Bermuda & Cannabis: How We Got Here

Though Bermuda’s government has taken swift and decisive steps to legalize cannabis in 2020, regulation is hardly a new topic of discussion. In 2018, the possibility of expanding patient access to cannabis-based treatment was being explored. However, when the proposal was brought forward for public consultation, it was met with unexpected criticism — and not in the way one would assume. The overwhelming consensus was that the government’s aspirations, impressively proactive though they were, didn’t go far enough.

Full legalization was demanded. Bermudians wanted a simplified framework that would allow all citizens to participate, no matter their economic standing. They also wanted help to bring a semblance of social equity, which was especially important because of the stark economic disparities that have long been a part of island life.

Bermuda’s population is basically made up of rich and poor with no prevalent middle class to speak of. As an island nation, Bermuda relies on imports for many everyday staples, which pushes up the cost of living and further widens the divide between the haves and the have-nots.

The COVID-19 pandemic has further exacerbated these circumstances. With international travel ground nearly to a halt, Bermuda’s tourism-based economy has taken a catastrophic hit, leaving an overwhelming number of Bermudians with no way to make ends meet.

It’s no coincidence that the Bermudian government has now decided to accelerate the cannabis legalization process. In fact, the pandemic’s economic impact has been directly cited in documents for public consultation on the topic. As of July 3, 2020, the window for submission of public comments officially closed, setting the stage for the bill’s final adjustments ahead of becoming law.

Setting Up the System

Public documents released thus far have cited the regulatory frameworks of Canada and neighboring Caribbean nations as Bermuda’s inspiration. However, U.S. industry operatives will also find similarities to the framework of Colorado.

Higher Yields Consulting: From Pink Sands to a Green Rush: Bermuda Prepares for Legalized Cannabis

Regulations will be overseen by a five-member board — the Cannabis Advisory Authority — selected from the “disciplines of health, scientific research, business, planning, and agriculture.” The Authority will be responsible for advising on policy matters, the distribution of educational materials, the execution of training programs, and the receipt and submission of licensing applications. The Authority will also give recommendations on approvals and refusals. Let’s take a quick look at the broad strokes of the proposal:

  • Adults age 21 years and older will be permitted to carry up to seven grams on their person.
  • Personal cultivation will be allowed but will require an annual license of $750.
  • Individuals with prior cannabis convictions will NOT be automatically barred from participating in the new industry.
  • Retail cannabis outlets will be required to submit to an inspection by the Commissioner of Police a minimum of once every six months.
  • Retail cannabis outlets will be permitted to allow consumption on their premises with the proper licensing.
  • Licensing will be required for every level of the vertical, including cultivation, importing, exporting, manufacturing, retail, transportation, and research.

The Bermudian government is implementing rigorous protocols to ensure that the system can’t be scammed. Still, excessive regulations are being adamantly avoided so as not to unduly burden aspiring participants.

Pushback

Despite the overwhelming popularity of legalization among Bermudians, not everyone is happy with all of the details of the proposal. According to an article in the Royal Gazette, Social Justice Bermuda — an activist organization — has taken issue with the $750 licensing fee for home cultivation. The group argues it will disproportionately exclude Black citizens from taking part in the legal growing scheme. Moreover, Social Justice Bermuda argues that such an exclusion would only further encourage illegal activity.

While there has been no direct response to this objection as of yet, the statements that have been released do bode considerably well for Social Justice Bermuda’s agenda. In her update on the public consultation,  Attorney General Simmons stated emphatically that all comments submitted by the public were being considered. The update also noted that license fees were being re-evaluated in hopes of finding a balance between the costs of all available licenses and “to achieve the best participation for under-represented or marginalized groups.”

The Island Way

Throughout all of this—the language of the bill, the process by which they created it, and the consultations by which they refined it, one thing is abundantly clear: This piece of legislation is for the people.

bermuda cannabis consulting

There’s no buying or selling of licenses allowed, meaning it won’t become a game of Monopoly for the rich. Bermudian citizenship is also required for participation. Most importantly, the Bermudian government has made it clear that their goal is to tip the scales in favor of the underclass. They’ve doubled down on that assertion through a rare attentiveness to the populace and a dynamic response to their concerns.

Still, even the most reasonable of regulations can prove to be an arduous regimen for the average entrepreneur to tackle. Having a green thumb or a silver tongue doesn’t typically correlate with a propensity for bureaucratic details. Those are the Devil’s domain, according to the old cliché.

As the Bermudian government takes the final few steps to make the dream of legalization a reality, an entirely new territory of opportunity will be opening. If you’re a Bermudian approaching this new opportunity with a plan and a passion, make sure you’re equipped to stake your claim.

If you’re not sure where to start, we here at Higher Yields Consulting can help. Since 2008, we’ve been putting our diverse skillset to work for the cannabis industry — both in the U.S. and abroad — and have consistently garnered stunning results for our clients.

Reach out to us today to schedule a consultation.

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Higher Yields Cannabis Consulting

Higher Yields Cannabis Consulting

Higher Yields Consulting is a Marijuana Consulting Group comprised of industry experts with decades of combined experience in the legal industry. Whether you are looking to get into the business or already have a license we can help your business succeed. Call (844) HI-YIELD to schedule an initial consultation.

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Cannabis Legalization: Defining the Language of Legalization and Decriminalization

cannabis legalization

Cannabis Legalization: Defining the Language of Legalization and Decriminalization

Why Define Cannabis Legalization Terms?

So what is the difference between cannabis legalization and decriminalization? What is rescheduling, is it similar to de-scheduling cannabis? Read on to learn more about framing cannabis legalization initiatives and what these terms actually mean.

All too often discussions inevitably occur with individuals who are not as familiar with terms and jargon that become an understood language within an industry or occupation. The goal of this report defines terms important to the cannabis legalization movement and the markets its successes have created. This report is designed to serve as a tool to illustrate how these terms impact state and federal laws, consumers, and stakeholders in the Cannabis Industry. Each of the terms defined has an impact on our understanding of the goals and progress of the cannabis legalization movement, those who support it, and those who benefit from it.

While this will not be a comprehensive list of terms it explores the terms that most impact legal access to cannabis. The following will be discussed in this report: Decriminalization, Rescheduling & De-scheduling, Compassionate Care and Medical Cannabis laws, Adult-Use Legalization, and Amended Scheduling.

What is Cannabis Legalization?

So what is cannabis legalization? Cannabis legalization or what is often referred to as adult-use cannabis legalization refers to states that have expanded access to adults 21 years of age and older. Possession within states’ legal limits is not subject to a criminal or civil penalty. Many of these laws were passed via ballot initiatives that promoted regulating cannabis similarly to alcohol, taxing sales at a higher rate than medical cannabis, and utilizing tax revenue to help fund state budgetary items like education. Possession limits for Adult-Use, or recreational cannabis as it is also known, are typically set lower than for medical patients. Products in adult-use markets also tend to have caps on the amount of THC that can be present in infused products such as edibles or concentrated products like vape pens or concentrates.

There are currently 11 states with Adult-Use markets with evolving regulations and requirements to address concerns including social equity and 4 with initiatives on the ballot for legalization in 2020. Now that we’ve covered what cannabis legalization is let’s move onto decriminalization.

Cannabis Decriminalization

The simplest definition of cannabis decriminalization is a law that reduces or removes the criminal penalties related to low-level cannabis possession. It is widely understood to mean that criminal penalties are not applied to possession of cannabis in amounts defined by law to fall within possession for personal use. In reality, the possession limits defined in these laws can vary from less than 10 grams to as much as 3.5 ounces. Additionally, possession that goes beyond these limits may still be subject to criminal prosecution.

Decriminalization laws at the state level are a big step forward for consumers in possession of small amounts of cannabis because criminal prosecution for this type of possession becomes a low priority for the state criminal justice system. This does not affect federal prosecution as there are no federal decriminalization laws with respect to cannabis at this time.

Federal cannabis decriminalization, were it happen anytime soon, would protect consumers but it would not protect state-legal cannabis markets unless specifically stated in the legislation. At this point any federal legislation that decriminalizes cannabis possession, but does not address the state legal markets that currently exist, would keep
the compliant stakeholders that operate within these markets in a legal grey area that is still at risk for criminal prosecution. Without expressed permission to banking institutions among other traditional business services, services to these stakeholders would continue to pose a risk to their continued operations.

Similarly, such a narrow view of decriminalization would not change the enforcement of tax codes like IRS 280E which impacts cannabis companies significantly by excluding many business expenses that are standard operating deductions for most companies, limiting cannabis company tax deductions to cost of goods sold (COGS). At this time there are currently 14 states with decriminalization provisions in their laws.

Rescheduling and De-scheduling Cannabis

Rescheduling and De-scheduling cannabis refer to the Controlled Substances Act of 1970 which contains five schedules under which a substance can be placed depending on its medical use, the potential for abuse, and safety or dependence. Cannabis is currently placed under Schedule I, which is reserved for substances with no known medical value that has a high potential for abuse and dependence. This scheduling limits opportunities for research on a substance, though it is becoming clearer that cannabis should not be placed at the schedule it currently resides under.

Rescheduling Cannabis means it would be placed under a less restrictive Schedule and potentially become eligible for greater research and medical use, though it could be potentially damaging to the Adult-Use markets as well as create new hurdles that current cannabis business operators may not be equipped for.

De-scheduling would remove cannabis from the CSA list entirely. While this action would remove many of the barriers currently in place for more efficient cannabis business operations, for instance, banking and the 280E hurdles could be eliminated, it would also open the markets up to more traditional businesses that are currently impacted by the legalization of cannabis such as alcohol, tobacco, and the pharmaceutical industries to name a few. This option may present a mixed blessing for consumers as it could radically reshape the cannabis industry as we know it.

marijuana legalization

Compassionate Care and Medical Cannabis Laws

Compassionate Care cannabis legalization refers to states that have very limited medical cannabis/medical marijuana programs where the list of qualifying conditions is very small. Qualifying conditions for these programs could be as limited as only allowing patients who are terminally ill to participate. Compassionate Care legalization can also refer to medical cannabis programs that severely limit the amount of THC products can contain. Sometimes states that have these programs are referred to as Low-High states, these programs tend to favor products that contain low percentages of THC (tetrahydrocannabinol) and high percentages of CBD (cannabidiol) for the perceived higher therapeutic value and lower potential for dependence.

Compassionate Care cannabis legalization refers to states that have very limited medical cannabis/medical marijuana programs where the list of qualifying conditions is very small. Qualifying conditions for these programs could be as limited as only allowing patients who are terminally ill to participate. Compassionate Care legalization can also refer to medical cannabis programs that severely limit the amount of THC products can contain. Sometimes states that have these programs are referred to as Low-High states, these programs tend to favor products which contain low percentages of THC (tetrahydrocannabinol) and high percentages of CBD (cannabidiol) for the perceived higher therapeutic value and lower potential for dependence.

Medical Cannabis or Medical Marijuana programs provide greater patient access through a larger list of qualifying conditions. These lists of conditions can be added to after medical cannabis has been legalized. Possession within a state’s legal limits is not subject to criminal or civil penalty.

Products available in these markets are regulated by state agencies and business licenses are limited to those who can meet ownership requirements. Early markets did not account for social equity, though state laws are evolving on this issue.

There are currently 33 states, 3 U.S. Territories, and Washington D.C. where medical cannabis is legal at every level except federal where municipalities choose to allow it. This does not mean that every city or town in a state that has legalized has to allow cannabis business in their jurisdiction. For example, in California where medical cannabis has been state-legal since 1996 and the Adult-Use market has been state-legal and operational since 2018, many cities and counties still do not allow cannabis businesses to operate within their limits. Currently, every state that now has Adult-Use cannabis laws also has medical cannabis laws. There are currently 3 states with ballot initiatives to legalize cannabis for medical use in 2020.

Amended Scheduling – The STATES Act

Full federal legalization of cannabis has been a hotly debated subject that has been gaining momentum since 2016. The closest the legalization movement has gotten so far in safeguarding state-legal markets has been the Cole Memo which lowered federal enforcement of cannabis law priorities in states with regulated medical cannabis programs and the Rohrabacher-Farr/Rohrabacher-Blumenauer Amendment, which prohibits the Justice Department from spending funds to interfere with state-regulated medical cannabis programs.

These measures limited enforcement but still did not address the lack of available banking, which is both an economic and safety issue for cannabis businesses; or IRS 280E, which as stated above, prevents cannabis businesses from deducting many standard costs associated with running a business beyond the allowed cost of goods sold (COGS) resulting in a much higher tax bill, often greater scrutiny of returns, and a high chance for audits. A 2015 white paper issued by the National Cannabis Industry Association on the topic of 280E reported that some cannabis companies were being taxed at an effective tax rate of 70% or more because of the inability to deduct typical business expenses from their gross income. This issue has not changed much if at all in the years since the white paper was published.

The STATES Act, unlike Decriminalization or legalization at either Medical or full Adult-Use, does not establish possession limits or establish regulations regarding cannabis. It doesn’t Reschedule or De- schedule Cannabis on the CSA, it Amends it. When/if the STATES Act passes it will amend the CSA to state that the provisions of the title on cannabis shall not apply to state-regulated cannabis markets or any person acting in compliance with state cannabis regulations. This exception would also apply to persons acting in compliance with tribal cannabis laws. This not only reinforces a state’s right to legislate the issue of cannabis in accordance with the wishes of its population, it also states that the proceeds from state-legal cannabis transactions shall not be deemed unlawful. This appears to mean that IRS 280E would not apply to compliant state-licensed cannabis businesses.

Cannabis USA

Conclusion:  Opportunities for Bi-Partisan Collaboration

Now, more than any time in American history since the establishment of the CSA, we have an opportunity to collaborate with current representatives and aspiring political leaders to build a framework for cannabis legalization. Doing so presents an unprecedented chance to address issues of social inequality that are a byproduct of the War on Drugs as well as identifying potential revenue streams through legalization that have not been available before.

The goals of each of the terms discussed in this report aim to lessen the social, economic, and criminal ramifications tied to cannabis laws currently in effect. Decriminalization, trading criminal penalties for civil, is an important first step for many states. It is far from perfect and can be unequally enforced, but its a start none-the-less.

The debate over CSA Rescheduling or De-scheduling of cannabis calls into question the decision to place it among substances that have been found to be harmful and highly addictive in the first place. This is especially true as America faces an opioid epidemic impacting citizens from a variety of walks of life.

Legalization, whether for Medical or Adult-Use, is about freedom of choice, developing and evolving industries, and providing safer options than the illicit market while providing much-needed revenue to states. Amended Scheduling places trust in the states to enact laws and regulations that make sense for their citizens while reserving federal authority to enforce existing laws against the illicit market, and potentially providing much-needed relief for heavily taxed cannabis businesses.

The goals of each of the terms discussed in this report aim to lessen the social, economic, and criminal ramifications tied to cannabis laws currently in effect.

  • Decriminalization, trading criminal penalties for civil, is an important first step for many states. It is far from perfect, and can be unequally enforced, but its a start none-the-less.
  • The debate over CSA Rescheduling or De-scheduling of cannabis calls into question the decision to place it among substances that have been found to be harmful and highly addictive in the first place. This is especially true as America faces an opioid epidemic impacting citizens from a variety of walks of life.
  • Legalization, whether for Medical or Adult-Use, is about freedom of choice, developing and evolving industries, and providing safer options than the illicit market while providing much-needed revenue to states.
  • Amended Scheduling places trust in the states to enact laws and regulations that make sense for their citizens while reserving federal authority to enforce existing laws against the illicit market, and potentially providing much-needed relief for heavily taxed cannabis businesses.

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Stephanie Till - Green Rush Indexed Data

Stephanie Till - Green Rush Indexed Data

This article was written by Stephanie Till of Green Rush Indexed Data with data compiled and provided by Bridge West CPAs. Stephanie is a Compliance Expert as well as a Historian who is currently archiving the Green Rush of the cannabis industry. The mission of her company is help clients by providing quality research services, custom tailored cannabis compliance consulting, dynamic training materials and exceptional customer service for those in the young cannabis industry.

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Government Collaborations for a More Cannabis-Friendly Community

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The government and the cannabis industry have been bitter rivals for decades. Since the days of Woodstock through to the era of CBD-everything, it seems that we’ve encountered increasing instances of opposition, legal strife, and logistical nightmares caused by the tension between these two over time. Now, like Jim and Dwight, the cannabis-friendly town of Edgewater is proving that long-time rivals can become cooperative friends. Hear from the man himself, Kris Teegardin, and pick up his tips for finding harmony in hardship.

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Minorities in Cannabis: Social Equity During a Racial Pandemic

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In any industry, life is more difficult for people of color, women, and other minorities. The cannabis industry is no different. In fact, there’s been an obvious lack of representation of communities of color since the inception of legal cannabis. Here’s everything you need to know about minorities in cannabis fighting for social equity.

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The Effects of COVID-19 on Cannabis Legalization & Legislation

Cannabis Legalization

As the U.S. continues to wrestle with an epic health crisis there is no “business as usual.” COVID-19 has taken the steering wheel and health experts are riding shotgun in an attempt to grab it back as we try to keep the economy alive. Meanwhile, those with an interest in cannabis legislation and legalization are keeping their eyes on the road ahead. We have insights from a seasoned cannabis industry CPA, a marketing strategist, and a cannabis industry archivist/data analyst to help shed some light on the current situation and what the future may hold.

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Emerging Cannabis States: Michigan, Oklahoma, Massachusetts, and Colorado

Emerging Cannabis States: Michigan, Oklahoma, Massachusetts, and Colorado

This month our focus is on Colorado, Massachusetts, Michigan, and Oklahoma. For Colorado and Massachusetts, Social Equity has been a subject of contention. Michigan opened a licensing opportunity in May and Oklahoma has opted to test breathalyzer technology to find tools to better determine whether a driver is impaired.

Oklahoma Cannabis Market

Scott Fegatter, a Republican Oklahoma State representative, has proposed expanding access through full adult-use cannabis legalization in order to generate tax revenue for the state budget, up to $100 million annually. His proposal is just one measure to alleviate the $250 million deficit anticipated for 2021 due to the pandemic. Oklahoma had a ballot initiative effort in the form of a petition prior to March 15, however that was before the shut down when the governor declared a State of Emergency due to COVID-19. There is however, concern that there is not enough support within the state legislature to legalize cannabis.

Something that might aid in decreasing opposition to expanding access to cannabis to full Adult-use is the pilot program for a cannabis breathalyzer which has recently been approved. The bill, approved in May, would require the Department of Public Safety to spend $300,000 on creating a pilot program for testing breathalyzers designed to detect cannabis impairment, the results of the test would not be admissible in court. This could really alleviate some issues with cannabis use and DUI laws for determining impairment. This is one of the first programs to make sure that the breathalyzer system can work to solve the problem of identifying drivers who are actually impaired due to cannabis use as

Michigan Cannabis

In early March 2020 Michigan began phasing out caregivers’ ability to sell cannabis to adult-use cannabis companies and are scrapping the ability to for caregivers to supply the Adult-use market entirely. Medical cannabis dispensaries may still obtain products from licensed caregivers, but the Adult-use market cannot. This opens up opportunities for licensed cultivators and producers to ramp up production and be able to meet demand within the privileged licensee supply chain.

In a move that might prompt employees to vote themselves into a union, an update has been made to Michigan’s cannabis industry regulations to no longer require operators to maintain labor peace agreements. This can be seen as controversial as there are many states that are starting to require labor peace agreements to protect both the industry and its workers. Considering unfolding events in Massachusetts where reactions to the pandemic are prompting employees to vote to go union, it will be interesting to see if the same would happen in Michigan and other states.

emerging cannabis states

Colorado Cannabis Market

This year Colorado has taken another step towards greater social equity by passing and signing into law HB1424 changing the Accelerator Program to a Social Equity Program by more clearly defining what the state is looking for in terms of social equity applicants. The legislation also allows for a social equity applicant to own a marijuana store or dispensary this is a change from the original Accelerator Program, which only allowed social equity licenses for manufacturing and cultivation. According to the law an Accelerator Endorsed Licensee is a retail marijuana cultivation, production, or store who has, pursuant to the rules, been endorsed to host and offer technical and capital support to a Social Equity Licensee. These Accelerator Endorsed Licensees may qualify for incentives such as reduced application or licensing fees. A Social Equity licensee is considered a natural person who meets criteria is established in section 44-10-308 (4). A Disproportionately Impacted Area will be defined to the extent relevant State of Colorado data exists or is available and is used for the purpose of determining eligibility, which means that depending on the data sets that are available to determine the areas that have been disproportionately affected by the war on drugs, Colorado will set guidelines. There are requirements for social equity licensees for operating in the same licensed premises or on a separate premise possessed by an Accelerator Endorsed Licensee. Accelerator Endorsed Licensees are not required to exercise the privileges of their license on the premises where a social equity license he operates. The implementation deadline has been moved from July 1, 2020 to  July 1, 2021.

 

This legislation also has created an exception to the felony restriction for social equity applicants. A marijuana conviction shall not be the sole basis for a license denial. Effective January 1, 2021 a social equity applicant may apply for a license and the qualifications for a social equity licensee are as follows:

  • The applicant must be a Colorado resident
  • They may not be a beneficial owner of a license subject to legal action
  • They must demonstrate the following
    • Residence in Colorado for at least 15 years between 1980 and 2010 in any census tract designated by the office of economic development and international trade as an opportunity zone or designated as a disproportionately impacted area as defined by section 44-10-203 (1)(j).
    • They have a parent, legal guardian, sibling, spouse, child, or minor in their guardianship that was arrested for a marijuana offense or was subject to civil asset forfeiture related to a marijuana investigation.
    • Having a qualifying household income can also be a determining factor
  • Applicant must hold 51% or more of the beneficial ownership of the company applying for a social equity license.

 

State licensing for marijuana Accelerator store licenses is scheduled to begin on January 1, 2021.

Massachusetts Cannabis

Massachusetts Cannabis Market

Massachusetts intends to speed up cannabis license there cannabis licensing process from application applicants having to wait 121 business days down to only 60, that is if COVID-19 hasn’t ruined the chances for that in the budget. The Governor of Massachusetts deemed adult-use dispensaries as non-essential over concerns that adult-use cannabis dispensaries attract clientele from neighboring states and closed them only weeks after the market’s opening, jump-starting a considerable fight over whether or not Adult-use dispensaries should remain closed. A judge ruled in favor of the governor’s position and Adult-use dispensaries were eventually reopened on May 26 along with other businesses.

Whether or not to determine Adult-use cannabis dispensaries as essential hasn’t been the only controversy in Cannabis licensing. Cannabis activists are currently in opposition to Massachusetts changes to Social Equity guidelines. This was due in large part to regulatory change that decreased the percentage of the ownership percentage from 51% down to 10% of minority ownership. There is currently a petition to revise it. The drop down to 10% does directly conflict with many city and town ordinances that require 51% ownership for social equity applicants. Cambridge Massachusetts is also dealing with a social equity issue. The municipality chose to only allow social equity applicants for the first stage of license applications and is being sued by a current medical marijuana licensee That is demanding to have the opportunity to have a co-located adult-use facility. The city appears to have established the special licensing for social equity applicants in an attempt to provide social equity licensees an opportunity to establish market share before non-social equity applicants are able to dominate the market. Massachusetts also began accepting business license applications for cannabis delivery on May 28 though it is unclear as to whether or not an application period is currently open.

In a move to protect employee interests, Massachusetts Mayflower Medicinals employees have voted to join the United Food and Commercial Workers Union Local 1445. The employees chose to join the union due to Coronavirus related issues such as a lack of consistent treatment from management, inadequate

healthcare coverage, and slow responses to the pandemic. They are obviously not the first in Massachusetts to choose a union, however, it is a trend that is worth watching because it’s occurring in multiple states not just Massachusetts

Conclusion

While none of the states in this report have legalization efforts in their legislatures or on the ballot there are developments occurring that have implications for the cannabis industry as a whole. Social Equity programs are becoming more than token efforts to address the cannabis industry’s issue with diversity while the continued efforts of labor unions to unionize the Industry’s labor force showcase a need in some markets to address labor concerns and management practices.

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Stephanie Till - Green Rush Indexed Data

Stephanie Till - Green Rush Indexed Data

This article was written by Stephanie Till of Green Rush Indexed Data with data compiled and provided by Bridge West CPAs. Stephanie is a Compliance Expert as well as a Historian who is currently archiving the Green Rush of the cannabis industry. The mission of her company is help clients by providing quality research services, custom tailored cannabis compliance consulting, dynamic training materials and exceptional customer service for those in the young cannabis industry.

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