Cannabis Won Big: A Post-Election Analysis

By Aaron G. Biros
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Editor’s Note: This article has been updated to include the presidential and congressional election results.


While the votes continue to come in for the presidential and congressional elections and we have some concrete results materializing, cannabis legalization has emerged as a clear winner across the board. Five states had initiatives on the ballot to legalize cannabis in one form or another and voters in all five states approved those measures by wide margins.

As of this writing, 15 states now have legalized adult use cannabis and 36 states have legalized medical cannabis. That is a significant portion of the United States with some form of legal cannabis, even without counting the emergent hemp markets across the country.

After a tight race and mail-in vote counts diminishing President Trump’s lead days following the election, Joe Biden has won the White House. Most cannabis industry stakeholders see this as a win for cannabis as both Biden and Vice President-Elect Kamala Harris have voiced support for federal decriminalization of cannabis. The vocal support is very much so tied to their campaign on ending racial injustices and systemic racism, citing the failed war on drugs for disproportionately harming communities of color.

While it is looking like the Democrats will retain control of the House of Representatives, it is still unclear which party will control the Senate. That  question likely won’t be answered until January 2021, when voters in Georgia will decide on two Senate seats in runoff elections that will decide which party gets the majority. With a Democratic majority in the House and Senate, it is entirely possible that the Biden administration could decriminalize cannabis on a federal level within the next four years. Without that majority, however, it is possible reform could come at a much slower pace.

As more states legalize cannabis, their neighbors see the potential economic benefits and want to cash in on the movement. Just take a look at the West Coast.

Comments made by politicians leading up to the election in the Northeast also shed some light on the alleged domino effect coming to the United States. In late October, about two weeks before the election, New York Governor Andrew Cuomo was asked when his state will legalize adult use cannabis. His answer: “Soon, because now we need the money.” Back in September, Pennsylvania Governor Tom wolf specifically asked the state legislature to legalize adult use cannabis. Governor Wolf said “people will go to New Jersey” to purchase cannabis once it becomes legal in the neighboring state.

Question 1 in NJ won by a very wide margin

Well, New Jersey legalized adult use cannabis. So now it appears we are in a waiting game to see which neighboring state will move forward before the other. Alyssa Jank, consulting services manager at Brightfield Group, predicts cannabis sales in New Jersey to reach about $460 million in 2021, up from about $94 million this year. She says the market could reach $1.5 billion by 2025.

Sam D’Arcangelo, director of the Cannabis Voter Project, a division of HeadCount, says the New Jersey measure is pretty bare-bones, so the legislature will need to pass enabling legislation that actually creates the adult-use program. “It’s tough to tell exactly what that legislation will look like or how long it will take to pass, but it’s possible it will be approved pretty quickly,” says D’Arcangelo. “Tonight’s results could set off a domino effect that inspires lawmakers to move forward with legalization in a number of states throughout the region.”

Let’s take a closer look at Arizona: Back in 2016, Arizona had a measure on the ballot to legalize adult use cannabis that failed to get enough votes. Things have clearly changed in the state in the last four years because Prop. 207 (the 2020 ballot initiative to legalize adult use cannabis) won 59.8% to 40.2%. Arizona now joins a massive West Coast bloc of states slowly creeping inland that have legalized adult use cannabis, including, Washington, Oregon, California, Nevada and now Arizona, not to mention Montana. Drug Policy Alliance’s Emily Kaltenbach believes that New Mexico will follow suit as well, with three out of four voters in the state in favor of it.

Voters in Mississippi approved a medical cannabis program by a wide margin with almost 74% in favor. Even more encouraging, voters in the state rejected the legislature’s attempt to hijack the initiative with their own alternative measure that would have involved developing their own program as they see fit without any sort of deadline.

While Montana can tend to lean slightly Democrat, it is surrounded by heavily Republican-dominated states like Wyoming and Idaho. With both Montana and South Dakota voters approving adult use legalization measures, this presents a potential inroad for cannabis to reach far more conservative states in the Northern Rockies and beyond.

Greg Kaufman Partner at Eversheds Sutherland and frequent Cannabis Industry Journal contributor, says this election puts considerable pressure on Congress to take some action on one or more of the cannabis-related bills currently pending. “In several states, cannabis was more popular than the winning presidential candidate, regardless of the party of the winning candidate,” says Kaufman. “This suggests that cannabis is not a partisan issue, nor should it be.”

The 15 states that have legal adult use cannabis now represents about 34% of the population in our country. “During the most divisive election in modern U.S. history, Americans demonstrated unity around at least one issue – cannabis policy reform,” says Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association. He says the victories we saw this week are commendable and will lead to a lot of new jobs, tax revenue and thousands of fewer arrests, but there is still a lot of work to be done. “We look forward to building on this progress as we continue to work with Congress to end the conflict between outdated federal laws and the growing number of states with regulated cannabis markets, and help undo the racially and economically disparate harms caused by prohibition.”

While we wait to hear who will control the Senate in 2021, which will have a massive impact on cannabis reform, we leave you with this great quote from Aaron Smith: “There is still a lot of work to do, but the wind is at our backs.”

To see the details and results of each cannabis measure on the ballot in this election, click here. 

Cannabis Sweeps: AZ, MS, MT, NJ & SD Approve Legalization

By Cannabis Industry Journal Staff
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Five states had cannabis reform on the ballot yesterday for the 2020 election: Arizona, Mississippi, Montana, New Jersey and South Dakota. All five ballot initiatives won by a clear margin, with some races ending in landslides. Stay tuned for coverage on congressional and presidential elections and the impact on the future of the cannabis industry.

For now, here are which states legalized cannabis last night, as well as some details on the five (well, technically eight) state ballot initiatives:

Arizona – Prop. 207 (Adult Use)

Results: 59.8% Yes, 40.2% No

Details:

  • Legalizes cannabis for adults over 21
  • Puts a 16% tax on retail sales of cannabis and cannabis products
  • Develops a process for expunging records of cannabis-related drug offenses
  • Arizona already has an established medical cannabis program

Mississippi – Initiative Measure 65 & Alternative Measure 65A (Medical)

Results: 67.9% Yes for either, 32.1% No against both

Details:

  • Both initiatives theoretically legalize medical cannabis in the state.
  • There is a legislature-proposed alternative on the ballot, which makes things a bit confusing and gives voters the option of voting for both, neither or one of the two.
  • Initiative 65 would give the state’s department of health a mandate and authority to establish regulations for a medical cannabis program by August 2021. This initiative lists 22 qualifying conditions.
  • Initiative 65A gives the legislature the power to come up with their own program as they see fit and does not include any sort of deadline.

Montana – Initiative 190 (Adult Use) & Initiative 118

Results: 56.6% Yes, 43.4% No

Details:

  • Legalizes, taxes and regulates cannabis for adults over 21
  • Requires the state’s department of revenue to license and regulate cannabis businesses
  • Puts a 20% tax on retail sales of cannabis and cannabis products
  • Develops a process for expunging records of cannabis-related drug offenses
  • Montana already has an established medical cannabis program

Initiative 118:

  • This just allows the language of the initiative to call an adult over 21, instead of 18 as it is stated in the Montana constitution. 

New Jersey – Question 1 (Adult Use)

Results: 66.9% Yes, 33.1% No

Details:

  • Legalizes, taxes and regulates cannabis for adults over 21
  • New Jersey already has an established medical cannabis program – this ballot measure gives authority to the regulatory body currently overseeing the medical program, the five-member Cannabis Regulatory Commission.
  • Only applies the 6.625% state sales tax and prohibits additional sales taxes.
  • This made it to the ballot by way of legislature after New Jersey lawmakers failed to pass it in 2019, instead passing the question on to voters. New Jersey does not have a ballot initiative process.

South Dakota – Constitutional Amendment A & Initiated Measure 26 (Adult Use & Medical)

Details:

Constitutional Amendment A Results: 53.4% Yes, 46.6% No

  • Legalizes, taxes and regulates cannabis for adults over 21
  • This also requires the state legislature to set up a medical program as well as a hemp program by April 2022.
  • Puts a 15% tax on retail sales of cannabis and cannabis products
  • Gives local governments authority to allow or ban cannabis businesses

Initiated Measure 26 Results: 69.2% Yes, 30.8% No

  • Establishes a medical cannabis program in South Dakota
  • It does list a few qualifying conditions like severe nausea, chronic pain, seizures and more, but it gives the state’s department of health the power to add more conditions to that list.
  • SD Department of health would have 120 days to set up regulatory framework.

Metrc Gets West Virginia Contract

By Cannabis Industry Journal Staff
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According to a press release published earlier in October, Metrc has won the seed-to-sale traceability software contract for West Virginia. The West Virginia Department of Health and Human Resources, Bureau for Public Health, Office of Medical Cannabis (OMC) made the announcement on October 21.

According to that press release, the main focus for the state’s traceability program is “helping OMC regulators ensure no illicit cannabis products are sold in the medical cannabis market, and also that no legal medical cannabis products are sold unlawfully.”

Regulators in West Virginia are still on schedule to open the medical cannabis market as soon as next year, according to Jason Frame, OMC director. “This is an important step to make certain medical cannabis is available only to West Virginians with serious medical conditions and to prevent diversion of products in West Virginia,” says Frame. “While the COVID-19 pandemic has put many industries across the country on hold, we’re proud to say that it has not stopped West Virginia from meeting its deadlines and laying the groundwork for a safe, regulated medical cannabis market.”

Regulators at the OMC are still working on scoring processing and retail license applications. The OMC says they will begin the process of issuing patient cards in the spring of 2021.

NCIA to DEA: Rescind the Interim Hemp Rule

By Cannabis Industry Journal Staff
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In a press release published this week, the National Cannabis Industry Association (NCIA) urges the DEA to rescind the controversial Interim Hemp Rule. Back in August, the DEA published the rule and it has received widespread criticism for its language in conflict with the 2018 Farm Bill.

The rule is a classic example of the federal agency’s resistance to cannabis reform. It states that legal hemp products can be converted to products containing more than 0.3% THC, the threshold established in the 2018 Farm Bill, thus becoming an illegal controlled substance.

Under the Interim Hemp Rule, the DEA could arrest and prosecute legal hemp processors if they are in possession of hemp or CBD oil that contains more than 0.3% THC at any time, even if only for a temporary moment in the extraction process. This creates a lot of criminal risk for hemp companies as it is an almost inevitable step in the extraction process.

Almost every state in the country has an established USDA-compliant hemp program and the NCIA believes the Interim Hemp Rule is in direct conflict with the USDA’s rulemaking authority. According to Aaron Smith, co-founder and chief executive officer of the NCIA, the DEA is overstepping its authority and going outside of its jurisdiction. “Given this agency’s history of doing everything in its power to maintain the criminalization of cannabis in any form, this rule was clearly not proposed to help the thousands of small farmers who are participating in approved hemp programs and could put them in unnecessary danger,” says Smith. “Failure to rescind it immediately is a clear violation of congressional intent and established law.”

You can view the NCIA’s full comments here.

UT-Arlington and UT-El Paso to Evaluate Phytochrome Manipulation in Hemp

By Cannabis Industry Journal Staff
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The Collaborative Laboratories for Environmental Analysis and Remediation (CLEAR) at the University of Texas at Arlington (UT-Arlington) and the University of Texas at El Paso (UT-El Paso) has begun collaborating with Curtis Mathes Grow Lights (CMGL), a subsidiary of the Curtis Mathes Corporation, and the hemp genetics company ZED Therapeutics. The research will involve characterizing the phytochemical effects of phytochrome manipulation using various LED horticultural lights of differing light spectrum, and novel high-yielding varietals of hemp. All of the hemp plants will be grown by renowned geneticists Adam Jacques, Christian West, and Oriah Love of ZED Therapeutics under the CMGL Harvester LED lights at their Oregon facility. Drs. Kevin Schug and Zacariah Hildenbrand will oversee the analysis of the corresponding samples for the expression of terpenes, flavonoids, and other classes of therapeutic compounds. The expression of 15 primary cannabinoid species will be performed concurrently by Matthew Spurlock of ZED Therapeutics.

“Since its inception, CLEAR has focused almost exclusively on improving environmental stewardship in the energy sector. It is nice to now diversify into the horticultural industry to better understand how chemically-diverse plants like hemp respond to different environmental-friendly LED lights,” says Professor Kevin Schug, Shimadzu Distinguished Professor of Analytical Chemistry and co-founder and the Director of CLEAR.

Hemp has recently garnered significant attention in the mainstream media as a result of the medicinal benefits of its primary natural constituent, CBD. The collaboration amongst UT-Arlington, UT-El Paso, CMGL and ZED Therapeutics is designed to better understand how the variable of light can influence the expression of other medicinal elements.

“We are incredibly excited about our growing collaborations with UT-Arlington, UT-El Paso, and ZED Therapeutics,” says CMGL’s COO, Robert Manes, “This particular research exploring phytochrome manipulation in hemp may unlock new lighting protocols whereby the modulation of different wavelengths is associated with the expression of different phytochemical profiles.”

This research also has the potential to discover novel molecules that may be present in the ZED Therapeutic hemp varietals using high-resolution exploratory instruments that are unique to the laboratories of CLEAR, such as Liquid Chromatography Quadrupole Time-of-Flight Mass Spectrometry (LC-QTOF-MS).

“We are always searching for new ways to expand our genetic catalogue and it will be interesting to see what sort of effects light modulation have on cannabinoid, terpene, and flavonoid expression,” says Adam Jacques of ZED Therapeutics, “Phytochrome manipulation, and any resulting epigenetic effects, is a poorly understood principle of horticulture and we see a significant opportunity with this research to unearth new knowledge.”

“Hemp is a unique plant both in its light spectrum adaptation and the wide range of phytochemicals it can potentially produce,” says Christian West of ZED Therapeutics, “I’ve been waiting my whole career to be a part of this research and having the lighting knowledge of CMGL combined with the analytical power of UT-Arlington and UT-El Paso is priceless in expanding our understanding of the plant.”

Former Denver Cannabis Regulator Joins Allay Consulting

By Cannabis Industry Journal Staff
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Last week, Allay Consulting announced a new hire, a previous cannabis regulator for the city of Denver. Kara Lavaux has earned her Certified Professional-Food Safety (CP-FS) certification and supervised the Denver Department of Public Health & Environment’s cannabis program before joining Allay Consulting.

Kara Lavaux, Allay’s newest hire

“Demand is increasing for compliance assistance in the industry,” says Kim Stuck, CEO and founder of Allay Consulting. “Kara brings a robust background as a pioneer for cannabis public health regulations. With the hemp market gearing up for federal regulation, this was the ideal time to expand our team.”

“As one of the first Marijuana Specialists in the nation, I wanted to stay in the cannabis industry,” says Lavaux. “Joining the Allay team allows me to utilize my regulatory knowledge to support hemp and cannabis companies and help them thrive.”

Lavaux brings more than 14 years of experiences as a regulator in Colorado, with six years of experience overseeing the cannabis program.

WSLCB

Washington Suspends License for Shipping Out of State

By Cannabis Industry Journal Staff
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WSLCB

On October 7, 2020, the Washington State Liquor and Cannabis Board (WSLCB) issued an emergency suspension for El Rey De La Kush, based in Riverside, Washington, for allegedly distributing cannabis products across state lines. This information was found in an email sent out by the WSLCB late Wednesday night on October 7. El Rey De La Kush does not have a website, but it looks like they own this Facebook page.

This picture taken from their Facebook page, appears to show an El Rey De La Kush-branded package of cannabis

Back in September, the Wenatchee Police Department told the WSLCB that they were investigating 4.3 pounds of cannabis they found shipped from a residence in Wenatchee via UPS. When they served a search warrant, they found roughly 620 pounds of cannabis with traceability tags leading them back to El Rey De La Kush.

The suspect in the case is Brandi Clardy, who is affiliated with the company in question and listed on their license. The original licensee, Juan Penaloza, passed away in July this year and Clardy had been the chief operator following Penaloza’s death.

In an interview with the police, the WSLCB says that Clardy admitted to the crime of removing cannabis from the premises with the intent to distribute across state lines.

The WSLCB says cannabis products were actively being diverted to Texas, where adult use cannabis sales is still very illegal.

The license remains suspended for 180 days, after which point the WSLCB will “pursue permanent revocation.” This marks the first and only emergency suspension issued in 2020.

OLCC-Logo

OLCC Suspends Testing Lab License

By Cannabis Industry Journal Staff
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OLCC-Logo

Back in late September, the Oregon Liquor Control Commission (OLCC), the regulatory body overseeing the Oregon cannabis market, issued an “Order of Immediate License Suspension” for Ecotest Labs, based in Phoenix, Oregon. In a press release, the OLCC says that the licensee, Proper Rental Management, LLC doing business as Ecotest Labs, made a number of violations.

The Oregon Environmental Laboratory Accreditation Program (ORELAP) is the regulatory body that oversees cannabis testing labs in the state. Back in July, they told the OLCC that they suspended Ecotest’s accreditations for failing to meet required procedures and standards.

The OLCC said that “continued operation represents a serious danger to the public health and safety.” ORELAP had suspicions that the lab moved testing instruments to an unlicensed location in Hillsboro, just outside of Portland, where they were conducting unlicensed testing. OLCC then launched an investigation into the lab.

Ecotest Labs told the OLCC they were having problems with their accreditation and thought they had been recertified. In August of this year, Ecotest Labs told the OLCC they were moving products for testing to the Hillsboro location, but said (incorrectly) that ORELAP rules allowed that to happen.

After digging into the METRC accounts for tracking cannabis products, the OLCC found the lab was continuing to move products for testing to the unlicensed location. There was no application submitted for the Hillsboro location.

The OLCC expanded their investigation to include other Oregon regulatory agencies in September. But on or around September 9, Ecotest’s lab was destroyed by the Almeda wildfire. At that point, they no longer had a licensed facility to conduct testing, but were still doing so in that Hillsboro location.OLCC-Logo

The OLCC says more than 160 cannabis businesses in the state sent products for potency testing through the lab after August 21, which now need to be re-tested. Regulators placed an administrative hold in METRC to prevent products from being distributed that were tested by Ecotest Labs.

While the investigation is still ongoing, Ecotest Labs has the ability to challenge the regulators’ actions and call for an administrative hearing. While the OLCC works with licensees impacted by the wildfires to help them in relocating, they said many of the violations occurred prior to the wildfire destroying their business.

Vermont Legalizes Cannabis

By Cannabis Industry Journal Staff
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On Tuesday, September 22, the Vermont Senate voted (23-6) to pass a bill that would legalize, tax and regulate adult use cannabis sales. The bill, S. 54, was approved by 92-56 in the Vermont House of Representatives earlier in the month.

Vermont Gov. Phil Scott

Governor Phil Scott did not sign the bill, but let it become law anyway without his signature late Wednesday night on October 7. He did however sign separate legislation that will expunge previous cannabis-related convictions.

With this piece of legislation becoming law, Vermont  is now the 11th state to regulate and tax cannabis sales. The Marijuana Policy Project has a helpful summary of the legislation you can find here.

Back in 2018, Vermont actually voted to legalize adult use possession and cultivation of cannabis, just not to tax and regulate it. Governor Scott signed that bill into law a couple years ago.

Previously, Vermont and Washington D.C. had legislation that legalized cannabis, just not the sale of it. Technically speaking, it is still illegal to sell cannabis in D.C.

The West Coast Wildfires: What is the Impact on the Cannabis Industry?

By Aaron G. Biros
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Since the beginning of this year, more than 8,100 wildfires have burned in California, torching a record 3.7 million acres of land in a state with one of the largest cannabis economies in the world. With the effects of climate change continuing to wreak havoc on the entire West Coast, smoke from those fires has spread across much of the country throughout the summer.

As we approach October, colloquially referred to as Croptober in the outdoor cannabis market for the harvest season, we’re seeing the August Complex Fire creep towards the Emerald Triangle, an area in northern California and southern Oregon known for its ideal cannabis growing conditions and thousands of cultivators. The wildfires are close to engulfing towns like Post Mountain and Trinity Pines, which are home to a large number of cannabis cultivators.

Hezekiah Allen, executive director of the California Growers Association, says losses could reach hundreds of millions of dollars. Fires across Oregon have torched dozens of cultivation operations, with business owners losing everything they had. The Glass Fire has already affected a large number of growers in Sonoma and Napa Counties and is 0% contained. None of these cultivators have crop insurance and many of them have no insurance at all.

The impact from all of these fires on the entire cannabis supply chain is something that takes time to bear witness; a batch of harvested flower typically takes months to make its way down the entire supply chain following post-harvest drying and curing, testing and further processing into concentrates or infused products.

Image: Heidi De Vries, Flickr

The fires affect everyone in the supply chain differently, some much more than others. Sweet Creek Farms, located in Sonoma County, lost all but one fifth of their crops to fires. Other cultivators further south of the Bay Area have lost thousands of plants tainted by smoke.

Harry Kazazian, CEO of 22Red, a cannabis brand distributed throughout California, Nevada and Arizona, says he is increasing their indoor capacity to make up for any outdoor flower loss. But he said it has not impacted his business significantly. “Wildfires have been a part of California and many businesses have adapted to dealing with them,” says Kazazian. He went on to add that most of his flower comes from indoor grows in the southern part of the state, so he doesn’t expect it to impact too much of his supply chain. Kazazian is right that this is not a new concept – the cannabis industry on the West Coast has been dealing with wildfires for years.

George Sadler, President of Platinum Vape

George Sadler, President of Platinum Vape, has a similar story to tell – the fires have impacted his supply chain only slightly, saying they had a handful of flower orders delayed or cancelled, but it’s still business as usual. “It’s possible this won’t affect the supply chain until later in the fall,” says Sadler. “There has definitely been an effect on crops that are being harvested now. It may end up driving the price of flower up, but we won’t really know that until January or February if it had an effect.”

Sadler believes this problem could become more extreme in years to come. “Climate change definitely will have an effect on the industry more inland, where we’re seeing fires more commonly – it could be pretty dramatic.”

One beacon of hope we see every year from these fires is how quickly the cannabis community comes together during times of hardship. Sadler’s company donated $5,000 to the CalFire Benevolent Foundation, an organization that supports firefighters and their families in times of crisis.

A large number of cannabis companies, like CannaCraft, Mondo, Platinum Vape and Henry’s Original, just to name a few, have come together to help with relief efforts, donate supplies, offer product storage and open their doors to families.

If you want to help, there are a lot of donation pages, and crowdfunding campaigns to support the communities impacted. The California Community Foundation has set up a Wildfire Relief Fund that you can donate to.

This GoFundMe campaign is called Farmers Helping Farmers and still needs a lot of funding to reach their goal. Check out their updates section to see how they are helping cultivators in real time. This Leafly page is also a very useful guide for how you can donate supplies, volunteer and help those impacted the fires.