Tag Archives: regulations

The Cannabis Industry Sees Record Growth Despite Continuous Obstacles

By Jay Virdi
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Worth an estimated $54 to $67 billion, the bourgeoning U.S cannabis industry continues to grow at record pace despite conflicting state and federal laws that cause obstacles at every turn.

This conflict remains a source of uncertainty for retailers, cultivators and the general public. And, unfortunately, the palpable tug of war between the states and the federal government will only increase when legalization is introduced at the federal level, putting tax dollars up for grabs.

A tug-of-war between the states and the federal government makes it difficult for cannabis businesses to obtain bank accounts, insurance and investors. It also means additional security and compliance challenges. It is the reason that the cannabis industry is an unsupportive environment for start-ups and employees who face primitive or even dangerous R&D conditions in order to advance the extraction process.

As cannabis companies fight to grow their market share, many lag behind when instituting a proper risk management structure from R&D to daily operations. Cannabis businesses that haven’t incorporated risk management will need to in 2021, especially when seeking to secure funding from PE firms.

As the 8th fastest growing industry in the U.S., maturing at more than 25% annually, adult use and medical cannabis sales are unlikely to decrease anytime soon. Rather, experts predict continued growing pains – and gains – to shape the U.S. cannabis industry in 2021.

The COVID-19 pandemic will continue to increase the growth of the cannabis industry— with a few roadblocks

Deemed “essential businesses,” many retail outlets and dispensaries stayed open throughout the pandemic and adopted new ways of serving customers, from curbside pick-up to drive-through windows and deliveries. At the same time, the pandemic hindered growth for some cannabis operations on the cusp of obtaining a license, as many applications were put on hold when state offices closed their doors for months. In some cases that meant raised capital was pulled and funding ceased. For start-ups who are seeking to apply again in 2021, it’ll be an uphill climb.

As a result of routine COVID-19 inspections in 2020, state officials uncovered a host of other issues at cannabis operations, including improper labeling, poor health and safety practices, lack of PPE compliance by staff and customers, incorrect counting of cash and more. In extreme cases, these visits resulted in regulatory fines and shutdowns. This led to the need to use seed money for something other than the organization’s original mission. In 2021, these scenarios are likely to turn into lawsuits from shareholders and activate directors & officers (D&O) and employment practices liability (EPL) claims from laid-off workers. These accusations dovetail with another major charge often levied against cannabis businesses —lightning speed growth without the business operations and risk management protocols necessary to support it.

Many cannabis businesses have not procured the necessary liability insurance coverage for the great risk that come with rapid growth. Whether it’s D&O and EPL policies as in the case above, or cyber, property or general liability (GL) policies, it’s critical to think more holistically about insurance coverage. Cannabis operations need to work with an insurance broker who specializes in the cannabis industry and understands different operations and business location, as exposures vary greatly.

R&D extraction dangers lead to unique risks

extraction equipmentIn 2021, extraction will be a major focus for cannabis organizations. Operations will continue searching for a competitive advantage to increase yield and develop superior products. Cannabis extractors will experiment with new ways to apply existing laboratory methods utilizing ethanol and CO2 as well as innovative cultivation methods adopted from the agriculture industry, using water and light exposure and different nutrients. R&D becomes a potential liability when cannabis extractors modify the use of existing equipment for a different type of extraction. Flammable products are often required, and explosions can occur.

If you are considering experimenting with R&D, engage your insurance broker to ensure the risk is covered within your existing policies and to explore best practices for experimentation and varying equipment use.

Desire for more security both inside and outside the operation

A cannabis operation’s security risk is two-fold. In light of the looting and civil unrest across the U.S. this year, heightened security measures were necessary for cannabis businesses to secure their goods. Additionally, a common risk— employee theft —increased as well.

Cannabis retail operations maintain a large supply of cash and product. As looting occurred, it was impossible to relocate cannabis product away from retail storefronts as a majority of state regulations prohibit cannabis to be removed from retail facilities. Owners and operators who did so risked being fined for non-compliance or losing their license.

The majority of cannabis theft — as high as 90% by some estimates — is employee related. In many cases, employees in cannabis grow facilities and retail storefronts scheme to cheat employers. Part of the challenge is that state regulations require plant and production facility blueprints to be publicly available. Thieves are using these layouts to plot their infiltration. In other scenarios, cannabis operators are recording walk-throughs of their facilities and publishing online documentaries. These also leave operators vulnerable.

Employers can increase security by restricting access exclusively to employee areas, while also investing in better internal access controls. Conduct an audit of your work areas with your cannabis insurance broker who can provide you with a list of best practices and do’s and don’ts for reducing theft.

Complications continue in compliance, banking and financial services 

Even though cannabis is legal for medicinal or recreational use in 43 states, businesses still struggle to secure bank accounts, business loans and insurance coverage. Small local banks and savings and loan businesses may be more willing to engage with cannabis businesses in 2021, while large institutions will keep shying away.

At every stop of the supply chain, cannabis business operators need to be proactive when developing strategies to manage risk. That means implementing risk management protocols to protect their business, their workforce as well as securing the proper insurance coverage.

This also includes growing the cannabis business’ safety net by engaging necessary insurance policies, appropriate to the business’ size and exposure, including cyber, environmental liability and crime policies, or applying for emerging loan programs in an effort to secure additional capital.

Evolution of the industry into 2021 and beyond

While the cannabis industry is evolving and changing, much will ultimately remain the same in 2021. Even if the U.S. government takes steps to federally legalize cannabis, a bill would not go into effect until later in the year at best, more likely in 2022 or beyond. Until a bill is passed, cannabis businesses will look to remain viable beyond the state level. For all cannabis businesses, 2021 will be about building on what they’re already doing and preparing for what will hopefully come next.

Aphria & Tilray Merger Creates World’s Largest Cannabis Company

By Cannabis Industry Journal Staff
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On December 16, 2020, Aphria Inc. (TSX: APHA and Nasdaq: APHA) announced a merger with Tilray, Inc. (Nasdaq: TLRY), creating the world’s largest cannabis company. The two Canadian companies combined have an equity value of $3.9 billion.

Following the news of the merger, Tilray’s stock rose more than 21% the same day. Once the reverse-merger is finalized, Aphria shareholders will own 62% of the outstanding Tilray shares. That is a premium of 23% based on share price at market close on the 15th. Based on the past twelve months of reports, the two companies’ revenue totals more than $685 million.

Both of the companies have had international expansion strategies in place well beyond the Canadian market, with an eye focused on the European and United States markets. In Germany, Aphria already has a well-established footprint for distribution and Tilray owns a production facility in Portugal.

tilray-logoAbout two weeks ago, Aphria closed on their $300 million acquisition of Sweetwater Brewing Company, one of the largest independent craft brewers in the United States. Sweetwater is well known for their 420 Extra Pale Ale, their cannabis-curious lifestyle brands and their music festivals.

Once the Aphria/Tilray merger is finalized, the company will have offices in New York, Seattle, Toronto, Leamington, Vancouver Island, Portugal and in Germany. The new combined company will do business under the Tilray name with shares trading on NASDAQ under ticker symbol “TLRY”.

Aphria’s current chairman and CEO, Irwin Simon, will be the chairman and CEO of the combined company, Tilray. “We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” says Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.”

Washington Lab Shut Down for Falsifying Test Results

By Cannabis Industry Journal Staff
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WSLCBIn a press release sent out earlier this month, the Washington State Liquor and Cannabis Board (WSLCB) announced they have shut down Praxis Laboratory for falsifying test results. The WSLCB, the state regulatory agency overseeing Washington’s cannabis industry, said that Praxis inflated data for potency test results on more than 1200 samples, giving samples higher THC levels than the state actually found.

A google search revealed the laboratory has since shut down their website. A message appears when you go to their website: “This site is currently undergoing maintenance. Please check back later.”

Praxis Laboratory, located in Centralia, Washington, is also accused of interfering with the investigation. “During the investigation the lab owner attempted to destroy evidence of falsified data in an effort to obstruct LCB’s ability to conduct a complete investigation,” reads the press release. “Labeling cannabis with falsely high THC potency levels is a form of consumer deception and is prohibited under Washington law.”

The WSLCB has state authority to take actions like license suspensions when licensees operate illegally. The suspension lasts for six months, during which time the WSLCB will “seek permanent revocation” of the lab’s license to operate, due to fraud and obstruction during the investigation.

photo of outdoor grow operation

The 2020 Global Cannabis Regulatory Roundup

By Marguerite Arnold
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photo of outdoor grow operation

As a strange year heads to a final, painful finish, there have been some major (and some less so) changes afoot in the global world of cannabis regulation. These developments have also undoubtedly been influenced by recent events, such as the recent elections in the United States, state votes for adult use reform in the U.S. and the overall global temperature towards reform. And while all are broadly positive, they have not actually accomplished very much altogether.

Here is a brief overview of the same.

The UN Vote On Cannabis
Despite a wide celebration in the cannabis press, along with proclamations of an unprecedented victory by large Canadian companies who are more interested in keeping their stock prices high than anything else, the December 2 vote on cannabis was actually fairly indecisive.

Following the WHO recommendations to reschedule cannabis, the UN voted in favor of the symbolic move. Despite removing cannabinoids from Schedule IV globally, a regulatory label designed for highly addictive, prescription drugs (like Valium), the actual results on the ground for the average company and patient will be inconclusive.

The first issue is that the UN did not remove cannabinoids themselves, or the plant, from Schedule I designation. This essentially means that countries and regions will be on the front lines to create more local, sovereign policies. This is not likely to change for at least the next several years (more likely decade) as the globe comes to terms with not just a reality post-COVID-19, but one which is very much pro-cannabis.

In the meantime, however, the ruling will make it easier for research to be conducted, for patient access (for the long term), and more difficult for insurers to turn down in jurisdictions where the supposed “danger” of cannabis has been used as an excuse to deny coverage. See Germany as a perfect example of the same.

It is also a boon for the CBD business, no matter where it is. Between this decision and the recent victory in Europe about whether CBD is a narcotic or not (see below), this is another nail in the coffin for those who want to use semantic excuses to restrain the obvious global desire for cannabinoids, with or without THC.

The U.S. Vote On The MORE Act

While undoubtedly a “victory” in the overall cannabis debate, the MORE Act actually means less rather than more. It will not become law as the Senate version of the bill is unlikely to even get to the floor of the chamber before the end of the session – which ends at the end of this year.

The House voted 228 to 164 to pass the MORE Act.

That said, the vote is significant in that it is a test of the current trends and views towards big issues within the overall discussion, beginning with decriminalization and a reform of current criminal and social justice issues inherent in the same. The Biden Administration, while plagued with a multitude of issues, beginning with the pandemic and its immediate aftershocks, will not be able to push both off the radar. Given the intersection of minority rights’ issues, the growing legality of the drug and acceptance thereof, as well as the growing non-partisan position on cannabis use of both the medical and adult use kind, and the economy, expect issues like banking to also have a hope of reform in the next several years.

Cannabis may be taking a back seat to COVID, in other words, but as the legalization of the industry is bound up, inextricably, in economic issues now front and center for every economy, it will be in the headlines a great deal. This makes it an unavoidable issue for the majority of the next four years and on a federal level.

Prognosis in other words? It’s a good next federal step that is safe, but far from enough.

The European Commission (EC) Has Finally Seen The Light On CBD

One of the most immediately positive and impactful decisions of the last month was absolutely the EC decision on whether CBD is a narcotic or not.

This combined with the UN rescheduling, will actually be the huge boost the CBD industry has been waiting for here, with one big and still major overhanging caveat – namely whether the plant is a “novel” one or not. It is unlikely as the situation continues to cook, that Cannabis Sativa L, when it hits a court of law, will ever be actually found as such. It has inhabited the region and been used by its residents for thousands of years.

However, beyond this, important regulatory guidance will need to fall somewhere on the matter of processing and extraction. It is in fact in the processing and extraction part of the debate that this discussion about Novel Food actually means something, beyond the political jockeying and hay made so far.

Beyond this of course, the marketing of CBD now allowed by this decision, will absolutely move the topic of cannabinoids front and center in the overall public sphere. That linked with sovereign experiments on adult use markets of the THC kind (see Holland, Luxembourg and Denmark as well as Portugal and Spain right after that), is far from a null sum game.

Legal Challenges Of Note

The European Court of Human Rights

Against this changing regulatory schemata, court cases and legal decisions remain very important as they also add flavor to how regulations are interpreted and followed. The most important court case in Europe right now is the one now waiting to be decided in the Court of Human Rights at Strasbourg regarding the human rights implications of accessing the plant.

Beyond that, in Germany, recent case law at a regional social benefits court (LSG) has begun to establish that the cannabis discussion is ultimately between doctors and their patients. While this still does not solve the problem of doctor reluctance to prescribe the drug, barriers are indeed coming down thanks to legal challenges.

Bottom line, the industry has been handed a nice whiff of confidence, but there is a still high and thorny bramble remaining to get through – and it will not happen overnight, or indeed even over the next several years.

MORE Act Passes the House – Is Legalization Around the Corner?

By Steve Levine, Alyssa Samuel
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On Friday, December 4, 2020, the US House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (the MORE Act), which would effectively legalize cannabis by removing it from the Controlled Substances Act. The bill (H.R. 3884) has several key components:

  • Most importantly, the bill would remove cannabis from the list of controlled substances in the Controlled Substances Act, as well as other federal legislation such as the National Forest System Drug Control Act of 1986. This would effectively end many of the obstacles created by the federal illegality of cannabis such as the lack of access to banking, tax consequences such as 280E, adverse immigration impacts and threats of federal criminal enforcement.

    Rep. Earl Blumenauer (D-OR) donning his cannabis mask as he presides over the Congress
  • Second, not only does the bill preclude future prosecution for cannabis-related crimes, the bill is designed to be retroactive and would provide for the expungement of past non-violent cannabis offenses.
  • The bill creates a prescribed excise tax on cannabis and cannabis products. The funds collected from the taxes would be channeled into opportunity and reinvestment programs.
  • A Community Reinvestment Grant Program would be established aimed at the provision of services for “individuals most adversely impacted by the War on Drugs,” such as job training, education, literacy programs, mentoring, and substance use treatment programs;
  • A Cannabis Opportunity Program would be established providing state funds for small business loans in the cannabis industry targeted at social equity candidates; and
  • An Equitable Licensing Grant Program providing funds for states to implement equitable cannabis licensing programs aimed at minimizing “barriers to cannabis licensing and employment for individuals most adversely impacted by the War on Drugs.”
  • The bill would require all cannabis producers to obtain a federal permit. Cannabis businesses would need to be licensed at the state, local, and federal levels to operate.

This MORE Act is a substantial step in cannabis legislation. Reactions to the proposed legislation have been mixed. While the bill does include some measures aimed at social equity, critics of the bill claim it does not go far enough. Similarly, while the bill includes a federal permitting provision, this would be the beginning of a nascent federal regulatory scheme.

What does this mean for your business? 

While this bill passed in the US House of Representatives, it would still need to pass in the U.S. Senate this term, which by most accounts does not seem likely. However, the passage of this bill signifies the progress that has been made and provides insight on what further legislation may look like.

Kennebec Analytical Acquires Cannabis Testing Laboratories

By Cannabis Industry Journal Staff
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According to a press release sent out last week, Kennebec Analytical Services (KAS) announced that they have acquired Cannabis Testing Laboratories (CTL), which was previously owned by Doane University. KAS is based in Lincoln, Nebraska and provides testing services for hemp and CBD producers in Nebraska.

CTL was a wholly-owned subsidiary of Doane University, renting space at the liberal arts college based in Crete, Nebraska. CTL gained ISO 17025 accreditation back in July of this year.

CTL operates independently of the university, but the lab is a resource for faculty and students. There are internship and experiential learning opportunities available at the lab for students. In addition to that, the lab also helps faculty that teach cannabis-related courses.

Last year, Doane University announced the launch of their Professional Cannabis Certificate Program. In June of this year, the university expanded their course offerings in cannabis, with seven courses available this fall semester.

Concetta DiRusso, Ph.D. is the CEO of KAS and says CTL has done provided testing for over 50% of Nebraska’s hemp market and provides hemp farmers with educational resources as the market gets off the ground. “Drs. Andrea Holmes, CTL founder, and Arin Sutlief, Laboratory Director, have done an outstanding job for Nebraska hemp farmers,” says Dr. DiRusso. “KAS is committed to continuing these valuable relationships and services for the hemp and CBD industries.”

Social Responsibility and Supporting BIPOC in Cannabis: A Q&A with Ernest Toney, Founder of BIPOCANN

By Cannabis Industry Journal Staff
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The drug war has harmed communities of color since its inception. For decades and decades, BIPOC (Black, Indigenous, and other People of Color) have been nearly six times more likely to be arrested for drug use than White Americans, despite similar rates of use.

Over the years that legalized cannabis has proliferated across the country, the same trends of market consolidation have emerged in every state that has legalized the plant. BIPOC communities already impacted by the drug war have less access to capital and therefore less access to the cannabis industry. Cannabis market consolidation has always led to white people taking a greater market share while BIPOC communities are left behind.

The legal cannabis industry currently lacks representation of BIPOC executives, business owners, and professionals. Ernest Toney, former global marketing and partnerships manager at Marijuana Business Daily, wants to change that. He founded the BIPOC Cannabis Business Network – a membership community that is working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners.

BIPOCANN is a place to meet cannabis industry leaders, a place to exchange goods, services and ideas that promote BIPOC economic growth in cannabis, an innovation hub for unique voices and perspectives, and it’s all BIPOC-owned and managed.

In this interview, we sit down with Ernest Toney to hear about BIPOCANN and ask him some questions about what the future of the cannabis industry could look like.

Cannabis Industry Journal: Tell me about your background- how did you get involved in the cannabis industry?

Ernest Toney: I grew up in Virginia and went to James Madison University where I studied kinesiology, and sports management in graduate school. That led me to pursue a career in sports administration, beginning as a sales and marketing director for a large YMCA in the southwest, followed by a stint as a sales consultant for the Arizona Diamondbacks in Major League Baseball. Immediately prior to joining the cannabis industry, I worked at USA Ultimate – the national governing body for the niche sport of ultimate (frisbee) in the United States. During that time, I managed and scaled adult programs and events across the country. A big part of my job required collaborating with national stakeholders and creating and enforcing policies to grow the sport by making it more accessible to diverse demographics. We also worked hard to increase the commercial visibility of the sport through mainstream media, including ESPN, with gender equity being a major focus area. It was cool because looking back, I learned a lot of things during that five-year period that is directly applicable to the work I’m doing to support the cannabis industry.

Ernest Toney, founder of BIPOCANN

But my interest in the cannabis industry became strong when I moved to Denver in 2011, a year before Amendment 64 passed. When Colorado became the first adult use cannabis market in the USA, it was an exciting time. I have always been curious about economics and how policies can impact people’s lives. I was interested in what was going to happen when the new market opened.

Early on, I followed the industry trends very closely. Living in downtown Denver, I saw firsthand the effects the cannabis industry was having on day-to-day life, like increased tourism, a housing market boom, a lot of new start-ups, dispensaries opening everywhere. It was just something I knew I wanted to learn more about.

Around 2016, I started making industry connections, but didn’t pursue opportunities until a few years later. Eventually, I was hired in 2018 by MJBizDaily to focus on new business initiatives. Some of my past successes with scaling programs, national and international event management, and community-building aligned with what they were looking for.

I started as the company’s first international marketing manager. In that role, I was responsible for driving marketing campaigns to increase the company’s global readership, event registrations, and business conference presence in foreign markets. After the first year, I transitioned to identify and manage marketing partnerships for the company – which included international and domestic media, event, and affiliate partnerships within and outside of cannabis.

I felt compelled to make a change amidst the social unrest this summer. I was doing my own protesting and volunteer advocacy in Denver, but started to see more broadly, in the cannabis industry, that cannabis executives and companies were bringing attention to the fact that the War On Drugs has been problematic for minorities and communities of color. There was greater talk about social equity programs and how they are not as effective as they should be. There was greater attention to the fact that over 40,000 people are still incarcerated for the plant that others are profiting from – and that the people behind bars are predominantly coming from communities of color. I was in a position that afforded me the opportunity to see what the composition of the global cannabis industry looked like, and I  could see minority representation was lacking in business ownership, leadership positions, and more.

I thought – what is the best way for me to use my talents, insights, and knowledge to affect and change this narrative? Ultimately, I decided to start my own business. Not only was this an opportunity for me to “walk the walk,” being a black man starting a business in this industry where there is a lack of black ownership, but more importantly I was uniquely positioned to be able to educate and let people know about the opportunities to be a part of the booming industry. So, I did some brainstorming and came up with a company, which is called BIPOCANN and it stands for connecting BIPOC communities to the cannabis industry.

The work I have been doing for the last quarter includes directly recruiting people into the industry. If you are curious and want to learn more about the industry, then BIPOCANN can be the entry point. We figure out what your goals are and use the network and our resources to get you connected and figure out where you want to go. Likewise, if you are a service provider, like a graphic designer, accountant, marketer or business owner for example, that sees opportunities for your business to play a role and support it from an ancillary standpoint, BIPOCANN can be an entry point for you too.

The other component to it is working with existing businesses who are trying to make the industry more accessible. I work with existing companies and brands to create platforms that amplify voices and make BIPOC folks more visible, seen and heard within the cannabis industry. We are also helping businesses increase their profitability through diversification tactics and marketing tactics that contribute to their bottom line.

CIJ: Tell me about BIPOCANN- what is it, what are your goals with this project and how has it been received so far?

Ernest: The prohibition of cannabis has disproportionately impacted communities of color in the Americas. I alluded to this earlier, but there are more than 40,000 people behind bars in the U.S. for cannabis possession and use. There’s evidence suggesting that Black Americans are up to six times more likely to get arrested for cannabis use than White Americans despite use rates being the same. And when you look at the makeup of the professional industry, there is poor representation of business ownership by people of color. The Cannabis Impact Fund references that only 4.3% of dispensaries are Black or Latinx-owned. These problems intersect in a lot of ways.

BIPOCANN is a small business working to make the cannabis industry more accessible and profitable for BIPOC professionals and business owners. Now, I know that one company cannot change 100 years of cannabis prohibition and how policy works. But if you want to make this industry more accessible, inclusive, and profitable for those who do not have the access then there are a lot of levers to pull. Policy is one. But BIPOCANN is using more direct strategies. We actively recruit people to come in and be a part of this industry, through employment, entrepreneurship, consulting, and collaborations.

We have also created the BIPOC Cannabis Business Network, a community where members can exchange services, network, and collaborate. It’s all about creating more opportunities for BIPOC professionals and business owners, and it’s a safe space to share your experiences and to ideate. Similar to your Cannabis Quality Virtual Conference, where there was a dedicated space for BIPOC folks to be seen and heard and tell their story through your virtual panels, we use our resources and network to help advocates for equity and access be seen, heard, and find opportunities to thrive as a business owner or professional.

CIJ: How do you hope BIPOCANN will be embraced by the cannabis community?

Ernest: I think it has been received well in its first quarter of business. We have had opportunities to share our story across a lot of platforms, including multiple cannabis industry conferences, podcasts, and interviews with varied media outlets. We are in startup mode, so currently we are about building a brand, being seen, and helping people understand what we are trying to achieve. We are working towards that right now. We have had some success and folks are supporting our vision and goals.

I am hoping the cannabis industry will look at BIPOCANN as another important resource within the social equity, business development, and networking landscape. I don’t want to be seen as a competitor to the organizations and individuals who have been doing similar work in this space, for much longer, but as an ally. Some of our approaches to bring new people into the industry will include strategically aligning communities and markets where we have strong ties – such as state governments, national nonprofits, and global cannabis networks.

CIJ: Where do you see the cannabis industry making progress with respect to diversity and including people of color?

Ernest: When I look at the types of conversations  and coverage the industry is having, even compared to last year, it seems like more conferences, media entities, brands, and individual leaders are tuned in and trying to figure out how they can contribute to making this industry better, more equitable and more accessible. I am seeing a lot of more attention, attempts to understand where the gaps are and what to do about it.

When I take a step back to think of all the virtual conferences that have made dedicated conference tracks or even entire programs – like the National Association of Cannabis Business’ Social Equity Conference, the Emerge Canna Conference, the Cannabis Sustainability Symposium, and the Cannabis Industry Journal’s post-election social justice panel – or weekly segments from Black leaders like Dasheeda Dawson (She Blaze) and Tahir Johnson (The Cannabis Diversity Report) — those are good signs. They are creating opportunities for voices representing underserved communities in cannabis to share their perspectives and be advocates for change.

But there is still much to do and that includes greater education about the realities, histories, and challenges BIPOC and other minority communities are facing. Going back to the NACB, they recently drafted a social equity standard for state legislatures to use as a baseline for crafting policies and provisions for social equity programs. That and resources from organizations like the Minority Cannabis Business Association, Supernova Women, Cannaclusive, Minorities for Medical Marijuana, and the Massachusetts Recreational Consumer Council, for example are some useful resources for the industry.

Wana Brands is also continuing to do good work, and it was exciting to see them become the first sponsor of the inaugural Black CannaConference by the Black CannaBusiness Magazine. That was a great example of an industry leader using their dollars, marketing resources, and company values to support an event specifically dedicated to creating, developing, and enhancing Black entrepreneurs and businesses in the cannabis industry.

“It is hard to know what even a year from now will look like.”On the policy front, we just saw on election day cannabis having a ton of success at the polls, passing in every single state where there was a ballot measure.

Arizona did a good job with having social equity provisions directly included in the language on their ballot measure. I think for the states that have yet to draft a social equity program, they can look at what has worked well in some other states and also look at what has not worked well, like loopholes that invite predatory behaviors.

I’m excited to see that Governor Ralph Northam and the Virginia Marijuana Legalization Working Group are already identifying the best ways to make a recreational market a beneficial and sustainable one, and tackling how to incorporate social equity, racial equity, and economic equity into a future legalization bill. I am looking forward to learning more after an upcoming meeting with a Working Group member. Eventually, I hope to contribute towards any social equity efforts that will benefit my home state and hometown (a high poverty community that has been at the crossroads of America’s major civil rights movements, with a correctional facility that houses an inmate population equivalent to nearly 10% of the town population).

CIJ: Where do you see the industry moving in the next five years?

Ernest: Ha-ha! It is hard to know what even a year from now will look like.

Just this week the United Nations rescheduled cannabis, which is a big deal! We also saw the U.S. House of Representatives pass the MORE Act. We are inching closer towards federal legalization in the US and I think it will happen within that five-year timeframe, and it will be contentious. There will be compromises on things some folks don’t want compromises on, there will be more big money influencing the outcomes of the industry, and there will be unforeseen or unintended consequences to whatever the federal legislation looks like. I recently moderated a panel of social equity license holders, who felt that federal legalization would harm the disproportionately impacted areas (by the War on Drugs) even more! Their preference was to see cannabis de-scheduled and remain under state control.

I think federal legalization will bring another wave of major mergers and acquisitions, similar to what the Canadian market experienced in 2019, benefiting big business over small business. “We need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance.”

CIJ: Do you think we can change that?

Ernest: There are so many things at play. The legislators need to have diverse perspectives and representation from the folks in the industry, especially people of color who can speak to the impact that a century of prohibition policies have had on their communities. Those voices and stories need to be heard, but that type of representation is grossly lacking on Capitol Hill…which is all the more reason we need leaders from the aforementioned communities to have a seat at the table when decisions are made.

I say that because a lot of time there are unforeseen consequences when policies are created, so decision makers at the federal level can learn from those of us already doing the work on the local level. I recently had a conversation with a former journalist and colleague who is currently in a cannabis regulatory role. We were talking about how policy and operations intersect with social equity. He made the points that “many markets implement license caps, which are intended to prevent oversaturation of cannabis business (the idea being that density of outlets impacts use rates, and particularly youth use rates); in theory, that’s a good policy – but it comes with very real consequences for social equity applicants (because those licenses often go to the wealthiest applicants).  License caps also artificially inflate the cost of those licenses (for a transfer of ownership), which also harms social equity applicants. Lotteries are also generally the result of policy and usually have disastrous results for the social equity applicant.”

So yeah – the rare opportunity to define a new industry that doesn’t just do business as usual, that can right its historical wrongs, and that will reward the communities that have been most harmed by cannabis enforcement, is now. And we need folks who are educated and informed about these matters to be at the policymaking level to have a fighting chance. The optimist in me says “we can do it!” The pessimist in me reminds me that it is 2020 and people still believe the Earth is flat. I’ll keep pushing for change, but I also won’t be surprised if this perfect opportunity to get it right goes wrong.

CIJ: How can people get involved in BIPOCANN?

Ernest: The best way to get involved is to visit www.bipocann.com and support our efforts by becoming an individual member or business member. Not only does that give you the opportunity to connect directly with other members in our business network, but it gives you the chance to be the first to be notified about the latest projects, events, and opportunities we’re working on to change the industry, how we can. By joining, you also directly support BIPOCANN’s goals, contribute to the operating budget of a black-owned business in cannabis, and support the nonprofit partners who we allocate a percentage of monthly sales towards.

You can also get involved by subscribing to our monthly newsletter through the website or by following our social media accounts @bipocann. We are also available for speaking, media, or consulting projects that support social equity, diversity, and inclusion in cannabis. For those types of inquiries, please contact ernest@bipocann.com.

Congress Passes MORE Act

By Aaron G. Biros
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A little over a year ago, the House Judiciary Committee approved the Marijuana Opportunity Reinvestment and Expungement (MORE) Act by a 24-10 vote, marking the first time in history that a congressional committee approved a bill to legalize cannabis. Fast forward a year, and the bill is making history again.

Rep. Earl Blumenauer (D-OR) donning his cannabis mask as he presides over the Congress

Rep. Earl Blumenauer (D-OR), a co-sponsor for the bill and co-chair of the Congressional Cannabis Caucus, donned a cannabis leaf mask as he presided over the floor debate in the House of Representatives on the morning of December 4. After the debate on the floor, the House of Representatives voted 228 to 164 to pass the MORE Act.

While this vote is historic and should certainly be celebrated, it is unfortunately a mostly symbolic win. During the Post-Election Analysis episode of the Cannabis Quality Virtual Conference, Andrew Kline, director of public policy at the National Cannabis Industry Association (NCIA), told attendees that this bill always had strong support in the House, but not enough support in the Senate. “You know I think there is pretty much a 100% chance of it passing the House,” Kline said back in early November. “I don’t think they would’ve scheduled the vote if they didn’t have the votes.”

The House voted 228 to 164 to pass the MORE Act.

Kline told attendees that Republican priorities are most likely to blame when the MORE Act fails to get enough support in the Senate. “The bigger question is what happens when it reaches the Senate and I think it is all but dead when it gets there,” says Kline. “Mitch McConnell has been reluctant to move any legislation over the past four years. He’s really ignored most legislation and particularly any legislation he doesn’t like. He doesn’t like cannabis and it appears to me he barely even likes hemp. He’s really not even fighting for the hemp industry.”

While the MORE Act likely doesn’t have a chance in the Senate, it passing the House is still a monumental moment in cannabis legalization history. This marks the first time in 50 years that Congress has revisited cannabis prohibition, according to Justin Strekal, political director of NORML. “This is a historic day for marijuana policy in the United States,” says Strekal. “By establishing this new trajectory for federal policy, we expect that more states will revisit and amend the archaic criminalization of cannabis, establish regulated consumer marketplaces, and direct law enforcement to cease the practice of arresting over half a million Americans annually for marijuana-related violations – arrests which disproportionately fall upon those on people of color and those on the lower end of the economic spectrum.”

Along with all of the success that cannabis had on Election Day, including five states legalizing it, the House passing this legislation is a symbol of shifting attitudes toward cannabis and serious progress on the federal legalization front.

The real question that should be asked is what will the 117th Congress do? If Democrats gain control in the Senate following the runoff elections in Georgia, it could reinvigorate the momentum behind this bill and offer a renewed breath of life.

Leaders in Infused Products Manufacturing: Part 5

By Aaron Green
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Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.

This is the fifth and final article in a series where we interview leaders in the national infused products market. In this final piece, we talk with Lisa McClung, CEO, and Glenn Armstrong, senior advisor at Coda Signature. Lisa got started with Coda in 2019 as a board member after transitioning from an executive role at Wrigley. She now heads up the company as CEO and President. Glenn has deep experience in product development and innovation with brands such as General Mills, Whirlpool and Wrigley.

Aaron Green: Okay, great let’s get started here. So we’ll start with Lisa. How did you get involved at Coda?

Lisa McClung, CEO of Coda Signature

Lisa McClung: I was lucky. Based on my experience, I was originally asked to be on the board of Coda. I’ve served on nine company boards in addition to my career as an executive at General Electric and at the Wrigley Company where I was heavily involved with innovation. The Board then asked me to consider stepping in as CEO after I’d been working there for six months. I was just overwhelmingly complimented that they considered me and I feel incredibly lucky to be here.

Aaron: Okay, great. Glenn, how did you get involved in Coda?

Glenn Armstrong: We’ve known each other for a long time at Wrigley. I was in innovation for the confectionery side and worked very closely with Lisa. When she became a board member, she asked me to do some advising for her. Im new to the cannabis industry so, I was really excited about doing something different. When Lisa became CEO, she asked me if I would help her.

Aaron: How do you think about differentiating in the market?

Glenn: I spent 90% of my career on the innovation side working with companies like General Mills, Quaker Oats and Amway. When I think about how to differentiate almost any company I always focus on innovation. In the cannabis industry, everybody’s got gummies and chocolates but you’ll hear people talking about gummies are going away.” No, youve just got to innovate, right? It’s like the carrot peeler from 20 years ago. It used to sell for about 25 cents, and it was all steel and now they sell for $10.99. Who would have known?

Glenn Armstrong, Senior Advisor at Coda Signature

I believe anything can be innovative. When I looked at the gummies I asked, what we learned at Wrigley, can we bring into Coda that currently is not in this industry?” Think about various gums and how they can change flavors over time like Juicy Fruit which dissipates really quickly and thats just how the flavor is.

Or, there are other ways like spearmint. You can get an initial boost and then extend that flavor by encapsulations. I don’t see much of that in the cannabis industry. It’s just taking what’s out there from flavor companies that people like and getting them into this market.

Aaron: Awesome. Do you have any particular technologies or work or products from other industries that really interest you?

Glenn: I would say it’s going to be from the pharmaceutical industry. You think about THC and CBD being so hydrophobic. With chocolate, it’s not such a hard thing to get into. If you try to get those kinds of compounds into aqueous solutions though it can be a challenge, the drug industry has been doing it for years! So, to me, delving into some of their patents and some of their ideas, that’s one of the most powerful industries I see where we could utilize their technologies to advance the industry. I expect big pharma to get into this. We can start looking at what they’re doing that we can leverage quickly to get into Coda products.

Lisa: We’re not necessarily a pharmaceutical brand, but we are committed to helping people live and feel better. It really is about how you weave cannabis into everyday life?

Coda’s line of chocolate bars

We have a platform of very indulgent products, which is our chocolates ranging from truffles to bars. We also are building our non-chocolate portfolio to include other ways to enjoy cannabis in their daily life. And then to Glenn’s point, I think there’s ideas and technologies from the pharmaceutical area, theres also things that have been in the food industry for years that provides sensations and experiences.

I think part of our goal is how many of the five senses can we touch from people in creating product?” The feel of something in your mouth heating, cooling. Not just the psychoactive aspect of it, but the complete end-to-end experience.

These are all dynamics of us delivering the live and the feel” piece of it. Then people can either use them from a lifestyle perspective for enjoyment, or a medical perspective. Our job is to provide consumers choices and options that provide those type of experiences.

Glenn: If you have a product that’s supposed to “reduce anxiety” why not start with the slight warming of the mouth? Something that feels calming long before the THC or CBD kicks in? Then have a flavor come up that just feels warm and comfortable. By combining all five senses, you have a product that really does something for your consumer.

Aaron: Thanks for that! Whats your process for creating a new product at Coda?

Lisa: Well, I think everybody talks about brainstorming sessions like innovation is something that just pops up. I think innovation has three legs to it. One is really customer-driven. So, we have to produce products that help our retailers make money, and that deliver really good experiences to consumers that we jointly serve.

The second piece of it is thinking about the discipline of innovation. So, when we make a product, what technologies do we bring to bear, can we scale them, and can we produce them at the right price point and delivery?

Coda Signature Fruit Notes

Then the last piece is the fun piece, trying to listen to what is and isnt being said in the market to really try to be a solutions company.

We spend a lot of time listening and watching the market to figure out where we can anticipate things. We used to call it problem detection” at Wrigley.

One project that Glen and I worked on was a mint that was designed really around adult usage in more professional situations. So, meaning the shape of the mint needs to be tucked in your cheeks so you couldn’t see it. And the packaging of it was something you could surreptitiously pop underneath the desk because we were designing it for people to use as really a business tool. You don’t think of mints as a business tool, but they really are, they give you more confidence with breath-freshening and you don’t necessarily want to hold that out with everybody else.

Some problems are about how to make a product more fun with our fruit. I can put pineapple jalapeño in my mouth and have a literal popping experience, which adds to my enjoyment of that experience.

The last piece is not to do too many products. One of the things that I think of in cannabis is that everybody’s still learning. It’s such a wide-open space, in some cases, that you also have to kind of pick what you do well. So, sticking close to our brand and what we stand for is also something that we’re trying to do. We’ve actually pulled in our SKUs recently and are trying to focus on a platform of indulgent experiences and of lifestyle products. We try not to do everything that we see out in the market and focus only on the things that we do well that solve problems for our consumers.

Glenn: From my perspective — I am not a big process person — I think the best way to do it is to say, okay, we’ve got these products. We could look at technology, we could look at something else, but let’s just go scour what’s out there. And let’s get outside of our industry.” Look outside your own game, and see what you can use.

Discovering how to use these technologies in a gummy or chocolate as opposed to just drugs isnt rocket science. My biggest avenue is looking outside and finding what you can apply as opposed to trying to reinvent everything.

Aaron: Weve focused on the front end of innovation. Can you articulate on the back-end how that moves into product development, manufacturing and commercial launch?

Lisa: We have a new product pipeline with a Stage-Gate process where we will have a number of ideas and whittle them down on certain criteria.

Sometimes the ideas start with the technology and not the market. Glenn will find something and say, Hey, this is going on, should we be thinking about this in cannabis?” It allows our each of our teams to come up with how they can make it work.

Then, as that product passes through the next stage-gate, we’re looking at the actual economics of the product, and how it fits relative to our other products all while were getting consumer input.

We get to that point in the process when we start trialing with consumers to help decide. And sometimes you get the best idea in the world, and then it’s not going to work so in some cases so you put it back in the pantry.

I never like to say that we don’t take an idea forward, even products that we may have taken off the market, we say we freeze products, we don’t cut products!” because our goal is to have options. Our discipline is around a Stage-Gate process tied to our business goals and objectives. It’s also about playing around with concepts and seeing what materializes.

Glenn: There is this whole notion of a process, there’s a Stage-Gate, but before that, it’s a lot of playing around. What Lisa and Ive recently worked on was making innovation a way of life so that every time you see something, you say something.

“We dont think of innovation solely as the next flavor that’s going to be on the shelf.”We always gave people permission to play in the web.The reason brainstorming sessions don’t tend to work, is we expect people to become innovative in these next five hours.

So, if you think of innovation as a way of life, then it becomes what you do daily, and you look at things differently. I like to say when you’re driving home, go a different route, because you never know what you’re going to see. When you get out of that habitual mindset, you’ll think about your business differently, almost naturally. Innovation — this way of life — is one of our buzzwords.

Lisa: I think building that innovative culture is a responsibility, but also a challenge for a company like Coda. I mean, we’re not new. We’ve been around five, six years and we have some of the leading chocolate bars out there. We’re known for flavor systems.

Where our goal is to create a culture of innovation, you get these little pockets of creativity and innovation, and then it starts snowballing. You build on it, get people excited about it, and move it forward. That’s how everybody gets involved in innovation.

One of the goals of that pipeline process is to combine inspiration and discipline. But you don’t just want to be innovative in the next flavor. That isn’t doing enough for our consumers. Weve educated them on the potential flavors could bring. But now we really want to be much more innovative across the board and see what kind of culture of innovation Coda can do.

We’re looking at the packaging, how we interact with retailers, how we use digital messaging to support our retailers and support our products. We dont think of innovation solely as the next flavor that’s going to be on the shelf.

Aaron: From a supply chain perspective, how do you go about sourcing ingredients?

Lisa: We have some wonderful partners that have been with us at Coda. People that bring us chocolate from other parts of the earth.

We continue to keep building our ecosystem of partners. We look at different flavor houses and different food type researchers to be partners with us to broaden our ecosystem. It’s something that’s very much top of mind, even more so during COVID, because we’re feeling  very fragile about our supply chains.

Glenn: Yeah, I think Lisa, that’s one thing you and I bring, not only to Coda, but I think to the cannabis industry, is the whole CPG discipline of how we look at suppliers and procurement. We need to go out there find some smaller flavor labs with incredibly creative folks.

I think the whole notion of expanding the supplier and vendor base, is pretty unique in this industry and that’s one of the strengths we bring to Coda.

Lisa: Our goal is to really create an ecosystem of different suppliers. I just think that that’s something other industries — you talked about pharmaceuticals earlier — have done. Cannabis is just starting to get there, but that’s where you get exponential opportunities.

We’re really looking at cross-functional and interdisciplinary teams with outside partners. Cannabis is at the stage now where I think it’s looking for more sophisticated technologies and new ways of deploying. We’re also really interested, as Glenn said, in some of the younger, more entrepreneurial firms that want to possibly expand their reach into cannabis as well.

Aaron: Okay, great. So my next question is can you give me an example of a challenge that you run into frequently? And this can be either a cannabis challenge or a business challenge?

Lisa: I think one of the challenges that cannabis faces in general is educating consumers about our market. One of the opportunities we have is to bring people into the market. We’re at the same time developing products for people who are in the cannabis space and are active users and have varying degrees of understanding of how they’re using the category in their daily lives.

We’re also trying to create products and education to invite people into the cannabis market. That’s a different challenge than if you’ve had an Oreo cookie, and people kind of understand cookies. They understand Oreos, and then they understand organic Oreos and all the other permutations of two chocolate cookies with a vanilla thing in between. Our goal is to expand the ability for people to access cannabis in their lives.

That is a very unique business problem. And it does represent a bit of a screen, are you going to do some of your products for more sophisticated users and others for less sophisticated users?  Cannabis has consumers that have been taught essentially to think about milligrams; there’s one of the key components of choice. People will look at the product and flavor, and then they look at the milligrams and the price point.

That’s very unique to what we would find on CPG. You don’t necessarily look at dollars per milligram when you buy a cookie. So, if you’re trying to make a premium product with premium flavors, how do you say, Well, yeah, there’s dollars per milligram, but this product has all these other technologies to create the warming or whatever.” “Innovation in products and new categories is critical to get the industry beyond common confections.”

So you kind of have a dual issue. You’re trying to get people educated on a new category and how they use it. But the education of the consumer in terms of the potential and the possibilities that they can access is going to be very important.

Aaron: What trends are you following in the industry?

Lisa: Beyond paying close attention to legalization progress across the country and monitoring how states are setting up their regulatory standards, were focused on which consumer demographics are incorporating cannabis into their wellness and self-care practices—and how Coda Signature products fit into their daily routines.

Glenn: For edibles, fast acting” is probably beyond a trend and it will be interesting to see where this nets out. Consumers appear to be balking at the slightly higher price point for fast-acting gummies, but there may be a market for after-dinner dessert items. In other trends, use of minor cannabinoids and terpenes for specific benefits appears to be a solid consumer need, but this is going to require solid science to see if these products truly work. Innovation in products and new categories is critical to get the industry beyond common confections.

Aaron: Okay great! Lastly, what would you like to learn more about?

Lisa: Were fascinated by the technological advances being made in the cannabis industry, and how those achievements may enrich the consumer experience moving forward. Were also interested in the growing body of scientific research around how cannabis products can enhance peoples health and wellness.

Glenn: U.S. legalization and the constant changes in regulations require someone to distill the information and do a weekly report on changes.

Aaron: Thank you both! That concludes the interview!

Analysis of 2020 Ballot Measures

By Laura Bianchi, Justin Brandt
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November 3 was a historic night for legalization across the country. Only a decade ago, cannabis was illegal for nonmedical use in all 50 states. Now, the tide has turned, and every presented cannabis-related initiative has passed, pushing the U.S. adult use cannabis market to 15 states with a population of over 110 million. If nothing else, this year’s election results provided clarity that American voters have become more open to the benefits of cannabis.

Here’s a list of states that passed cannabis-related measures in the 2020 election, along with an analysis of each initiative and what it means for the future: 

New Jersey: Public Question 1

New Jersey’s ballot proposed and ultimately passed the measure Public Question 1, making it the first Mid-Atlantic state to legalize adult use cannabis.

Expected to take effect January 2021, this measure legalizes the adult use of cannabis for anyone over the age of 21 along with cultivation, processing, and retail sales. The Cannabis Regulatory Commission oversees the state’s medical cannabis industry and will now be responsible for the new adult use cannabis market. However, since the ballot measure didn’t outline many details, it has left a lot of discretion up to the state’s legislature, leaving residents awaiting specifics about home-grow rules, possession limits, and other retail regulations.

Public Question 1 will apply the state sales tax of 6.625 percent. However, under this measure, the local jurisdictions are permitted to implement an additional 2 percent, so the final tax rates remain undecided. With New Jersey’s nearly 8.9 million residents, it’s projected to have adult use sales of around $375 million in just the first year and estimated to reach up to $900 million by 2024.

Mississippi: Initiative 65 & Alternative 65A

Mississippi had two competing measures on the ballot to legalize cannabis for medical purposes: Initiative 65 and Alternative 65A. Initiative 65 prevailed with 74 percent of the vote.

Between 2018 and 2019, over 228,000 Mississippi residents signed a petition that led to Initiative 65 appearing on the ballot. And by mid-2021, the legalization of medical cannabis is expected to take place. This initiative is designed to allow medical cannabis treatment for people with at least one of 22 specified qualifying conditions, including ALS, post-traumatic stress disorder (PTSD), epilepsy and Parkinson’s disease. The passage of the initiative allows those patients to possess up to 2.5 ounces of cannabis at one time with a cannabis sales tax set at the state’s regular sales rate of 7 percent.

The Mississippi Legislature proposed the competing ballot item, Alternative 65A, in what supporters of Initiative 65 believed was an effort to confuse voters. This measure restricted the use of cannabis to only terminally ill patients but did not specify qualifying conditions, possession limits or a tax rate leaving the results somewhat ambiguous with many details to be set by Mississippi Legislature. Initiative 65 easily won over the alternative with nearly 74 percent of voters approving versus just over 26 percent for Alternative 65A.

Montana: I-190 & CI-118

Montana became the 14th state to legalize adult use, passing both cannabis-related initiatives on the ballot: Initiative 190 (I-190), which creates a legal adult use cannabis market, and Constitutional Initiative 118 (CI-118), which supplements I-190, allowing the state to establish the legal purchasing, consumption or possession age of 21.

These ballot issues will go into effect beginning January 2021. Initiative I-190 legalizes the adult use and possession of up to one ounce of cannabis or 8 grams of concentrate. It also allows individuals to cultivate up to four cannabis plants and four seedlings in their residence.

Depending on the circumstances, anyone serving cannabis-related sentences for reasons no longer considered crimes under I-190 may request to be resentenced or have their conviction expunged.

Cannabis and infused product retail sales will be taxed at 20 percent. Following the Montana Department of Revenue’s deduction of administrative costs to enforce the measure, remaining tax revenue is set to be allocated to the state’s general fund, veterans programs, conservation programs, drug addiction treatment programs, and local law enforcement and healthcare workers.

South Dakota: IM-26 & CA-A

South Dakota made history as the first state to legalize both medical and adult use in the same election, moving from total prohibition to legalization in just one night. First came Initiated Measure 26 (“IM-26”), South Dakota’s medical cannabis ballot item, passing with nearly 70 percent of the vote. Then came the adult use initiative, Constitutional Amendment A (CA-A), narrowly passing with almost 54 percent of votes.

Both ballot issues are set to go into effect on July 1, 2021. IM-26 establishes a medical program for individuals with a physician-certified debilitating medical condition. Patients can possess a maximum of three ounces of cannabis and, for patients registered to cultivate at home, they will be permitted to grow up to three plants at minimum unless otherwise prescribed by their physician. However, under this measure, the Department of Health can limit the number of cannabis products each person may possess and make amendments to the conditions qualified as debilitating.

CA-A legalizes the adult use of cannabis for adults age 21 and older, allowing possession or distribution up to one ounce, and for those living in a jurisdiction with no licensed retail stores, permitting the growth of up to six cannabis plants in a private residence. This measure also requires the state to adopt hemp laws.

Marijuana sales will be taxed at 15 percent under Amendment A, estimating revenue of $29.3 million by 2025. After any revenue is used for costs associated with implementing this measure, remaining revenue will be divided between public schools and the state’s general fund. 

Arizona: Prop 207

On November 3, voter initiative Proposition 207 passed with 60 percent of the vote, and Arizona became the 13th state to legalize adult use cannabis – a movement that’s expected to make a great addition to the state’s already thriving medical cannabis program.

Also known as the Smart and Safe Act, this initiative legalizes the possession and use of cannabis for residents age 21 and older. It requires the Department of Health and Human Services to develop the rules regulating businesses in areas like licensing of retail stores, and production and cultivation facilities. Individuals will now be allowed to grow up to six plants in their private residences, with no more than 12 plants per household.

Prop 207 placed a 16 percent excise tax on cannabis sales in addition to the state’s 5.6 percent, totaling a 21.6 percent tax. It is estimated that legal cannabis will generate $300 million in revenue, which will be divided between community college districts, municipal police, sheriff and fire departments, fire districts, highway funds and a new Justice Reinvestment Fund. This initiative also allows anyone convicted of certain cannabis-related crimes like possession, consumption, cultivation or transportation to petition for the expungement of their record beginning July 2021.

Each of the initiatives above is expected to provide a wealth of job opportunities and economic growth for their state. This transition also allows those in the cannabis law and regulation industry the chance to develop and implement meaningful and accessible social equity licensing programs. In addition to day-to-day business needs, our firm will be working closely with clients as they transition from strictly medical cannabis licenses to dual licensing. We will also help new licensees build out and develop their adult-use licenses with long-term success in mind.

Cannabis has quickly become a mainstream health and wellness solution for people all across the globe. With the estimated annual national market for cannabis being $50-$60 billion, it’s believed to be a real solution to many local economic shortfalls caused by COVID-19, opening up the country and cannabis industry to a whole new world of opportunity.