Cannabis Law Prof Blog

Editor: Franklin G. Snyder
Texas A&M University
School of Law

Saturday, September 16, 2017

Veterans are fighting the VA for pot instead of pills

VeteransVeterans who have served in war zones and suffer with PTSD are one step closer to getting marijuana to treat it with.  This February the government approved the first study of marijuana's affects  on veterans with PTSD.

The government funded study has struggled to find eligible participants. The Department of  Veterans Affairs has not cooperated. The VA is refusing to refer eligible veterans for the study. So researchers are having to seek participants out on their own. This process has been slow with over 3000 veterans interviewed and less than 30 being accepted. The requirements are strict and confidential. Most veterans are ineligible to participate because they live too far from the study or do not meet the requirements. 

The VA has remained firm in its policy against medical marijuana. VA employees are prohibited from discussing medical marijuana  with veterans. Regardless that the study is government funded, the VA refuses to assist the study with referring eligible veterans. Researchers feel access to the VA system would boost recruitment and speed up the process by screening out veterans faster.

    "To be eligible for the study veterans must be diagnosed with chronic PTSD caused by military service. Men and women of     all ages are encouraged to apply. 26 Veterans are currently participating in the study."

Some veterans are seeing marijuana as an alternative to addictive medications. One veteran organization is wanting to fight suicide and chronic pain with marijuana. The organization claims that the medicines proscribed by the VA and doctors are addictive. When those medicines no longer work because the person has become tolerant or addicted to the medicine, veterans must find help some other way. 20% of the nations suicides are the men and women who have worn the nation's uniform.

 

September 16, 2017 | Permalink | Comments (0)

Insurance Company Seeks to Avoid Liability Concerning Medical Marijuana

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A Maine insurance company has pushed a case concerning the reimbursement of one of their client's medical marijuana expenses up to the Maine Supreme Court. Although the state legalized medical use of marijuana in late 1999, Maine's Supreme Court has yet to consider the issue of an insurance company's liability under federal law when it is forced to reimburse one of its policyholders for his or her medical marijuana purchase. Many states are divided on this issue. As The Associated Press states:

Five states — Connecticut, Maine, Minnesota, New Jersey and New Mexico — have found medical marijuana treatment is reimbursable under their workers compensation laws, according to the National Council for Compensation Insurance. Florida and North Dakota, meanwhile, passed laws this year excluding medical marijuana treatment from workers’ compensation reimbursement.

The final decision in this case has the potential to be very beneficial or detrimental to the medical marijuana business in Maine. If Maine's Supreme Court ends up ruling that medical marijuana should be covered under insurance policies, it will likely open the door to many more people being able to use medical marijuana as a treatment for their ailments because the out-of-pocket cost of medical marijuana would no longer be an issue. However, if the verdict states that insurance companies do not have to reimburse their clients when dealing with medical marijuana, it is likely that many people will shy away from medical marijuana as a treatment because of cheaper treatment alternatives that would be covered under their insurance policies. 

September 16, 2017 | Permalink | Comments (0)

US POT Meets the USPTO: Can Marijuana Strains Be Patented?

USPTO or US POT? Protecting a marijuana brand is likely one of the first things a startup thinks about early on in the business process. But what startup marijuana companies may want to consider is the possibility of patenting their cannabis strains. While it's unclear whether the United States Patent and Trademark Office ("USPTO") will issue a patent for marijuana, some companies have submitted applications with the hope that it meets the standard patent requirements for issuance.

The USPTO allows for plants to be patented, such as strawberries, peanuts, and roses. Under the Plant Patent Act of 1930, the USPTO grants patents to "those that have invented or discovered and asexually reproduced a distinct and new variety of plant." These patents last for twenty years from filing the application, which is enough time for the inventor to profit from their plant invention before being undersold by an imitation. For this reason, startups may want to consider looking into the patent application procedure.

Before I mentioned how a startup might concern itself with branding. Well, unfortunately, marijuana-related trademark applications are likely to be denied registration by the USPTO. Thus, often the only protection a marijuana business can attain for their brand is a state trademark, which doesn't do anything for protecting their company brand across state lines. However, if a company were to acquire a patent for their strain, it would have rights in all fifty states. One commentator compares and explains these rights:

But even if these patents issued, what could the prosecuting party actually stop someone else from doing? The names of the plants themselves are not patented, but the genetics are. If I create a new strain and call it "Pagan Feast" and got a patent for it, I would not be able to stop someone in a state where I did not have any trademark rights to Pagan Feast from using the Pagan Feast name for a different marijuana strain. However, I would be able to use my patent to stop someone in all fifty states from selling my specific genetic product under any name. If I wanted to have exclusionary rights regarding the name itself, I would need to obtain trademark protection in as many states as possible, which, unlike patents, requires that I actually be doing business with that name in each state in which I want protection.

It seems that it's at least possible (while still a little unclear) to get a patent on a marijuana strain. For example, Patent No. 9095554 was granted in August of 2015 to weed growers in California; this was the first patent issued for a marijuana strain that contained "significant amounts" of THC.

The legalization of marijuana may be on its cusp, and plant-growers have been fast to submit their patent applications with the hope that legalization is near. Startups would be wise to follow their lead.

September 16, 2017 | Permalink | Comments (0)

Move Over Amsterdam

Content_amsterdam_coffee_shopSin City may soon have a new vice. Nevada is looking to be the first legalized state with cannabis lounges and many hope this will create a new avenue of tourism. Lounges, otherwise known as coffee shops in Amsterdam, are regulated areas in public where cannabis users can smoke. They are essentially cannabis bars. Reid Nelson with The Hill reports that the Legislative Counsel Bureau in Nevada has given the green light to cities and counties to adopt rules that will allow lounges to go into place. According to the Counsel, Nevada's state law does not prohibit the creation of lounges by local governments. The idea of legal smoking lounges are facing both support and opposition from multiple sides. As reported: 

The Nevada legislator who spearheaded much of the legalization movement, state Sen. Tick Segerblom (D), has said he thinks marijuana will attract new tourists to the state.

“We’re going to really market this thing around the world,” Segerblom told The Hill in a recent interview...

But legalization skeptics say the growing prevalence of marijuana stores, and lounges where those products can be consumed, increase the risk of crime associated with the nascent industry.

“The people of Nevada wanted folks not to go to jail for using marijuana,” said Kevin Sabet, who heads the anti-legalization group Smart Approaches to Marijuana. “I don’t think they envisioned pot clubs in their neighborhood.”

The difference in opinions between advocates and skeptics will surely create some interesting debate within local communities. However, there is an additional player who should not be forgotten: Casinos.

Thomas Moore with the Las Vegas Sun wrote about the difficulty Casinos are having with legal cannabis. The Nevada Gaming Commission is trying to address these issues and give guidance to Casinos. Specifically, Casinos must balance the conflict between federal and state laws. If now Las Vegas wants to become a worldwide destination for cannabis tourists, Casinos are unlikely to welcome this competition.  It seems Casinos have an incentive to oppose cannabis lounges. 

Traditionally, Amsterdam has been known as the most popular destination for cannabis tourism. Some people in Nevada are hoping to change that. Local communities will soon debate the pros and cons of allowing lounges in their cities and casinos are unlikely to sit by quietly. 

September 16, 2017 | Permalink | Comments (0)

Marijuana Industry Miraculously Weathers Hurricane Irma

2560px-Irma_2017-09-03_1545ZIf you have paid any attention in the last few weeks to the news and social media outlets, you would know that many have faced the wraths of numerous hurricanes wreaking havoc in Houston, Southwest Asia, and various islands in the gulf. Irma swept through causing a path of destruction, leveling the British Virgin Islands, Barbuda, St. Martin. Along its path, Irma hit Florida causing severe flooding and prompting Governor Rick Scott to declare a state of emergency. Surprisingly, despite Irma's destruction, Florida's multimillion supply of medicinal marijuana remained untouched, reports say–

“We were thankfully spared the worst of the storm and have fared well considering the plight of others,” said Flor Santiesteban, a spokesman for Modern Health Concepts, based in Redland in Southwest Miami-Dade. “Our cultivation and processing facilities are up and running with backup power at the moment, and we resumed filling patient orders yesterday.”

Other distributors, including The Green Solution and Liberty Health Sciences in Alachua, made out fine, according to the companies. Bill Monroe, director of dispensary management for 3 Boys Farm, one of the newest license-holders in the state, said, “We got a little bit of damage to some top elements of the greenhouse from some things blown around,” but otherwise emerged intact.

Shockingly, all growing facilities were impacted by the hurricane, yet a majority of all greenhouses, distribution centers, and retail outlets sustained little damage. Unfortunately, gas shortages in the state stalled much of the delivery services to some 36,000 medical marijuana patients. There's good new though as delivery services resumed in Miami on Thursday and other distributors in South Florida hope to be making deliveries as early as next week. 

September 16, 2017 | Permalink | Comments (0)

Legal Marijuana Is Almost Here. If Only Pot Farmers Were on Board.

In November 2016, Californians voted to legalize marijuana for adult use by passing Proposition 64, potentially laying the ground work for the state to open the largest legalized marijuana market in the country. Although licenses to grow the crop will not be handed out until January 2018, the state has been encouraging potential licensees to apply for months. Conveniently, the state also happens to be the l Cali argest producer of marijuana in the United States. In fact, the counties of Mendocino, Humboldt, and Trinity make up the famed Northern Californian region known as The Emerald Triangle, named due to its reputation as being the largest cannabis producing region in the United States.

Then how is it that Californians are facing the very real possibility that there may not be enough regulated marijuana to serve the new legalized market?

Writing for the New York Times, Thomas Fuller reports that marijuana farmers in the Emerald Triangle are simply having a hard time seeing the benefits of entering the legal marketplace:

“I know that the numbers don’t look great; there are a lot of folks that aren’t coming in,” said Hezekiah Allen, the executive director of the California Growers Association, a marijuana advocacy group. “People are losing faith in this process.”

Based on data from various state and county agencies, Mr. Allen, of the growers association, estimates that about 11 percent of growers — about 3,500 of 32,000 farmers in the Emerald Triangle, which covers Mendocino, Humboldt and Trinity counties — have applied for permits. Most have been deterred by the voluminous paperwork to obtain a permit, the fees and the taxes, he said.

Proposition 64 decriminalized the possession of small amounts of marijuana, allowed individuals to grow six plants at home and set rules for the sale and cultivation of regulated plants, seeking to end what had been two decades of a freewheeling and largely unregulated medical cannabis system. The punishment for growing or possessing large amounts of unregulated marijuana was downgraded to a misdemeanor from a felony (emphasis added).

And therein lies the rub. By reducing potential penalties for large scale growers, Proposition 64 could be severely curtailing the legalized market it hoped to create.

“You could have 1,000 pounds in your hotel room right now and you might be charged with just a misdemeanor,” Thomas D. Allman, the sheriff of Mendocino County, said. In a small number of cases, traffickers can be charged with conspiracy, which is a felony.


California took a different path from Colorado, the first state to legalize marijuana, where possession of large amounts of unregulated cannabis remains a felony and where the black market is significantly smaller, according to Sean McAllister, a lawyer who specializes in cannabis cases in both states.


In addition, Fuller writes that growers view the new legalization process as much more burdensome than what they are accustomed to:


For the last two decades growers operated under a lightly regulated system of medical cannabis collectives. Legalization now brings a deluge of rules passed by towns, counties and the state.

While increased regulation has predictably deterred some growers from applying for a state license, another hurdle remains in that California growers can simply make more money by selling their crop -illegally- across states lines.


California, which by one estimate produces seven times more marijuana than it consumes, will probably continue to be a major exporter — illegally — to other states. In part, that is because of the huge incentive to stay in the black market: marijuana on the East Coast sells for several times more than in California.

By submitting their growing operations to state inspection, it seems likely that growers would also be cutting into their profits. As of right now, it appears that growers in California are not willing to hurt their bottom line in exchange for the opportunity to come out of the shadows and operate openly. Consequently, the situation cast serious doubt on California’s ability to smoothly transition over to a regulated market with the potential to raise billions in tax revenue.

September 16, 2017 | Permalink | Comments (0)

Strategies to lower canna-business income taxes.

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You might think that starting a retail marijuana business (in a state where it's legal of course) could be a great way to earn lots of money.  You might be right.  But in a cannabis-related business, a prudent entrepreneur needs to do some extra planning to see whether or not income taxes will eat up the profits. 

See, the Federal government has something of a split personality where marijuana is concerned.  On the one hand, it's still illegal under the Federal Controlled Substances Act.  On the other hand, the Internal Revenue Service doesn't care whether income is derived from legal or illegal activities (James v. United States, 366 U.S. 213, 218 (1961)) - they expect income taxes regardless. 

Of particular interest to canna-businesses is IRS regulation "IRC section 280E", which disallows otherwise legitimate business expenses if the income is generated from the "trafficking", or sales, of certain controlled substances, including marijuana. This means that a state-legal cannabis business cannot deduct normal operating expenses, such as rent, payroll, and utilities. Consequently, the business ends up paying income tax on these expenses.  Unfortunately, without careful planning, one could find that the tax bill to the IRS is greater than the net profits!

In his article “Five Steps for Cannabis Businesses to Minimize Punitive 280E Taxation”, Daniel Rahill outlines some possible strategies to reduce the tax burden caused by section 280E.  Rahill notes that this section does not allow ordinary business deductions, but it does allow a business to deduct its cost of goods sold (COGS) from gross sales:

The history of cannabis taxation leaves us with the important premise that, while IRC Section 280E disallows any deduction for ordinary and necessary business expenses for illegal controlled substance businesses, COGS is not considered an expense, but rather an adjustment taken into account in arriving at gross income. Under Treasury Reg. Sec 1.471-6(a) and -11, taxpayer must include as inventoriable costs all direct (e.g., the cost of inventory and delivery, and the cost of materials and labor for manufactured inventory) and indirect production costs (i.e., rent and utilities related to inventory). While a taxpayer cannot use IRC Section 263A to turn IRC Section 280E non-deductible expenses into ultimately deductible items, taxpayers should nonetheless be diligent in maximizing the proper expenses that should get allocated to inventory, and ultimately, COGS.

Rahill also notes that a typical cultivator would normally allocate most of its expenses to COGS, whereas a typical dispensary would have far more typical business expenses that are disallowed under 280E.  He recommends diversifying the retail business activity to legitimately allocate normal business expenses into business activities (such as counseling services, or retail sales of non-cannabis products) that do not involve "trafficking" a controlled substance.  By doing this, the other business activities can deduct the expenses on their income, reducing the overall income tax burden on the entrepreneur. 

~ Zackery D. Artim

September 16, 2017 | Permalink | Comments (0)

"Cannabis Lounges" May Become Reality in Nevada

Conflict over cannabis law is often framed in terms of the "federal vs. State" paradigm. That is accurate, but there is more to it. The conflict over cannabis arises within governments as much as between them. There is plenty of internal strife at the state level, even between those who support, or at least tolerate, legal cannabis. Consider Nevada, where the push for "cannabis lounges" has raised some differences in perspective. From Leafly.com

 

Gov. Brian Sandoval is raising concerns about a new opinion by lawyers for the state legislature that says nothing in state law prohibits local governments from allowing marijuana consumption in businesses such as cannabis lounges and cafes. 

 

“I did not support them previously,” Sandoval told the Las Vegas Review-Journal on Tuesday. “I don’t support them now.” 

 

Sandoval said in an email to the Reno Gazette-Journal he’s concerned that such establishments could pop up “piecemeal throughout the state” with different rules and regulatory structures. 

 

He also questions why Sen. Tick Segerblom proposed legislation this spring to legalize consumption in some public places if the legal authority already existed. 

 

The Nevada Gaming Commission has its own concerns as well. 

We can categorize states as "pro" or "anti" cannabis, but it is a little more nuanced that than. The legislature, the governor, the various agencies, et al. have their own stances on how to approach cannabis. And this is just at the state-level. There is real complexity in mapping out these conflicts across all levels of U.S. government. Eventually it begins to look like three-dimensional chess.  

All of this said, perhaps conflict between branches is a good thing; a sign of a robust and successful tripartite system of government. But for better or for worse, this kind of intrastate conflict has handicapped the legal status of marijuana. Take Nevada for example: cannabis is legal, but it is illegal to use it in public establishments (at least depending on who you ask). This presents a quandary for tourists who wish to consume it legally. A proposed solution is allowing the cannabis lounges. At the state level, it there is no unified vision of marijuana policy. Some support the lounges and some don't—the governor is cautious, the Legislative Counsel Bureau says it's fine, the Gaming Commission just wants to ensure that marijuana and gambling remain far apart. The end result is that for now, the term "legal marijuana" still has plenty of qualifications attached to it. So practically speaking, while marijuana is currently legal in some states, it is really quasi-legal at best.  

September 16, 2017 | Permalink | Comments (0)

Texas Can-nabis

Texas is moving forward with its medical marijuana program and three dispensaries are ready to begin work. Alex Samuels reports, Compassionate Care dispensary is ready to begin cultivation of medical marijuana pending its approval by the Texas Department of Public Safety. The Texas Compassionate Care Act, requires that the department have its first facility approved by September 1, 2017.

Only three dispensaries will provide the medical grade CBD oil for patient use and will provide a very small number of patients with treatment according to Samuels. Though the numbers are low, as described by Samuels below, it is a start for the Lone Star State. 

Despite the time and effort each dispensary will take to get licensed and begin producing cannabis oil, each will only be serving a select group of individuals.

According to Sindi Rosales, the CEO of the Epilepsy Foundation of Central & South Texas, roughly 160,000 Texans have intractable epilepsy — only 0.57 percent of the state’s total population.

“Even if this ends up only benefiting a small number of people, I think they’re grateful that they have this opportunity,” Rosales said. “Even if it’s a small number, why not provide this medicine if it’s available?”

Other advocates, however, point out that while Texas is making strides in the right direction, an even smaller group — epilepsy patients whose symptoms have not responded to federally approved medication — will be allowed access to the medicine.

“This is kind of a bittersweet time for those of us who are advocating for reform,” said Heather Fazio, a spokesperson for Texans for Responsible Marijuana Policy. “We’re happy the process is moving along, but it’s such a limited program and we know there are so many other people who could benefit from this if the program was more inclusive.”

Despite the small population of Texans who will actually able to use the medicine, advocates agree that the dispensaries could be life-changing for those who benefit from it.

“We’re just asking for another tool in our toolkit that we can offer people who are desperate and that’s what this is,” Rosales said. This may or may not work, but it should definitely be offered.”

This is a major step for the state. Provided all three dispensaries are granted licensing by the department Texas will finally join several other states in the collective movement towards legalization. Read more about the Compassionate Care dispensary here

September 16, 2017 | Permalink | Comments (0)

Thinking About the Ill: Who Does This New Regulation Really Affect?

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In California a new state regulation will require dispensaries to shut down operations by Dec. 15 or risk not being able to get the new license required to operate as a dispensary and distribute "medical marijuana". But what will happen to the patients who depend on dispensaries to get their medically necessary marijuana? The State believes that three months is enough time for patients to get in contact with a caregiver that will meet their needs. Will this new regulation better protect these patients? Aileen Wingblad gives a brief insight to this subject. 

The state’s Medical Marihuana Licensing Board on Tuesday said the December deadline gives ample time for dispensaries to wind down service, and that it will begin that day to accept applications for licenses – required under a new regulatory system aimed at increasing oversight and taxing the industry.

 

The new licensing regulations list “provisioning centers” for the sale of medical marijuana, and the licensing process asks applicants to disclose any marijuana-related business they’ve been involved in, such as a dispensary. Harns said background investigations – paid for with non-refundable application fees – will be conducted before licenses are issued. Falsifying information is cause for being denied a license. Criminal history can also affect eligibility.

 

Until licenses are issued, registered patients will have to grow their own marijuana or obtain it from caregivers, as allowed under existing law.

 

Read the full article. 

September 16, 2017 in Medical Marijuana, State Regulation | Permalink | Comments (0)

Family Law Lags Behind in the Wake of Ending Cannabis Prohibition

     Family imageA New York mother possessed amounts of marijuana not even enough to be a misdemeanor.  Prosecutors did not pursue charges, but Child Protective Services (“CPS”) decided it was enough to remove her children.  Click here to read the full story from 2011.  

    A Michigan couple was state-licensed to use and grow medical marijuana for epilepsy and multiple sclerosis; however, CPS removed their six-month-old daughter, sending her to live with a grandmother a few hours away.  The couple got their daughter back, but only under CPS supervision.  Click here to read the full story from 2013. 

    Much more tragic, is the Texas couple whose toddler was removed from her home when CPS learned that the couple was smoking marijuana at night after their daughter went to bed.  In a state-licensed foster home the toddler was beaten to death by her angry foster mother.  Click here to read the full story from 2013. 

    As marijuana laws become more relaxed, the injustices to families at the hand of state agencies are on the rise.  If CPS’s policies were updated to be consistent with state law and societal values, these stories likely would not have happened. 

    The public policy behind custody battles and CPS investigations is the best interest and welfare of the child.  Up until recent years, society has generally viewed marijuana use as bad, and our agencies’ policies and state laws have reflected those societal values, as rules and laws should.  Now, however, things have changed.  Marijuana is decriminalized in over half of the states, and many states are adopting some form of legal marijuana use.  Increasingly, marijuana use is no longer associated with danger or even substandard morals.  As such, keeping the best interest of children in mind, it is time to rethink our standards as to agency rules and state laws to keep up with changing marijuana laws.

    Suggested remedies for the problem include reform to the standard for assessing both recreational and medical marijuana use in the home and including “parent-protective” language in state marijuana laws and policies. (Family Law & Cannabis Alliance).  However, these resolutions will take time to evolve.  In the meantime, families are being affected in very real ways.  If you find yourself in a situation like this, a great resource is the Family Law & Cannabis Alliance website.  The website includes cannabis research related to family issues and a page on how to handle CPS.

September 16, 2017 in Decriminalization, State Regulation | Permalink | Comments (0)

Medical Marijuana for Vets

The American Legion passed a resolution condoning the use medical marijuana for veterans suffering from post traumatic stress disorder at its recent National Convention. American Legion Post 630’s resolution urges,

 “PTSDthe United States government to permit Department of Veterans Affairs medical providers to be able to discuss with veterans the use of marijuana for medical purposes and recommend it in those states where medical marijuana laws exist.”

Under current regulations the VA is required to follow federal laws banning the use of medical marijuana in any capacity. VA clinicians cannot prescribe medical marijuana nor will the VA cover medical marijuana subscriptions. The VA website suggests that there is no evidence that marijuana is an effective treatment for PTSD.

A recent study, conducted on patients enrolled in the New Mexico Medical Cannabis Program, found that cannabis is associated with reductions in PTSD symptoms. The study reported that PTSD patients showed a 75 percent reduction in PTSD symptoms while using cannabis. The sample size was relatively small, 80 patients, and the subject needs further study.

As many as 500,000 veterans who served in Iraq and Afghanistan have been diagnosed with PTSD. These numbers are expected to rise in the future. As a veteran I think that it is irresponsible of the VA to not allow its clinicians to prescribe medical marijuana if they think it is in the best interest of their patients. The benefits of medical marijuana are well documented. Recent studies indicate that cannabis might help veterans suffering from PTSD. It is time for Congress to step up and pass a bill allowing medical marijuana for those veterans who desperately need it.

September 16, 2017 | Permalink | Comments (0)

A Push For Sustainability

Flow Kana  bills itself as a branding, marketing and distribution company for small marijuana farmers who grow “sustainable, sun-grown cannabis ... that embraces California values and the small farmer ecosystem.”

In an interview, Steinmetz said the venture will create a facility – called the Flow Cannabis Institute – that will acquire marijuana grown by 80 to 100 farmers in Mendocino and southern Humboldt counties. The facility will then dry, cure and trim the pot and package it for sale at dispensaries with branding labels for Flow Kana and individual farms.

Founder, Michael Steinmetz, feels that there is a big difference between cannabis grown commercially in a warehouse and cannabis grown in the hills. 

Boutique cannabis farmers are grouped together and work collectively using the resources that Flow Kana provides to assist them in going to the market effectively. 

They stand to compete with "big marijuana" next year when recreational Marijuana sales begin in California. 

Recently, the venture spent about $3.5 million to acquire a winery site to convert to a regional processing center for cannabis, which included 87,000 square-feet of industrial space.

 

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September 16, 2017 in Recreational Marijuana | Permalink | Comments (0)

Revenue Potential for a Texas Marijuana Tax

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Although marijuana is illegal in Texas, the Comptroller had collected revenue from the "controlled substance tax" until its repeal on September 1, 2015. In fiscal year 2015, that tax collected less than $7,400. But imagine if Texas legalized marijuana and imposed an excise tax on its sale. How much revenue would that raise for the Comptroller's coffers? To answer that question, Michael Taylor of San Antonio Express-News looked at how much revenue Colorado and Washington raise from their marijuana taxes and fees. He reasoned the following:

The per capita marijuana tax revenue of Colorado, adjusted for Texas’ population, comes to $519 million in annual revenue for the Lone Star State. Now, you might just argue to me that — culturally at least — the Colorado Rockies aren’t a good comparison to Texas. And I might just argue back to you that everything’s bigger in Texas.

These amounts understate the financial potential since they reflect less than two years of data, and the numbers keep growing rapidly. I’m confident that Texas could generate — conservatively — an estimated $500 million in incremental tax revenue per year if the state legalized marijuana.

At the end of this year's legislative session, Governor Greg Abbott signed a $217 billion budget into law. To pay for that budget, Texas will rely, among others, on its sales tax (26.4 percent of total revenue), motor vehicle sales/rental taxes (4.1 percent), motor fuels taxes (3.1 percent), franchise tax (4.3 percent), and insurance taxes (1.9 percent). Those in favor of replacing those taxes with other revenue sources or raising additional revenue should seriously consider the $500 million a marijuana tax could potentially raise if Texas legalized marijuana and taxed its sale. 

September 16, 2017 | Permalink | Comments (0)

Increases in adult use becomes worrisome

Man-smoking-marijuanaOne of the main concerns of opponents to the legalization of marijuana has been the possibility that such legalization would increase adolescent use of the drug. Opponents believed an individual’s future may be negatively affected if marijuana use began at a young age. However, opponents may now have a new concern: adult use of marijuana is increasing “precipitously.” Although the increase in the number of adult users may not be concerning, it is the increase in the number of adults that are “getting high all the time” that is alarming. Based on the latest federal survey data, Christopher Ingraham highlights this new concern by a comparison of marijuana users to alcohol users:

Marijuana users are nearly three times as likely as drinkers to consume their drug of choice daily.

Some of that daily marijuana use is probably inherently moderate and nothing to be concerned about. But public health researchers worry that much of it is a result of problematic use — drug dependency.

"While alcohol is more dangerous in terms of acute overdose risk, and also in terms of promoting violence and chronic organ failure, marijuana — at least as now used in the United States — creates higher rates of behavioral problems, including dependence, among all its users," as Carnegie Mellon University researcher Jonathan Caulkins wrote for the magazine National Affairs earlier this year.

This begs the question if this new concern may be a potential roadblock to legalization of the drug down the road. Considering the latest federal survey data, States may become more hesitant in participating in the marijuana market, thereby delaying or outright prohibiting legalization of recreational marijuana.

September 16, 2017 | Permalink | Comments (0)

Wednesday, September 13, 2017

Schain: Keystone State MMJ rollout "got it right"

AaaPennsylvania's medical marijuana program has hit a few bumps on the road so far, and is currently battling lawsuits claiming that regulators improperly granted licenses to the winning applicants.  But Philadelphia lawyer Steven Schain of Hobart Law Group is offering praise and support for regulators who, he says, "got it right."  He offers his take on things in a new piece on the Cannabis Business Executive site, Lessons Learned From the First Phase of Pennsylvania’s Marijuana Program.   A sample:

Ignoring the program’s primary objective of swiftly providing sick people with medicine, the first phase license denials and awards triggered a tidal wave of malevolence to wash across Pennsylvania.

 

Seduced by their own PowerPoint deck’s glitter, both high and mighty and hardscrabble applicants received a rude awakening in the form of both denied ­applications and modest scoring. Stunned by their lack of sway and convinced that shenanigans prevented fair consideration, lawsuits ranging from “striking Pennsylvania marijuana law as unconstitutional” to “disqualifying successful applicants for alleged wrongdoing in other jurisdictions” are being loudly threatened across all 67 counties.

 

Although the program allows each applicant to receive a de-briefing on how respective applications were scored, and for unsuccessful applicants to appeal their scoring, here is what the first phase results revealed:

 

▪ Life ain’t fair.  Mirroring Arizona’s 2016 dispensary permit results (in which 750 applicants sought 31 licenses), each program application had less than 1 in 11 chance of winning.  Further, because the program omits any residency requirement, Pennsylvanians, whom had never grown, processed or sold marijuana, had even less of a chance.

 

▪ Big marijuana carried the day. Approximately 70 percent of the winning applicants were affiliated with growers, processors and dispensaries already operating in multiple legalized marijuana jurisdictions. Beyond being able to demonstrate a history of being a transparent, compliant and profitable marijuana-related business, winning applications were crafted by experts at submitting winning applications, which is distinct from growing, processing and selling marijuana.

 

▪ Consultant means failed grower.  Like a rube swindled by a suddenly exiting town carny, seemingly sophisticated Pennsylvanians got suckered by consultants with shiny trade show booths leveraging claims of “Colorado or California growing experience” and selling fanciful and proprietary lighting, fertilizing and yield optimization techniques.  Also, enjoying handsome windfalls at 400 unsuccessful applicants’ expense were lobbyistS and juiced-in lawyers offering connectivity to politicos with jazzy titles and zero decision-making process impact.

 

▪ Follow the rules closely. Does your diversity definition encompass armed forces veterans or involve third-party certification?  Regardless, because Pennsylvania’s marijuana law defines a diverse group as a certified disadvantaged, minority-owned, women-owned, service-disabled veteran-owned or veteran-owned small business, the program’s unique criteria disqualified many seemingly qualified applicants.

 

▪ Pennsylvania’s Program Is Built to Last.  Perceived inequities aside, the DOH and the program got it right.  Beyond meeting every self-set deadline and blitzing through 500 applications in 90 days, licenses were generally awarded to the best-funded applicants with proven track records of success.  In an exceedingly volatile industry hinging upon timing, adequacy of funding, and fullness of regulatory compliance, in the first phase the DOH has positioned the program for its greatest likelihood of swift success.

Read the whole thing. 

September 13, 2017 in Business, Medical Marijuana, State Regulation | Permalink | Comments (0)

Congressman: "We're completely on our asses" on marijuana

AaaRep. Tom Garrett (R-Va) wants Congress to get off its collective derrière and resolve the problem of marijuana legalization by turning it over to the states.  Earlier this year he introduced the Ending Federal Marijuana Prohibition Act of 2017 (H.R. 1227), which would remove cannabis (both marijuana and hemp) from the Controlled Substances Act entirely and turn regulation over to the states.

It's basically the same bill that Sen. Bernie Sanders (I-Vt) introduced a couple of years ago.  In a story on PJ MediaGOP Lawmaker on U.S. Pot Policy: ‘We’re Completely on Our Asses,’ he has some blunt words about why he favors the approach:

On Monday, Garrett doubled down on the legislation, explaining the reasons he supports state discretion over medical marijuana policy. After he outlined his reasoning to his constituents, Garrett said at the Cato Institute, “I didn’t have anyone vehemently opposed.”

 

The Ending Federal Marijuana Prohibition Act of 2017 would remove marijuana from the list of federally controlled substances, bringing it in line with alcohol and tobacco standards. Decriminalization would eliminate a justice system that Garrett believes disproportionately disenfranchises the poor and politically weak, would allow medical professionals rather than the federal government to make key decisions for conditions like epilepsy, and would allow states to realize hundreds of millions of dollars in economic revenue annually.

 

Garrett’s district grows about seven-eighths of all tobacco in Virginia, and his state, Kentucky and Tennessee, he said, could be economic “monsters” in the industry of agricultural hemp due to climate advantages if marijuana were decriminalized.

 

.  .  .

 

“You should be free to do what you so choose to do so long as it’s not an impact on others that’s negative. That’s easy, and that’s who we’re supposed to be as a nation,” he said, adding that the government closest to the people – local government – governs the most efficiently.

 

Garrett, a former prosecutor, described the Republican Party as “AWOL” when it comes to marijuana policy. At the same time, he said that more dangerous drugs like heroin should be treated differently for their rapid and widespread destruction.

 

“I am not pro-marijuana. I’m not anti-marijuana,” he said. “I’m pro-Constitution. I’m pro-liberty. I’m pro-government that enforces its laws.”

 

September 13, 2017 in Drug Policy, Federal Regulation, Legislation, Medical Marijuana, Politics, Recreational Marijuana | Permalink | Comments (0)

Monday, September 11, 2017

Congress extends restrictions on Justice Department marijuana prosecutions

AaaThe ginormous spending bill passed by Congress and signed by President Trump extends the Congressional prohibition on use of Justice Department funds to prosecute state-licensed medical marijuana facilities that are in compliance with state laws.  There was some doubt about that earlier this week when the House Rules Committee blocked the Rohrabacher-Blumenauer Amendment from the House version of the spending bill, but it made its way into the final bill anyway.

President Trump, in his signing message, signaled that he wasn't necessarily on board with the amendment, however.  The Washington Times reports:

MMr. Trump n his statement also questioned a provision in the law that bars the Justice Department from using funds “to prevent implementation of medical marijuana laws by various States and territories.”

 

Mr. Trump said, “I will treat this provision consistently with my constitutional responsibility to take care that the laws be faithfully executed.”

 

That appears to be in line with Attorney General Jeff Sessions’ comments that he opposes the “expanded use” of marijuana. A White House spokeswoman could not be reached for comment.

 

Michael Collins, deputy director of Drug Policy Alliance, said Mr. Trump “continues to send mixed messages on marijuana.”

 

“After stating during the campaign that he was ‘100 percent’ in support of medical marijuana, he now issues a signing statement casting doubt on whether his administration will adhere to a congressional rider that stops DOJ from going after medical marijuana programs,” Mr. Collins said. “The uncertainty is deeply disconcerting for patients and providers, and we urge the administration to clarify their intentions immediately.”

 

Twenty-eight states have some form of medical marijuana, but the drug is illegal under federal law.

 

The spending bill’s provision on medical marijuana prevents the Justice Department from arresting or prosecuting patients, caregivers and businesses that are acting in compliance with state medical marijuana laws. The measure will only be binding through the end of September.

I'm not sure we should read too much into the statement.  Given that the amendment now is the law, it is itself one of those that the President will have to faithfully execute.  The real issue is whether Trump's DOJ reads the restriction as narrowly as Obama's DOJ did.  He may decide that the way to get Congress off its collective backside to address the legalization question is to follow the previous Administration's approach.  After all, as President Grant famously said, "I know no method to secure the repeal of bad or obnoxious laws so effective as their stringent execution."

September 11, 2017 in Federal Regulation, Legislation, Medical Marijuana, News | Permalink | Comments (0)

Sunday, September 10, 2017

A Beginner's Guide to Medical Marijuana

Medical MarijuanaDo you know enough about medical marijuana to consider yourself well-informed? Sufficiently informed? According to Amanda Chicago Lewis, even the people who are cool with pot often don't know very much about how they might go about integrating cannabis into their own wellness routines. Some topics covered in her Rolling Stone article:

  • Start simple: acknowledge that cannabis has medical properties
  • Be familiar with the downsides
  • Remember that doctors receive no education about medical marijuana
  • Not every medical cannabis option involves getting high
  • When you look up info about pot online, consider the source
  • Nothing is legal in all 50 states
  • Temper your expectations, and the expectations of those around you

"So I wanted to offer up some of the collected wisdom I've managed to gain during years of conversations with scientists, doctors, patients and caregivers. Just as I hoped a few weeks back that my fellow stoners might help spread the gospel about how to be a good weed citizen with their canna-curious friends, this guide aims to provide you with the tools to help introduce someone to the world of medical marijuana."

 -- Daniel Carter 

 

September 10, 2017 in Medical Marijuana | Permalink | Comments (0)

Saturday, September 9, 2017

Interesting new study says teen marijuana usage at 20-year low

If recent statistics are any indication, looser restrictions on recreational marijuana might not increase usage by adolescents. According to a Washington Post piece by Christopher Ingraham: 
Mj

Last year, 6.5 percent of adolescents used marijuana on a monthly basis, according to the latest National Survey on Drug Use and Health. The last time monthly teen marijuana use was this low was 1994, according to federal survey data.

With the advent of many states allowing medical marijuana and decriminalizing recreational use, many will find these numbers to be surprising.  But Ingraham notes that there was:

. . . a statistically significant drop from 2014, when the nation's first recreational marijuana shops opened in Washington state and Colorado...Adult marijuana use, on the other hand, is rising. Last year 20.8 percent of Americans between the ages of 18 and 25 used marijuana at least monthly, the highest number since 1985. Among adults ages 26 to 34, 14.5 percent used marijuana monthly in 2016, also the most since 1985.

This is obviously good news for legalization proponents and more studies will be needed.  But given the public concern in protecting minors and avoiding the stagnation of adolescent brain development, the results may show that legalization itself may not lead to greater consumption. 

 --Jacob Morales

September 9, 2017 in Research | Permalink | Comments (0)