Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Sunday, January 6, 2019

Will 2019 really be the "year of weed"? How can we tell?

Images (5)The questions in the title of this post are prompted by this new lengthy Rolling Stone piece fully headlined "Why 2019 Will Be the Year of Weed: From more states legalizing to a boom of new kinds of products, here’s what to expect from the cannabis industry this year."  Here are excerpts from an article that merits a full read:

In 2018, pot reached a tipping point.  A clear majority of Americans now wants to see the drug made fully legal. California and Canada began selling marijuana to anyone over 21. Corporate behemoths like Altria (parent company of Marlboro cigarettes) and Constellation Brands (parent of Corona beer and Svedka vodka) made multi-billion dollar weed investments. And Senate Majority Leader Mitch McConnell (R-KY) managed to include hemp legalization in the 2018 Farm Bill — de facto legalizing every part of the cannabis plant except THC.

But at the same time, pot prohibition is not over.  Well over half a million folks are still arrested for possession every year. Smoking weed or working for a pot company can still threaten your housing, employment, immigration status, finances and freedom.  Cannabis business models, regulatory environments and market valuations shift on a daily basis....

As for the 2018 Farm Bill, it’s not yet clear what the regulatory landscape will look like for CBD in 2019.  [Some expect] researchers will soon be able to access CBD without jumping through the hoops necessary to acquire a Schedule I drug license from the DEA, which could finally allow scientists to provide more evidence of the compound’s uses and dosage.  Still, many people in the cannabis industry are concerned about what the exact guidelines will look like on the commercial production side, and how the rollout will go.

For business owners who have been involved in the weed game for a while, another aspect of the 2018 Farm Bill has proven a troubling sign of the times: anyone with a drug felony conviction in the past 10 years will not be allowed to participate in the legal hemp and CBD market.  “What the fuck is that?” asks longtime cannabis cultivator Bill Levers, who runs an influential Instagram account through his California-based company, Beard Bros Pharms.  “No one got rich on hemp.  There were no hemp cartels. So why would there be a restriction?”

The drug-felony provision in the Farm Bill cuts to the heart of one of the biggest unresolved problems facing the marijuana movement in 2019: the persistence of the illicit market, and the struggle to accommodate folks who have been illegally selling or growing marijuana for years.  It is now widely acknowledged that barring people with drug felony convictions from the cannabis industry is racist, as white people with experience on the illicit marijuana market are far less likely to be arrested or convicted.  But even without a criminal record, making the transition from outlaw to mogul has proven incredibly difficult, and many of the people who have tried have already given up....

Taxes, in particular, are a thorny issue.  Local and state governments generally consider pot taxes to be a primary incentive for legalization, but if tax rates are too high, fewer growers and dispensaries will try to go legal.  Already, lax oversight and an oversupply of legal cannabis in states like Oregon and Washington have led to diversion rates of at least 30 percent — meaning at a minimum about a third of legal pot is being sold on the illicit market. Meanwhile, in places like California, Canada and Michigan, hundreds of illegal storefront marijuana dispensaries compete with legal vendors, consistently undercutting them on price.  Illicit operators tell me again and again that they cannot afford to survive in the highly taxed and regulated legal market, so they intend to continue breaking the law — sometimes while simultaneously operating a legal business.

Because wealthy (and typically white) applicants have an easier time covering high taxes and licensing fees, some states and municipalities have created so-called “equity” programs to ensure a more diverse industry.  In 2017 and 2018, places like Oakland and Sacramento garnered fawning headlines for setting the lofty goal of legislating solutions to the catastrophic and racially disproportionate impact of the War on Drugs.  But moving into 2019, California cannabis operators of all colors and political stripes now often describe equity a well-intentioned idea that is failing in practice.  The words “tokenism” and “paternalistic” come up a lot.

“Equity is a marketing tool.  All of the licenses are going to be given to the people with the most money,” predicts Ophelia Chong, the founder of StockPot Images and executive creative director of Aura Ventures.  “Social equity will work for a few, but even then it will be 2 percent [from disadvantaged backgrounds], and those 2 percent will have to really climb a mountain to do it, with no help.”  Outside of California, however, including equity and restorative justice in cannabis legalization remains an alluring prospect.

“What I like about California is they give a chance for minorities to get in.  They doing the opposite in Michigan,” says Jason, whose cannabis social club, the OMS Dab House, has been a crucial gathering place for Detroit’s marijuana movement for the past decade.  Michigan legalized adult-use cannabis in 2018, but as in California, quasi-legal medical dispensaries began proliferating years ago, serving stoners and sick people alike.  (The ongoing legal confusion around sales and social spaces is why Jason preferred to not give his last name).  Though the city of Detroit is more than 80-percent black, black activists there have previously asserted that only three to five percent of local marijuana dispensaries were owned by black people. Jason predicts that, as Michigan’s legal cannabis industry becomes increasingly corporate and consolidated, those numbers will only go down.

https://lawprofessors.typepad.com/marijuana_law/2019/01/will-2019-really-be-the-year-of-weed-how-can-we-tell.html

Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Political perspective on reforms, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate | Permalink

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