Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Sunday, November 8, 2020

Noticing how marijuana reform contributes to regulator diversity even with much equity work ahead

Download (14)Because there has historically been a general lack of diversity in all sorts of government positions, I would guess that state administrators and regulators have not typically been an especially diverse bunch.  But, when Cat Packer in 2017 was appointed the first Executive Director of the Los Angeles Department of Cannabis Regulation, I started noticing the efforts in some quarters to try to ensure state and local marijuana regulators reflected more of the diversity of our great nation.  (Just some of a number of other notable regulators in this space include Toi Hutchinson in Illinois, Shaleen Title in Massachusetts, Marisa Rodriguez in San Francisco.)

These stories came to mind as I saw this story out of New Jersey from The Root, headlined "America Has Yet to Achieve Racial Equity in Cannabis Reform. New Jersey Is Hoping Dianna Houenou Can Change That."  I recommend the piece in full, and here are excerpts:

[A] third of Americans (more than 111 million total) now live in states where adults can legally purchase pot.  But although reform is sweeping the nation, with dispensaries popping up everywhere from Oakland and Denver to Baltimore and Chicago, America’s “green rush” has yet to substantially uplift the communities most harmed by the country’s devastating “war on drugs.”  Instead, white business-owners and large corporations have disproportionately benefited from cannabis reform, prompting fresh concerns about what the future of marijuana legalization holds for the Black and Latinx communities who suffered the most from America’s punitive drug policies.

New Jersey hopes to change that narrative.  On Friday morning, Gov. Phil Murphy appointed Dianna Houenou, a senior advisor with an extensive background in criminal justice reform, to lead the state’s Cannabis Regulatory Commission, which will be charged with shaping the state’s cannabis laws and ensuring that the communities devastated by the New Jersey’s drug policies reap the benefits of the burgeoning industry.

“Dianna has been a critical voice for social justice and equity on my team for the past year and a half after spending several years working on the fight to legalize marijuana with the ACLU,” Gov. Murphy told The Root in a statement. “Her commitment to doing what is right and to leaving no one behind has powered our criminal justice reform agenda, and I am immensely proud that she will be continuing that commitment as Chair of the Cannabis Regulatory Commission.”

“Since day one, we have said that the legalization of recreational marijuana must prioritize the communities marginalized and decimated by the failed War on Drugs,” Murphy added.  “I know that Dianna is the perfect person to lead our state’s effort to create a marketplace for recreational marijuana that is equitable, fair, and inclusive of all communities.”...

New Jersey is the most populous of all the states that legalized recreational marijuana this week, and the first state in the mid-Atlantic to do so — leading Pennsylvania and New York, where lawmakers have long discussed legalization but have disagreed on how to do so.  In New York, a major part of that disagreement has stemmed from questions around equity and accessibility.  Nationwide, Black and Latinx Americans aren’t leading cannabis operations in significant numbers, nor have they been leading regulation or law-making efforts....

Working to make cannabis reform equitable will be no small task for Houenou and the commission, particularly in a state like New Jersey, where, despite similar rates of marijuana usage, Black people are 3.45 times more likely to be arrested for cannabis possession than white people.  As recently as 2016, the Garden State spent $669.3 million to enforce restrictive drug policies, “despite the grave racial inequities in fuels,” writes Insider New Jersey.

Because the country has yet to really get equity in the cannabis industry right, Houenou will be leading New Jersey into uncharted territory.  But if successful, the state could very well be a model for the region and the country at large.

Houenou isn’t going it alone.  She has the full support of Gov. Murphy, who made marijuana legalization a signature part of his 2017 election campaign.  She also understands that making cannabis reform truly equitable will be a holistic process requiring education, advocacy and buy-in from a variety of stakeholders, from law enforcement to those who lost years of their lives to drug prohibition policies.  For her and the commission, equity won’t be an afterthought, as it has been in other places.  “We really are looking to make sure that equity is built into a regulated structure at the onset,” she said.

Houenou stresses that under her leadership, nothing would be off the table for the commission.  This includes policies already existing in other places, including prioritizing permits for those who live in neighborhoods impacted by harsh drug policies, as well as individuals who have been entangled in the court system specifically for cannabis offenses. But she’s also interested in exploring — and breaking down — other barriers to entry and ensuring that revenue from these burgeoning businesses goes back into Black communities.

November 8, 2020 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)

Tuesday, November 3, 2020

"From Medical to Recreational Marijuana: Lessons for States in Transition"

The title of this post is the title of this exciting and timely new report authored by Dexter Ridgway and Jana Hrdinova of The Ohio State University's Drug Enforcement and Policy Center.  (The full glossy version of the report is at this link, an SSRN version can be found at this link.)  Here is the report's abstract:

As of October 2020, eleven states and the District of Columbia have undergone a transition from medical to adult-use marijuana regimes navigating the creation of a new industry within a complex and incongruous legal framework.  The collective experience of these states has created a wealth of lessons for other states that might legalize adult-use marijuana in the future.  Yet not much has been written about the process of transition and how states managed the creation and implementation of the regulatory framework for an emerging industry.

This report, which draws on interviews with current and former government officials, aims to fill this gap by documenting lessons learned and decision-making behind the policies that shaped the recreational landscape in four states: Colorado, Michigan, Nevada, and Oregon.  The purpose of this research is to provide actionable and concrete advice to states that are transitioning, or are planning for a transition, from a medical marijuana regime to an adult-use or recreational framework.  The report highlights major decision points states face in their transitions and the pros and cons of each choice, lessons learned gathered from the participants in our study, and a short discussion of major challenges each state had to face with their respective programs.y 

November 3, 2020 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Wednesday, September 30, 2020

"Cannabis and Coronavirus: Impact on Medical Cannabis Industries in Three States"

The title of this post is the title of this new paper recently posted to SSRN and authored by Samuel DeWitt, a student at The Ohio State University Moritz College of Law.  (This paper is yet another in the on-going series of student papers supported by the Drug Enforcement and Policy Center.)   Here is this latest paper's abstract:

The COVID-19 pandemic, while detrimental to the American economy as a whole, positively impacted the cannabis industry in many ways.  This paper examines how the pandemic changed the medical cannabis industries in three states where medical cannabis programs were recently implemented -- Ohio, Pennsylvania, and Maryland. 

In all three states, cannabis dispensaries were declared essential businesses and have remained in operation throughout the pandemic.  Due to the necessities of social distancing and minimizing contact, the medical cannabis programs in these states implemented new, innovative measures such curbside pickup, online ordering technology, drive-thru windows, delivery systems, and telehealth consultations.  Additionally, some states loosened restrictions on supply limits and caregiver registration, making medical cannabis more accessible to patients.  This paper suggests that many of these changes should remain permanent after the pandemic ends because they have modernized and, in some cases, legitimized, the cannabis industries in these states.

September 30, 2020 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms, Who decides | Permalink | Comments (2)

Tuesday, September 8, 2020

"Building a Better Marijuana Tax"

The title of this post is the title of this new paper recently posted to SSRN and authored by Carl Crow, a recent graduate of The Ohio State University Moritz College of Law.  (This paper is yet another in the on-going series of student papers supported by the Drug Enforcement and Policy Center.)   Here is this latest paper's abstract:

Eleven states and the District of Columbia have passed legislation legalizing adult possession and use of marijuana.  Of those twelve jurisdictions, only eight of those jurisdictions have active markets where the substance can be legally bought and sold, and each imposes a different taxation scheme on the flow of marijuana goods in the marketplace.  This paper analyzes each tax base and then proposes a bifurcated recreational marijuana tax scheme for states that are currently thinking about legalization: (i) tax flower, bud, and trim based on weight; and (ii) tax concentrates, edibles, oils, and other “distilled” marijuana products based on potency, currently measured by THC content.

The idea behind taxing by potency is two-fold: first, the state may pursue public health goals by nudging consumers away from high-potency forms of marijuana – and prevent producers from gravitating even more strongly toward high-potency goods; second, taxing by potency may help normalize the recreational use of marijuana by encouraging society to treat marijuana more like other legal drugs such as alcohol and cigarettes.  While no tax scheme is perfect, a hybrid weight/potency base combined with a sunset provision to allow further research on the area appears to be the ideal way to regulate marijuana at this moment in time.

September 8, 2020 in Business laws and regulatory issues, Recreational Marijuana Commentary and Debate, Taxation information and issues , Who decides | Permalink | Comments (0)

Tuesday, August 4, 2020

"Legal Cannabis Provides A Bright Spot In A Bleak Economy"

The title of this post is the headline of this notable new Forbes piece.  Here are excerpts:

The pandemic has hobbled entire sectors of the economy but the cannabis industry is surviving, even thriving. Sales are up as consumers turn to marijuana for stress relief and recreation.  Companies in the industry are making those sales easier and safer with online ordering to reduce contact between retailers and customers.  There are even a variety of new products for consumers to try.

Consumers may be cutting their spending, but not on cannabis.  Retail sales of medical and recreational cannabis in the U.S. is predicted to top $15 billion by the end of 2020 according to the Marijuana Business Factbook.  That’s an increase of about 40% over 2019 sales.

Two thousand people who consume marijuana regularly were surveyed by Verilife and reported using more cannabis during the pandemic.  Their increased consumption upped their average monthly spend on cannabis from $49 to $76.  Greg James, the publisher of Marijuana Venture and Sun Grower magazines, said at least part of the sales increase is due to the bars closing. “Staying home and enjoying a joint or edible becomes the thing to do,” he said....

Of course, the cannabis industry is not a money-printing machine, even when demand expands.  Basic business rules apply including follow the intricate laws carefully, keep pristine records, and hire excellent employees.  Most businesses fail because they "have questionable management and unrealistic business plans,” said James.  He has spoken with hundreds of cannabis companies during the six years his magazines have been published.  “As with most businesses, the successful ones quickly adapt and figure out how to manage with the new normal,” he said. “Good management and well trained employees are as valuable in Cannabis as in every other industry.”

August 4, 2020 in Business laws and regulatory issues | Permalink | Comments (0)

Sunday, August 2, 2020

Is the COVID pandemic really "eating away at the illicit marijuana market"?

The question in the title of this post is prompted by the headline of this new Politico piece which is fully headlined "The pandemic is eating away at the illicit marijuana market: Legal sales have boomed since March, though it’s hard to say how many customers previously bought from illegal dealers."  Here are excerpts:

The legal marijuana industry has spent years battling illegal sellers who have eaten away at its market share and undercut its prices. But the coronavirus has proven to be a boon for legal pot shops, as customers fear the risks associated with inhaling questionable products and are nervous about letting sellers into their homes.

Legal operations have moved quickly to take advantage of the situation, seizing on relaxed rules to expand shopping options in states across the country, including curbside pickups and deliveries. Also, pandemic-frazzled Americans are simply getting stoned more often.

“It's understandable that people may be more hesitant to get their products from sources that are unregulated,” said Kris Krane, CEO of 4Front Ventures, which operates dispensaries in multiple states. “They may not want to go to their dealer’s house, or they may not want to have their dealer come into their house, at a time when people are social distancing and not supposed to be interacting with people that they don't know.”

In addition, cities that never allowed pot shops in their towns, even in states where marijuana is legal, are rethinking the local bans in search of fresh tax revenue. And more people than ever are registered as medical marijuana patients: Florida added nearly 5,000 patients a week in June, and more than 50,000 since March.

The data is murky — credible sales figures on illegal marijuana transactions are inherently difficult to come by — and it’s likely that those sales are also booming as anxious Americans smoke more weed while hunkered down. But many close industry watchers believe the current circumstances are pushing more Americans into state-legal markets. Revenues are expected to hit $17 billion this year, according to New Frontier Data — a 25 percent spike over 2019.

Mitch Baruchowitz, managing partner at cannabis investment firm Merida Capital Partners, argued in a paper in May that the pandemic is “cannibalizing” the illegal market. He hasn’t seen anything in the ensuing months to change that assessment. “The vast majority of the current growth in the cannabis space is being driven by consumers transitioning from the black market to the legal market,” Baruchowitz wrote.

The boom in sales is driven in large part by new legal markets, particularly the start of recreational sales in Illinois and Michigan. But even some states with relatively mature markets have seen big spikes in sales. In Oregon, for example, monthly revenues jumped from just below $70 million during the first two months of this year to more than $100 million in May and June....

Even with this year’s rapid growth, however, the legal marijuana market is still dwarfed by illegal sales, which New Frontier estimates at $63 billion for this year. Nowhere is the underground weed market a bigger problem than in California, where it’s estimated that 80 percent of marijuana sales are still from illegal sources — and most industry officials are deeply skeptical that the pandemic will significantly alter that reality in the short term....

Michigan faces a similar problem in quashing illegal sales: The vast majority of cities in the state — including Detroit — still don’t allow recreational pot shops to operate. In addition, marijuana cultivation is still ramping up in the state, since full legalization only took effect in December. “Demand, especially in the adult-use market, is still higher than the supply as the production in the industry continues to grow,” said Andrew Brisbo, executive director of Michigan’s Marijuana Regulatory Agency. “That keeps prices still higher than I think they will be in the long term.”

Industry officials are divided on whether the pandemic is eroding the illicit marijuana market, but there’s little doubt that the current economic troubles will push more states to consider legalization. That’s in large part because states' desperation for cash is only going to grow. Even if marijuana taxes would only make a difference at the margins, it undoubtedly will prove enticing to lawmakers.

Some New York lawmakers are pushing this idea, after legalization efforts failed in each of the last two years. They’ll likely face even greater pressure to enact recreational sales if New Jersey voters pass a recreational legalization referendum in November, as expected. Even in deep red states, the idea is likely to get a good look. A Republican lawmaker in Oklahoma has argued the state should look at allowing recreational sales, suggesting it could raise $100 million per year.

August 2, 2020 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate | Permalink | Comments (2)

Tuesday, July 7, 2020

"Understanding Social Equity"

The title of this post is the title of this significant new digital book put together by Chris Nani now available via SSRN.  I am proud to be able to say Chris is a former student who has been doing amazing work in the cannabis space since his time in law school (including the development of a great tool for judging social equity programs available as "Social Equity Assessment Tool for the Cannabis Industry").   In his new book, Chris has assembled short and effective essays from more than a dozen experts; here is the book's SSRN abstract: 

Understanding Social Equity is a compilation of viewpoints from various authors with diverse backgrounds.  From attorneys, policy analysts, and journalists to advocates, business owners, and social equity applicants, my goal was to provide as many perspectives as possible – some of which may conflict with other authors to provide regulators a wide range of respected opinions about social equity programs.  Together, we believe this compilation can be used as a guide for drafters and regulators when determining minute details about how they would like to create or improve their social equity program.

The goal of this book can further be defined into four objectives:

 ●  Educate regulators on what social equity programs are and their importance.

 ●  Why certain criteria should be used to define social equity applicant eligibility.

 ●  An analysis of prior social equity programs.

 ●  Key factors for social equity programs.

I was quite honored that Chris asked me to author an essay for this book. My contribution is titled simply "Tracking Social Equity," and here is how it begins:

Chris Nani, in the first sentence of his preface to this volume, defines social equity programs as those that “seek to remediate and help individuals, families, and communities harmed by the War on Drugs.”  Behind this crisp definition of social equity programs stands a series of complicated questions about just who should be the focal point for remediation and help and how these programs should be oriented and assessed.  By starting to unpack these questions, we can begin to appreciate just why these programs are so important in principle and so challenging in practice.

July 7, 2020 in Business laws and regulatory issues, Criminal justice developments and reforms, History of Marijuana Laws in the United States, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Tuesday, June 30, 2020

"Marijuana and Its Movement: Issues with Transporting a Legally Ambiguous Substance"

The title of this post is the title of this new paper recently posted to SSRN and authored by Joshua Gmerek, a recent graduate The Ohio State University Moritz College of Law.  (This paper is yet another in the on-going series of student papers supported by the Drug Enforcement and Policy Center.)   Here is this latest paper's abstract:

Regardless of whether you are a commercial truck driver performing a job, a patient driving to get her medicine, or a citizen who just recreationally enjoys marijuana, the rules surrounding the transportation of marijuana are important.  California became the first state to legalize the medical use of marijuana in 1996, and the prevalence of medical and recreational marijuana legalization has only expanded since then.  At this point, some product or chemical compound from the cannabis plant is virtually everywhere in the United States, yet the transportation of these products has not been comprehensively debated by the public, let alone legislated. 

This article is focused on exploring the unique legal landscape surrounding the transportation of marijuana, hemp, and cannabidiol (CBD) from both a business and individual perspective.  By showcasing examples of how businesses and individuals have been impacted by the unclarity in this area, the goal is to convey that nothing about transporting these products is risk-free and that there is unnecessary conflict between state and federal law.

June 30, 2020 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

"What’s the best minimum legal age for cannabis?"

The question in the title of this post is the headline of this effective new Leafly article, which builds off the research noted in this prior post about the "right" minimum age for legal access to recreational cannabis.  Here are excerpts:

When it comes to legal cannabis, the random collection of ages across North America is curious. Every US state that allows recreational cannabis sales requires customers to be at least 21 years old. In Canada the minimum age is 19, except in Alberta (where it’s 18) and Québec (which started at 18 but raised it to 21 earlier this year).

In most jurisdictions, medical marijuana is legal for people age 18 and older, with a doctor’s recommendation.

What difference does it really make if someone is 18, 19 or 21? A research team at Memorial University in Newfoundland, Canada, recently investigated the question. Instead of looking at the immediate health and safety of young adults, they assessed later life outcomes — namely educational attainment, lifetime cigarette smoking habits, and general physical and mental health. In their study, the Memorial University team concluded that the ideal minimum legal age for cannabis was 19....

Health experts cite THC exposure in adolescents causes changes to the brain’s folding patterns, decreased neural connectivity, thinning of the cortex and lower white matter, among other symptoms. However, one recent study suggests any changes to brain structure caused by cannabis use in adolescence cleared up by the time subjects were in their 30s.

Another ongoing study in the Saguenay region of Quebec took MRI scans of over 1,000 adolescent brains in 2002, and the same subjects are currently being re-evaluated as adults — results pending.

If the serious nature of brain health is such a risk, why not just make cannabis illegal until a person’s mid-20s? In the real world, policymakers have to weigh human nature’s penchant for the forbidden with appropriate rules and consequences. In an ideal world, sure — and in this ideal world underage kids never go looking for cannabis from illicit sources, either. In the real world, though, policymakers have to weigh human nature’s penchant for the forbidden with appropriate rules and consequences. In an ideal world, alcohol would also be outlawed for health reasons, but we all know how Prohibition worked out.

Prior to the Oct. 2018 opening of legal cannabis sales in Canada, a government task force took a hard look at the best-legal-age question. That group found that the higher the minimum legal age, the more likely adolescents will seek out unregulated sources, risking both consumption of potentially more dangerous products and also incarceration.

Prior related post:

June 30, 2020 in Business laws and regulatory issues, International Marijuana Laws and Policies, Medical community perspectives, Medical Marijuana State Laws and Reforms, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Monday, June 29, 2020

"California cities begin embracing cannabis in desperate search for cash"

The title of this post is the title of this recent notable Politico article. Here are excerpts:

California local governments scrambling to find tax revenues during the coronavirus pandemic are turning toward an industry they had considered taboo until now: cannabis.

It has been almost four years since voters legalized recreational marijuana in California, and nearly 70 percent of cities and counties have yet to embrace pot businesses because they see regulatory problems or have concerns about public safety and negative publicity.

But some, facing insurmountable budget gaps as unemployment rises to its worst level since the Great Depression, would now rather open their doors to cannabis than lay off more workers or cut services.  So far, a handful of cities have begun developing cannabis tax measures for the November ballot since voter approval is required to add local taxes.  It's a trend many in the industry expect to continue over the next month absent approval of a federal bailout for state and local governments....

San Bruno, a Bay Area city that two years ago banned marijuana businesses, is among the governments with a change of heart.  Last week, city council members voted unanimously to fund a tax measure and public education campaign, while voicing support for the idea of exploring an ordinance that would allow a dispensary or delivery service to open sometime next year.

According to projections from city officials, an operational cannabis shop could reduce San Bruno’s projected $8.2 million deficit in the upcoming fiscal year by around $300,000. “It's not gonna solve our problems, but it's going to keep $300,000 that we desperately need to hire whomever it is to make our city better,” Councilmember Marty Medina said at the meeting.

The city of Montclair in San Bernardino County is facing a similar budget crunch as sales tax revenue has cratered following the temporary closure of its mall. There, city officials are considering proposals to repeal a marijuana ban and create regulations for commercial activity.  The plan could raise up to $2 million annually, according to City Manager Edward Starr.

While both San Bruno and Montclair are left-leaning cities where a majority of residents voted to approve the Prop. 64 legalization initiative in 2016, Republican-led jurisdictions where voters rejected the statewide measure are also starting to consider cannabis — to the surprise of industry observers.  Last month, councilmembers in Yucaipa asked city staff to begin looking into alternative revenue streams, including marijuana businesses, amid a 15 percent decline in sales tax revenue and increasing public safety costs. Republicans hold a 20-point registration advantage over Democrats in the San Bernardino County jurisdiction, where a majority voted against Prop. 64....

Calls for jurisdictions to dive into the legal market have even come from some of the highest levels of state leadership, with Treasurer Fiona Ma calling the tax revenues a potential “game changer” during a virtual round table last month....

Among the other jurisdictions that have already begun developing cannabis tax measures or have shown interest in doing so are Sonoma, Signal Hill, Wildomar, Lemon Grove and Yountville.  As in Yucaipa, one of the prevailing themes in council meetings elsewhere has been that their residents are sending tax dollars to neighboring jurisdictions by purchasing marijuana products from other cities with licensed stores or from the state’s robust illicit market.

Industry research firms BDS Analytics and Arcview Market Research estimate that unlicensed operations brought in $8.7 billion in untaxed revenue in 2019, compared to the legal market's $3.1 billion.

According to Jackie McGowan, founder of Green Street Consulting, local leaders are also looking at nearby jurisdictions that have developed their cannabis markets and don’t want to be left behind.  Among those that have already allowed marijuana businesses, Monterey County is counting on $10.2 million in projected cannabis tax revenues to cover general fund shortfalls and avoid layoffs in the upcoming fiscal year and Santa Barbara County leaders believe $10.6 million in marijuana revenue will help offset coronavirus losses.

June 29, 2020 in Business laws and regulatory issues, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Taxation information and issues , Who decides | Permalink | Comments (1)

Tuesday, June 16, 2020

"Struggling Through the Pandemic: Cannabis Social Equity During Covid-19"

Thumbnail_COVID-19_Social Equity During COVID-19_for-socialThe title of this post is the title of this new report that the team at Ohio State's Drug Enforcement & Policy Center has just gotten online via SSRN.  I was pleased to be play a part in this work, and here is the report's abstract:

In March 2020, in response to the COVID-19 national emergency, states across the United States began issuing shelter-in-place orders curtailing operations of individual businesses based on “essential” and “non-essential” classification.  Virtually all states with legalized medical cannabis, and the majority of adult-use states, allowed cannabis establishments to remain open albeit often with significant restrictions on their operations.  Yet, the cannabis industry, and small, minority-owned or social equity designated businesses in particular, are not insulated from the broader economic shockwaves spreading through the country. 

In April 2020, the Drug Enforcement and Policy Center conducted a survey asking patients/consumers and cannabis industry professionals about the challenges they were experiencing and government responses.  Hoping to fill a gap in early discussions of the impact of the COVID-19 crisis, we were especially interested in the impact on cannabis industry participants designated as social equity businesses.  The results indicate that the COVID-19 pandemic has both introduced tremendous new challenges for the cannabis industry and exacerbated long-standing difficulties for businesses in this arena.  If small, minority-owned and social equity businesses are to survive, they need to be treated by the system like any other regular small business venture.  While regulations and safeguards are necessary, these businesses need to be able to operate as a true business, rather than a semi-legal venture with no access to loans, banking, insurance, tax relief, and flexible deliverable modes.

June 16, 2020 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Thursday, May 21, 2020

Bipartisan coalition of state attorneys general urge Congress to include banking access for marijuana businesses in COVID relief bills

As reported in this press release from earlier this week from the Colorado Attorney General, "a bipartisan coalition of 34 state and territorial Attorneys General [on Tuesday urged]  Congress to pass as part of upcoming COVID-19 relief legislation the federal Secure and Fair Enforcement (SAFE) Banking Act (H.R. 1595) or similar measures that would give legal marijuana-related businesses access to the federal banking system."  Here is more from the press release:

Under existing law, federal regulators prohibit financial institutions from providing services to marijuana businesses in states where medical or retail marijuana sales are legal. Forcing legal businesses to operate as cash-only operations poses serious safety threats, creating targets for violent and white-collar crime. The SAFE Banking Act permits marijuana-related businesses in states and territories with existing regulatory structures to access the federal banking system.

The SAFE Banking Act has widespread, bipartisan support with 206 cosponsors in the U.S. House of Representatives. The House passed the bill in September 2019. The HEROES Act relief legislation, which the House approved last week, also included the language of the SAFE Banking Act.

In their letter, the Attorneys General note that the COVID-19 pandemic has shed new light on problems that the SAFE Banking Act is intended to remediate, including health and safety concerns stemming from frequent and large cash exchanges.

The full text of the letter can be read here.

Also released with this letter ws this effective report from the Attorney General Alliance Cannabis Project titled "Solving An Untenable Situation: The Public Health and Safety Rationale Behind The Secure and Fair Enforcement Banking Act."

May 21, 2020 in Business laws and regulatory issues, Campaigns, elections and public officials concerning reforms, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Sunday, May 17, 2020

"The 'Free Market' for Marijuana: A Sober, Clear-Eyed Analysis of Marijuana Policy"

The title of this post is the title of this new paper recently posted to SSRN and authored by H. Justin Pace.  Here is its abstract:

Marijuana is prohibited at the federal level.  At the same time, states are not only decriminalizing marijuana but attempting to provide a regulatory apparatus for its sale. This has created a unique business environment.  In some ways there is a true “free market” for marijuana in states where it has been legalized — free, that is, of the legal and financial infrastructure available to fully licit businesses in America.

Contracts may not be enforceable because they lack a legal purpose.  Relief in bankruptcy court may not be available, either as a debtor or as a creditor.  Use of a legal entity to limit liability and take advantage of entity personhood may be impracticable.  Federal money laundering and other laws effectively restrict access to the banking system, forcing marijuana businesses to operate as purely cash businesses.  The USPTO refuses to register federal marks related to marijuana.  Marijuana businesses face challenges in obtaining competent legal counsel to guide them through a market free on one hand regulated on the other.

The odd legal posture has implications for considering marijuana policy through an economic lens.  Any analysis of marijuana externalities should consider any additional externalities created by that odd legal posture.  An analysis of policy options for mitigating negative externalities should also factor in the additional costs for marijuana businesses due to this “free market.”  The uncertainty, from a policy perspective, counsels in favor of applying heuristics when considering policy options: this paper offers three and applies each.

This is the first paper to use this situation to examine the value offered by our legal and financial infrastructure.  An inability to use it hurts marijuana businesses in very real ways.  But, at the same time, marijuana businesses are able to operate — to thrive even — nonetheless.  That infrastructure is both more and less valuable than is appreciated, and in surprising ways.  Ultimately, this paper advocates federal action that facilitates a continued incremental, state-by-state approach to marijuana reform.

May 17, 2020 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, History of Marijuana Laws in the United States, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Tuesday, May 5, 2020

"Reconsidering Federal Marijuana Regulation"

The title of this post is the title of this new article authored by Paul J. Larkin, Jr. available via SSRN.  Here is its abstract:

The Controlled Substances Act (CSA) prohibits the cultivation and distribution of marijuana by placing it in a category (Schedule I) reserved for drugs that are unhelpful and dangerous.  In so doing, the CSA approached this problem from the wrong direction.  People use drugs for medical or recreational purposes, and each one requires a separate legal scheme.

Medical Marijuana Use: For more than 50 years, Congress has entrusted to the Commissioner of Food and Drugs the decision whether a particular drug is “safe” and “effective” and therefore can be sold throughout the nation.  The reason is that those decisions require the scientific expertise of professionals in the fields of medicine, biochemistry, and the like, not the legal knowledge of Justice Department lawyers or the moral sensibilities of the electorate.  Congress should leave to the judgment of the FDA Commissioner the decision how federal law should regulate medical-use marijuana.

Recreational Marijuana Use: American society permits alcohol and tobacco to be sold under regulation.  For alcohol, the Twenty-First Amendment empowers states to decide whether and how to sell liquor without much room for supplementary federal regulation.  For tobacco, the Family Smoking Prevention and Tobacco Control Act of 2009 authorizes the FDA Commissioner to regulate the distribution of tobacco products.  Congress should consider whether to follow the same approach here.  There are various factors relevant to that decision.  For example, long-term marijuana use can lead some users to become dependent on, or addicted to, the drug, or to suffer serious mental disorders, such as psychosis.  Legalizing recreational marijuana use also will increase the number of roadway accidents attributable to cannabis intoxication. Whether the benefits of recreational marijuana use outweigh those harms is the question that Congress should answer.

May 5, 2020 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (1)

Wednesday, April 22, 2020

Student presentation on "Producing a Better Marijuana Tax Scheme"

Students in my Marijuana Law, Policy & Reform seminar are continuing to complete their presentations on research topics of their choice, and the second presentation slated for this week will focus on marijuana tax issues. Here is the student's description of his topic and some some "light" reading selected to help set the stage for his presentation.

In my paper, I set out to find a tax scheme that gives greater weight to the public health concerns of legalization while balancing the desire for revenue and fairness.  In doing so, I analyze the three primary tax bases that may be chosen by a legislature: (1) Price, (2) Weight, and (3) Potency, pausing a moment to describe just how complex the concept of marijuana "potency" really is.  In doing so, I lay out the benefits and disadvantages of each tax base and use Illinois' tax scheme to illustrate these pros and cons.  I also consider whether medical marijuana should be taxed on a separate scheme, exempted from tax, or treated the same as product intended for adult use.  Finally, I make a case for a hybrid tax base: tax flower and bud by weight, and edibles and concentrates by potency (as measured by THC). 

In making my case, I recognize that there is no perfect marijuana tax scheme.  The science is too young, marijuana is too complex a substance (both scientifically and by dint of being both "fun" and medicine), and these factors serve to amplify the push-pull between social goals, revenue, simplicity, and fairness inherent in any tax.  I have thus included in my proposal a five-year sunset provision that will force legislators to return to the table and incorporate new science (along with the previous five years of data what worked and did not work in the original law) and hopefully produce a better tax scheme.

BOTEC Analysis LLC, Cannabis Potency Tax Feasibility Study (Oct 2019)

NPR, Highly Potent Weed Has Swept The Market, Raising Concerns About Health Risks (May 2019)

BOTEC Analysis Corp., Testing for Psychoactive Agents (Aug 2013)

Tax Foundation, How High Are Recreational Marijuana Taxes in Your State? (Apr 2019)

Pat Oglesby, Laws to Tax Marijuana (How To Tax It) (June 2012)

April 22, 2020 in Assembled readings on specific topics, Business laws and regulatory issues, Recreational Marijuana Commentary and Debate, Taxation information and issues | Permalink | Comments (0)

Friday, April 17, 2020

Congressional Cannabis Caucus makes bipartisan call for state-legal cannabis businesses to be included in next COVID relief package

As detailed in this letter, a bipartisan group of US representatives are urging House Leadership to include state-legal cannabis businesses in COVID-19 relief efforts.  Here are excerpts from the two-page missive addressed to Nancy Pelosi and Kevin McCarthy:

As you draft the next COVID-19 relief bill, we write to ask that you address one of the shortcomings of the CARES Act — the exclusion of state-legal cannabis businesses and their employees. The COVID-19 crisis response demands the full participation of the American people, businesses, and workforce.  However, without relief, a very large population is left without the means to execute the required public health measures and continue to provide financially for their families.

The state-legal cannabis industry is a major contributor to the U.S. economy and workforce, employing over 240,000 workers across 33 states and four territories, and generating $1.9 billion in state and local taxes in 2019.1,2 As states respond to the COVID-19 crisis by shuttering businesses to mitigate the virus’ spread, jurisdictions across the country have recognized cannabis businesses as “essential.”  Essential businesses, in many places, can operate during the pandemic provided they abide by required public health safety measures.  Like other businesses with continued operations, cannabis businesses have met the moment by preserving access to treatment for patients with chronic conditions, donating protective clothing, and manufacturing equipment for medical use.  However, unlike other small businesses, cannabis businesses are not eligible for the CARES Act programs.

State-legal cannabis businesses need access to CARES Act programs to ensure they have the financial capacity to undertake the public health and worker-focused measures experts are urging businesses to take.  This includes access to and participation in SBA’s loan programs — financial support that is designed to pay workers, group health care benefits, and family or sick leave. Current SBA policies prevent cannabis businesses from accessing the Paycheck Protection Program (PPP), Emergency Economic Injury Disaster Loans (EIDLs), EIDL grants, or SBA loan forgiveness – programs intended to help businesses fight COVID-19 in safe and equitable ways....

Given the nature of the epidemic, we must ensure that everyone has the capacity to carry out the recommended public health and worker-focused measures.  Without doing that, we risk undercutting the public health efforts nationwide.  We ask that House leadership include provisions to allow state-legal cannabis businesses and the businesses who work with this industry to access the critical support they need during this unprecedented time.

April 17, 2020 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Thursday, April 16, 2020

Student presentation on "Transportation of Hemp and Marijuana"

With the semester winding down, numerous students in my Marijuana Law, Policy & Reform seminar are scheduled for presentations on research topics of their choice this week.   The fourth presentation slated for this week will focus on the transportation of cannabis.  Here is part of the student's description of the issue and some background readings he has flagged:

For all the discussion that has been had about the legalization of marijuana, we have not sufficiently discussed how these products should be moved around. The goal of my presentation is to explore this issue by looking at cases that have unfolded and the policies of institutional players. For some background, please see:

Hemp Suppliers at Odds With Hazy Regulations” 

The Great American Cannabis Experiment” 

Inability To Ship Across State Lines Hurts Cannabis Businesses, Especially Small Operators” 

Travelers caught with weed in Chicago airports won’t be busted, police say” 

April 16, 2020 in Assembled readings on specific topics, Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Wednesday, April 15, 2020

Student presentation on "Marijuana Stocks"

As students "take over" my Marijuana Law, Policy & Reform seminar through presentations on research topics of their choice, I continue to enjoy hearing about (and posting here about) their selected topics. The third presentation slated for this week will focus on marijuana stocks. Here is part of the student's description of the issue and some background readings he has flagged:

While the market for investors is nearly impossible to predict, as the Covid-19 pandemic is currently demonstrating, certain industries seem to be “recession proof” and are viewed as “safer” investments. One such industry is the “sin” industry.  Stocks that fall under this category include tobacco, alcohol, weapons, gambling, sex, and most importantly, marijuana.  While many of these industries have been publicly traded on major US stock exchanges for decades, the first marijuana stock was not traded until February 27, 2018.  Thus, the industry is still in its infancy with many questions left unanswered.  I will focus on three areas of law impacting marijuana stocks: 1) the Controlled Substance Act, 2) taxes, and 3) fraud. Further, the history of marijuana stocks in the US, the potential outlook for marijuana stocks in the future, and my opinion on which marijuana stock will be the most successful will be discussed.

Fabian Gorsler, A Marijuana Company is Listed on the U.S. Stock Exchange for the First Time, Highsnobiety (Feb. 27, 2018).

Casey W. Baker, Marijuana’s Continuing Illegality and Investors’ Securities Fraud Problem: The Doctrines of Unclean Hands and IN PARI Delicto, 12 J. Bus. Entrepreneurship & L. 93 (2019).

Erin Fuchs, The Legal Risk of Investing in Weed is ‘Remote’ and ‘Theoretical’, Yahoo Finance (Nov. 3, 2018).

April 15, 2020 in Assembled readings on specific topics, Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, History of Marijuana Laws in the United States, Recreational Marijuana Commentary and Debate, Taxation information and issues | Permalink | Comments (0)

Student presentation on "Employment rights in a world of marijuana reform"

Continuing to provide in this space background on from students who are "taking over" Marijuana Law, Policy & Reform seminar through presentations on research topics of their choice, the second presentation this week will focus on employment law issues.  Here is how the student working on this topic describes her plans along with background readings she has provided:

While marijuana is legal in some form in thirty-three states, it does not mean that any citizen of those states is immune to negative repercussions for their legal consumption.  Even where medical marijuana is legal, not every state guarantees legal protections.  My presentation will center on the current state of consumer rights, specifically in the realm of employment.   Just as states vary on legalization, few states agree on how marijuana consumption should be treated in an employment context.  Many states are hesitant to require an employer to change its hiring or drug-enforcement policies, despite the change in marijuana law.  Other states provide employment protections by forbidding an employer from retaliating against an employee for any legal activity performed outside work so long as it does not affect the employee’s ability to perform, without regard to marijuana specifically.  I will explore the current trends in employee protections as marijuana law gradually becomes more robust and organized.

Marijuana Accommodations In The Workplace: Your Employees Are Smoking Pot—Now What?

Legal marijuana use still costs people jobs. A new California bill takes on the issue

The Sham Of Drug Testing For Benefits: Walker, Scott And Political Pandering (old, but still very good)

Economy Needs Workers, but Drug Tests Take a Toll

Impact of marijuana legalization important lesson for employers

April 15, 2020 in Assembled readings on specific topics, Business laws and regulatory issues, Employment and labor law issues | Permalink | Comments (0)

Thursday, April 9, 2020

Student presentation on "Regulatory Frameworks States Have Developed for Edibles"

As students in my Marijuana Law, Policy & Reform seminar continue "taking over" my class by making presentations on research topics of their choice, I will continue providing in this space background on their topics and links to relevant materials they provide.  The last of three presentations this week will focus on the (always hot) topic of edibles, and here is how my student has described his topic along with background readings he has provided:
 
For my paper, I'll be looking at the regulatory frameworks states have developed for edibles.  After some background on edibles and their significance to the marijuana industry, I'll discuss the varying levels regulations that states have employed.  Then I discuss the three major types of regulations for edibles: (1) testing; (2) packaging and labeling; and (3) THC content.  Finally, I conclude by assessing the effectiveness of each type and making my own recommendations for moving forward.
 
For background, please see the resources below:

Alice G. Walton, Is Eating Marijuana Really Riskier than Smoking It?, FORBES (June 4, 2014).

Jeff Rossen & Jovanna Billington, Rossen Reports Update: Edible Marijuana That Looks Like Candy Is Sending Kids to the ER, TODAY (Sept. 16, 2017).

Robert J. MacCoun & Michelle M. Mello, Half-Baked--The Retail Promotion of Marijuana Edibles, 372 NEW ENG. J. MED. 989 (2015).

Mike Montgomery, Edibles Are the Next Big Thing for Pot Entrepreneurs, FORBES (July 19, 2017).

Ryan Vandrey et al., Cannabinoid Dose and Label Accuracy in Edible Medical Cannabis Products, 313 JAMA 2491-93 (2015).

Daniel G. Barrus et al., Tasty THC: Promises and Challenges of Cannabis Edibles, RTI PRESS 6 (Nov. 2016).

April 9, 2020 in Assembled readings on specific topics, Business laws and regulatory issues, Medical Marijuana State Laws and Reforms, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)