Mitch McConnell: Drug Warrior, CBD Champion?

The Rolling Stone/June 29, 2018/Amanda Chicago Lewis

Yesterday, the Senate passed a version of the 2018 Farm Bill that would legalize so-called “industrial hemp” – legislation that has long been a pet project of one of the most powerful men in America, Senate Majority Leader Mitch McConnell (R-KY). His office immediately issued a self-congratulatory press release about the sanctity of the American farmer and the enormous economic opportunity that will soon be available to former tobacco growers in his home state of Kentucky. These are the talking points McConnell has been pushing since the beginning of the year: that hemp is “a completely different plant than its illicit cousin,” marijuana, and that Americans are clamoring for more hemp products, spending $820 million last year on “everything from clothing to auto parts,” mostly made out of hemp grown overseas.

But hemp and marijuana are not actually different plants, and some experts say that McConnell’s desire to legalize hemp is not really about hippie rope necklaces and home insulation. It’s about a drug – a compound with such immense medical potential that the FDA just approved a pharmaceutical-grade version for children suffering from intractable seizures. We are talking, of course, about cannabidiol, or CBD.

Ever since Sanjay Gupta showcased the healing powers of CBD in his August 2013 CNN special Weed, America has been obsessed with the stuff. For the uninitiated, CBD is a cannabis compound that doesn’t really get you “high,” as THC does. Instead, CBD has a calming, anti-inflammatory effect that advocates and salespeople claim can do everything from reduce anxiety to kill cancer cells. At health food stores and marijuana dispensaries across the country, you can now find CBD lotions and CBD capsules and CBD beard balms and, yes, even smokeable cannabis that is high in CBD.

But CBD’s legality is complicated, to say the least. Without getting into the mind-numbing specifics, let’s just say that reasonable people disagree about whether it is possible for any CBD to be legal, and shops selling CBD products in states like Indiana and Tennessee have been raided by local law enforcement. So in order for mainstream retailers to feel comfortable carrying CBD products and Kentucky’s farmers to subsequently cash in on the CBD craze, McConnell put together legislation making it official. Though he’s focused his hemp legalization rhetoric on helping farmers and bland-sounding industrial products, his true intentions became abundantly clear about two weeks ago, when Sen. Chuck Grassley (R-IA) proposed an amendment that would exclude CBD and other major compounds (called cannabinoids) from the definition of legal hemp.

McConnell shot the proposal down, saying, “I’ve declined to include suggestions that would undercut the essential premise of the bill, namely that hemp and its derivatives should be a legal agricultural commodity.”

At no point did he refer directly to the “derivative” that was up for discussion. But anyone paying close attention understood what he was talking about.

“McConnell’s omission of CBD is not a denial of it. It’s simply a tactical political move,” says Carl Cameron, a former Fox News commentator who now works for New Frontier Data, a D.C.-based firm that provides information on the cannabis industry to investors. “He’s trying to help potential supporters avoid criticism in places where opposition to marijuana might be misconstrued and then undermine support for hemp.”

Leslie Bocksor, who runs the cannabis consulting firm Electrum Partners, agrees that McConnell has downplayed the fact that CBD is a primary motivation for legalizing hemp so as to fly below the radar of anti-pot donors and voters.

“This is just a way for McConnell to be able to move this forward without taking the political risk in talking about what’s going on, which is, yes, CBD is in so much demand that the supply can’t possibly equal the demand any time in the foreseeable future,” Bocksor says. “This is part of the Kabuki theater of the political environment we’re in today.”

Bocksor himself has embraced this kind of winking reference – hemp as a euphemism for CBD – as a business strategy. For the past few years, he’s been advising the companies he works with to avoid mentioning CBD directly or making any medical claims about what the product can do in order to avoid interference from law enforcement or warning letters from the federal government. Label everything as “hemp extract,” Bocksor says, and the consumer will know you mean CBD, as well as what kinds of health benefits can be expected.

Culturally, hemp has long been seen as a taller and more fibrous cannabis plant than marijuana, but the legal distinction is based only on THC content. Once CBD started to enter the mainstream consciousness about five years ago, pot farmers in states like Colorado and California began to breed strains of cannabis that were high in CBD but contained so little THC that they could be reclassified as “hemp.” Around the same time, the 2014 Farm Bill created a pilot program where state departments of agriculture and universities could register farmers to grow “hemp” — meaning, cannabis that was less than 0.3 percent THC.

McConnell’s home state of Kentucky is the second biggest producer of hemp under this program – behind only Colorado. And while most people believe that the hemp pilot program in the 2014 Farm Bill was not created with the intention of causing a boom in CBD products, that is exactly what happened.

“Almost all of the hemp growers in Kentucky are doing so for CBD production right now, and I know that because we either represent them, or we’ve been to the farms to see what they’re doing,” says Colorado-based cannabis attorney Bob Hoban, who recently argued in federal court on behalf of the Hemp Industries Association. “Cannabinoids are the cash product that comes out of hemp.”

So even if he doesn’t want to say so outright, McConnell’s desire to allow more American farmers to legally grow hemp is rooted in the popularity of CBD. This is a significant turning point in cannabis politics: one of the most powerful Republicans in the country is pushing for the legalization of a major compound found in marijuana. And in 2018, this isn’t that surprising. Red states like Oklahoma and Arkansas have voted to legalize medical use, and prominent GOP leaders like John Boehner and Orrin Hatch have publicly reversed course, supporting legal weed after decades of supporting prohibition. A recent Center for American Progress poll showed that a majority of Republicans now support the full legalization of the cannabis plant. Still, other polls have shown that support for pot among the evangelical base remains low, and a few major conservative donors – including casino magnate Sheldon Adelson – remain staunchly anti-cannabis.

So instead of openly embracing CBD, McConnell talks about hemp, which sounds less scary — even though CBD derived from “hemp” and CBD derived from “marijuana” is exactly the same thing.

For now, the legal status of CBD is still murky. But with McConnell’s support, there is a good chance that the House’s version of the Farm Bill will include a provision to legalize hemp-derived CBD, and potentially open the door a world where you can find CBD soaps and CBD tinctures on the shelves at Target and CVS. Many entrepreneurs are already bracing themselves for the change.

“Everybody knows on the corporate side that this Farm Bill is it. It’s gonna go through,” says Dan Goldfarb, whose Canna-Pet hemp CBD products can be found at thousands of independent pet stores and veterinarian offices nationwide. “But nobody’s been stopped from actually making these products in the interim. It’s simply a chilling effect. I like the chilling effect, because it keeps away corporate scumbags.”

 

FDA Rejects Petition to Further Restrict Marijuana

Forbes/July 5, 2018/Tom Angell

The U.S. Food and Drug Administration (FDA) has denied a request from an anti-legalization group to place marijuana and its derivatives on a list of restricted substances that are not “generally recognized as safe and effective.”

The move is “not necessary for the protection of public health,” Janet Woodcock, the director of FDA’s Center for Drug Evaluation and research wrote on Monday in a letter to the group, Drug Watch International.

The organization had filed its petition requesting the cannabis crackdown in December, writing that the move would “send an industry-wide warning to the estimated 33,000 marijuana businesses in the U.S., many of which are making unsupported medical claims for marijuana and THC drug products sold as ‘medical marijuana.'”

The prohibitionist organization pleaded with FDA to take action that would “reduce or end the ability of [over-the-counter] sellers of these drugs to assert and advertise unsupported medical claims for their products.”

“It would immediately make such claims unlawful and subject the sponsors to regulatory action, including injunctive seizure of mislabeled and misbranded drugs, as well as other potential sanctions permitted under the [Food, Drug and Cosmetic Act].”

But FDA balked, saying that while it “appreciates the safety and public health concerns that motivate” the request, the agency “already has adequate authority to remove unapproved new OTC drugs containing marijuana or THC from the market.”

“In order for FDA to take enforcement action against illegal marketing of unapproved new OTC drugs containing marijuana or THC, it is not necessary for FDA to establish a negative monograph for marijuana or THC.”

While the decision by FDA not to assign so-called “negative monograph” status to marijuana and THC won’t do anything to make marijuana more available, or change its legal status—which remains prohibited under Schedule I of the Controlled Substances Act—the rejection suggests that the Trump administration is not looking for excuses to go out of its way to deal public relations blows to the cannabis industry.

In fact, despite a move by U.S Attorney General Jeff Sessions this January to rescind Obama-era protections for state marijuana laws, President Trump himself indicated last month that he supports pending congressional legislation to end federal cannabis prohibition.

Last week, the powerful U.S. Senate Appropriations Committee issued a report criticizing roadblocks to research on marijuana that are caused by its ongoing Schedule I status.

The FDA’s negative monograph list currently contains unapproved drug products such as certain daytime sedatives, aphrodisiacs and deterrents to nailbiting or thumbsucking.

The list is “not intended to be comprehensive lists of all classes of OTC products, active ingredients, or conditions of use that cannot be marketed without FDA approval,” the agency wrote in its rejection of the Drug Watch International petition.

“While you suggest that a negative monograph would reduce or end the unlawful marketing of unapproved new OTC drugs containing marijuana or THC, existing law makes very clear that such unapproved products cannot be marketed under the FD&C Act,” the feds said. “FDA has not determined that any OTC drug products containing marijuana or THC are [generally recognized as safe and effective]  for their intended indications. Therefore, these products are ‘new drugs’ per section 201 of the FD&C Act that must be approved by FDA to be legally marketed.”

“That the Agency has not promulgated a negative monograph specific to marijuana or THC does not absolve a drug manufacturer or marketer from its responsibility to obtain an approved NDA or ANDA if one is required by law.”

“It is the responsibility of companies marketing drug products in the United States to ensure that their products are safe and effective and marketed in compliance with the law,” FDA’s Woodcock wrote. “[A]s discussed above, FDA has existing authority to pursue regulatory or enforcement actions regarding unapproved new OTC drugs, including those containing THC or marijuana.”

 

California Cannabis Businesses Brace For New Regulations

Marijuana Retail Report/July 1, 2018

A fire sale took place at marijuana dispensaries on Saturday. Strict regulations go into effect July 1 across the state, which means shops had to sell all non-compliant products by the end of business day Saturday.

California is requiring shops to sell only marijuana that has been tested for pesticides, potency and microbiological contaminants.

Many businesses aren’t happy about the new requirements. Nearly 150 marijuana businesses warned they could face crippling financial losses unless the state extends the July 1 deadline.

In a letter to Gov. Jerry Brown, the United Cannabis Business Association said the changes would further unsettle the struggling legal marketplace that launched Jan. 1, potentially forcing businesses to close their doors.

The trade group that represents cannabis companies said there are too few labs to handle the testing, and retailers would have to destroy vast amounts of unsold cannabis that does not meet the new standards.

Association president Jerred Kiloh estimated that businesses could face nearly $400 million in losses if those unsold supplies are destroyed.

“Forcing the industry into compliance … will further cripple the already struggling regulated market,” the letter said.

In a statement, the state Bureau of Cannabis Control gave no indication it would consider rolling back the deadline.

“We issued our emergency regulations back in November, and at that time we were pretty clear about the fact that there would be a six-month transition period for retailers to use up their existing supply. We felt that was a sufficient amount of time to deplete stock on hand and adapt to California’s new rules,” agency spokesman Alex Traverso said in an email.

The regulations are being phased in six months after the state broadly legalized marijuana and required that pot sold after Saturday meets strict quality standards. Retailers have been unloading untested inventory at bargain-basement prices.

The rollout of the nation’s largest legal pot market has been bumpy at best. The black market is still flourishing, and the industry complains about taxes that can approach 50 percent in some areas.

Others fear a shortage of retailers for both adult-use and medicinal marijuana could shut down the supply chain, stranding growers with mountains of unsold pot.

California is operating under temporary regulations, while the largest city, Los Angeles, has been slow to issue licenses.

The change in rules was part of the state’s decision to allow the industry to get a running start at the beginning of the year. Shops were given six months to burn through supplies of cannabis and edibles produced without strict testing requirements.

Any marijuana harvested this year, or for sale July 1, must meet quality and safety standards or be destroyed.

The letter depicted an emerging industry that is struggling to find its footing.

The group said the 30 licensed labs that would test pot would be unable to handle demand, resulting in a shortage of products on shelves. A system intended to track plants from seed to sale has been delayed. And packaging companies are not ready to meet the new rules.

“Customers and patients will turn to illicit market retailers and delivery services who will still have an abundance of products for sale. Licensed retailers will be forced to shut down,” the letter said.

The businesses and advocacy groups that signed the letter represent a fraction of the state’s legal marketplace. For example, over 3,300 cultivation licenses have been issued, and there are more than 400 licensed retailers.

Schumer introduces bill to federally decriminalize marijuana

CNN\June 28, 2018\Annie Geng

Washington (CNN)Sen. Chuck Schumer has introduced a new bill to decriminalize and regulate marijuana at the federal level.

The legislation, which the New York Democrat announced back in April, would remove marijuana from the Controlled Substances Act, where it is classified among drugs such as heroin and LSD.

By striking marijuana from the act, Schumer’s office said in a news release Wednesday, the bill would effectively decriminalize the drug at the federal level. The measure would still allow states to determine their own marijuana laws while maintaining federal law enforcement against trafficking to states where it is illegal.

Several states allow recreational sales of marijuana, including California, Oregon and Massachusetts.

Schumer’s bill would direct a specific amount of tax revenue to a Treasury trust fund for the “small business concerns” of women and “socially and economically disadvantaged” individuals working in the marijuana industry.

Under the bill, advertising for marijuana and related products would be restricted for youths, should joint research conducted by the Department of Health and Human Services, National Institutes of Health and the Food and Drug Administration determine that doing so would be “appropriate for the protection” of the health of those 18 and younger.

In a press statement, Schumer said this legislation is “simply the right thing to do” and that he is hopeful its “balanced approach” will earn bipartisan support in Congress. The bill is co-sponsored by independent Sen. Bernie Sanders of Vermont and Democratic Sens. Tim Kaine of Virginia and Tammy Duckworth of Illinois.

A similar measure aimed at loosening federal guidelines on marijuana and giving states more flexibility in determining their own laws was introduced earlier this month by Sens. Elizabeth Warren, D-Massachusetts, and Cory Gardner, R-Colorado.

In April, President Donald Trump told Gardner he will support efforts to protect states that have legalized marijuana, according to a statement from the senator. The deal, which was first reported by The Washington Post, came after Gardner said he’d block all Justice Department nominees after Attorney General Jeff Sessions rescinded guidance from the Obama administration, known as the Cole memo, that had adopted a policy of non-interference with marijuana-friendly state laws.

This Brand-New Marijuana Survey Offers 3 Unique Takeaways

The Motley Fool/June 16, 2018/Sean Williams

Few industries have grown at the pace of the legal cannabis industry in recent years. Cannabis research firm ArcView notes that North American sales catapulted higher by 33% to $9.7 billion in 2017, and they’re on track to hit more than an estimated $47 billion in annual sales by 2027. That’s the type of growth that investors and business owners have a very hard time overlooking, even if it’s still an illicit drug at the federal level.

There’s little denying that times are changing, with Canada on the verge of becoming the first developed country in the world to legalize adult-use cannabis, and 29 states in the U.S. having passed broad-based legislation on medical marijuana since 1996.

This new cannabis-use survey is an eye-opener

However, the scope of change in the legal cannabis movement is none more apparent than in the latest results from the 2017 “Monitoring the Future” survey, which is funded by the National Institute on Drug Abuse.

In the 2017 survey, nearly 44,000 students in the eighth, 10th, and 12th grades were surveyed in 360 public and private schools from across the country. In particular, it was the responses of the oldest cohort, the 12th graders, that was the most telling about marijuana.

Between 1976 and 1979, the “Monitoring the Future” survey showed that just 15% of 12th-grade students believed their parents would not have disapproved of them using marijuana once or twice. Furthermore, only 8% said their parents wouldn’t have disapproved of occasional pot use, while a meager 4% wouldn’t have disapproved to regular cannabis use.

Now, let’s fast-forward to 2017, where 23% of 12th-grade students now believe their parents wouldn’t disapprove of them trying marijuana once or twice. Similar jumps were seen for occasional use and regular use, where 17% and 13%, respectively, of 12th graders responded that their parents wouldn’t disapprove. All three of these comparisons for rare, occasional, and regular pot use offered statistically significant percentage increases over the last four decades.

Three significant takeaways

So, what does this survey tell us? Indirectly, I see three important takeaways for the legal cannabis movement, businesses, and even investors.

  1. The public’s perception of marijuana is consistently improving

First, we’re seeing a dramatic and consistent shift away from the negative rhetoric directed toward pot that was observed during the “War on Drugs” during the 1980s and 1990s. According to national pollster Gallup, favorability toward marijuana for all adults aged 18 and over has never been higher. Its October 2017 survey found that nearly two out of three respondents favored the idea of fully legalizing the drug.

Meanwhile, in 1995, the year before California became the first state to OK the use of medical weed for compassionate-use patients, Gallup’s survey found just 25% support for legalization. As favorability improves, the pressure will mount for select state and federal lawmakers to reform existing cannabis laws.

  1. The younger generation is the future of the legal cannabis industry

Secondly, this survey adds even more evidence that the younger generation views cannabis in a considerably more positive light relative to older generations. For those of you who may have missed it, the independent Quinnipiac University released a poll back in April that asked adults aged 18 and over whether they would support the legalization of marijuana. Though 63% of respondents said yes, the standout figure was that 82% of 18-to-34-year-olds were in favor of legalization. In fact, support for cannabis tends to ebb with age, per Quinnipiac’s poll.

What’s the point, you ask? Namely, that it demonstrates the importance Generation Z and millennials will play for the legal weed industry in the years and decades to come. Even though legal marijuana dispensaries may have a nice mix of consumers in terms of age right now, it’s the strong favorability of the younger generation toward pot that’s liable to drive growth over the long run.

  1. Tobacco and alcohol companies had better watch their backs

Third, it suggests that the tobacco and alcohol industries had better keep an eye on the rearview mirror, because the legal cannabis industry is closing in. Notably, the “Monitoring the Future” survey showed that the perceived disapproval among the parents of 12th-grade students for smoking a pack of cigarettes a day or weekend binge drinking rose modestly since 1976-1979. Some 92% of 12th-grade students believe their parents would disapprove of their choice to smoke a pack a day in 2017, up from 89% four decades ago, while 86% suspect their parents would disapprove of binge drinking, up from 85% between 1976 and 1979.

In plainer English, whereas the negative stigmas associated with smoking tobacco and drinking alcohol are still present (if not more apparent in the case of tobacco) four decades later, the negative perception of cannabis has weakened to the point where consumers could begin to switch away from tobacco and/or alcohol consumption to marijuana instead.

This potential for product swapping is a big reason why Corona beer and spirits maker Constellation Brands (NYSE:STZ) ponied up approximately $190 million for a 9.9% stake in Canada’s Canopy Growth Corp. in late 2017. Constellation Brands understands the dynamics of vice products and viewed an investment in Canada’s most visible (and largest) cannabis company as the next logical step. Plus, Constellation and Canopy Growth Corp. are expected to partner on a number of products, as well as assist one another with regard their marketing and distributing their products — at least in countries where cannabis is legal.

There’s no longer any denying at this point that the cannabis landscape is shifting. The only question left to answer is whether Congress is paying attention.

U.S. Senate Appropriations Committee Passes Medical Marijuana Protections

Cannabis Business Times/June 14, 2018/Eric Sandy

A U.S. Senate Appropriations Committee vote pushed state-legal medical marijuana protections even further down the legislative process on June 14, echoing what the Rohrabacher-Blumenauer amendment achieved in past spending bills. This time around, though, an amendment offered by U.S. Rep. David Joyce (R-OH) is gathering support as part of the Commerce, Justice, Science (CJS) spending bill, which directly funds U.S. Department of Justice operations.

The amendment would bar the DOJ from spending money on the prosecution of any licensed medical cannabis business or operator in states where medical cannabis is legal.

“Once again, members of Congress have signaled that protecting state-legal medical cannabis is no longer a controversial issue,” said Aaron Smith, executive director of the National Cannabis Industry Association, in a public statement. “From protecting state medical cannabis programs from being targeted by federal law enforcement to growing support for allowing banks to work with the cannabis industry, lawmakers are increasingly unwilling to waste taxpayer money interfering with legal and responsible cannabis businesses.”

What’s next? These departmental spending bills will be rolled into the 2019 federal budget, which will garner full floor votes in the House and Senate later this year. We’ll be keeping track of this policy’s progress.

 

Trump says he is likely to support ending blanket federal ban on marijuana

Los Angeles Times/June 8, 2018/Evan Halper

President Trump said he likely will support a congressional effort to end the federal ban on marijuana, a major step that would reshape the pot industry and end the threat of a Justice Department crackdown.

Trump’s remarks put him sharply at odds with Atty. Gen. Jeff Sessions on the issue. The bill in question, pushed by a bipartisan coalition, would allow states to go forward with legalization unencumbered by threats of federal prosecution. Sessions, by contrast, has ramped up those threats and has also lobbied Congress to reduce current protections for medical marijuana.

Trump made his comments to a gaggle of reporters Friday morning just before he boarded a helicopter on his way to the G-7 summit in Canada. His remarks came the day after the bipartisan group of lawmakers proposed their measure.

One of the lead sponsors is Sen. Cory Gardner (R-Colo.), who is aligned with Trump on several issues but recently has tangled with the administration over the Justice Department’s threats to restart prosecutions in states that have legalized marijuana.

“I support Sen. Gardner,” Trump said when asked about the bill. “I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.”

The legislative proposal, which is also championed by Sen. Elizabeth Warren (D-Mass.), would reshape the legal landscape for marijuana if it becomes law.

California and eight other states, as well as Washington, D.C., have legalized all adult use of marijuana. An additional 20 states permit marijuana for medical use.

But even as states legalize, marijuana has remained a risky and unstable business because of federal law making it illegal. Concerns about federal law enforcement seizures have inhibited most lenders from working with marijuana businesses. And investors have also proceeded cautiously.

“If you are in the marijuana business … you can’t get a bank loan or set up a bank account because of concern over the conflict between state and federal law,” Gardner said at a news conference Thursday to unveil the new bill. “We need to fix this. It is time we take this industry out of the shadows, bring these dollars out of the shadows.”

He called it a “public hypocrisy” that the firms are expected to pay taxes yet are barred from participation in the financial system.

A lifting of the federal prohibition also would bolster efforts to create uniform testing and regulatory standards for marijuana, and potentially free scientists to pursue research into the medical uses of marijuana.

Trump’s support could potentially have a major impact, providing political cover for Republicans who worry about being tagged as soft on drugs. Still, the proposal faces a tough road in Congress.

Even though most lawmakers now represent areas where pot is legal for at least medical use — and public opinion polls show majorities of Democratic and Republican voters nationwide favor legalization — congressional leaders have shown little appetite for loosening restrictions. The House is blocking the District of Columbia from permitting sales of recreational pot, even after its voters chose to legalize. A 2014 budget amendment that protects medical marijuana businesses from Drug Enforcement Administration raids is perpetually under attack.

“It faces tremendous head winds,” John Hudak, a marijuana policy expert at the Brookings Institution in Washington, said, referring to the Gardner-Warren bill.

Trump said he is likely to support the federal legalization effort despite a warning against it from a coalition of narcotics officer groups.

“We urge you to see through the smoke screen and reject attempts to encourage more drug use in America,” they wrote in a letter to Trump Thursday.

The marijuana industry continues to be whipsawed by mixed messages from the administration.

In January, the Justice Department sent pot businesses into a panic by rescinding an Obama-era policy that restricted prosecutors from targeting sellers who operate legally under state laws. Sessions warned at the time that any pot business could find itself in the crosshairs of prosecutors — regardless of whether marijuana was legal in their state.

The move enraged Gardner, who said the administration had earlier given him assurances that there would be no such raids, at least in his state. At Gardner’s behest, Trump in April ordered an abrupt retreat from the announced crackdown. Trump made the order without even consulting Sessions, a sign of their tense relationship.

But prosecutors did back off. During this administration, there have apparently been no federal raids or seizures of pot companies for sales that are legal under state law.

“Remarkably little, if anything, has changed,” said John Vardaman, a former Justice Department attorney who helped draft the Obama-era rules, known as the Cole memo, after former Deputy Atty. Gen. James M. Cole, who issued it. “Almost every U.S. attorney in states where marijuana is legal has decided to apply the same principles as the Cole memo,” said Vardaman, now an executive at Hypur, which sells banking compliance software to marijuana companies.

Banking is the area in which the Gardner bill could most help pot companies.

The Senate proposal, and a companion bipartisan measure in the House, would amend the Controlled Substances Act so that its marijuana provisions do not apply to any person or business that is in compliance with state laws. To put bankers at ease, it specifies that such marijuana sales would not be considered trafficking and do not amount to illegal financial transactions.

“The very people you want involved in this market are the ones who have been most reluctant to get involved because of the banking issue,” said Vardaman. “If you address that, you would have enormous beneficial effects for the industry.”

While Trump’s comments were welcomed by marijuana activists, they remain on edge, especially because of Trump’s spotty record at actually pushing legislation through Congress.

“We have seen this president voice his support for a lot of things related to cannabis, but he has done absolutely nothing to move legislation,” said Hudak. “This is just more empty rhetoric from a president who is vague on this issue.”

Gardner is hoping he can persuade more of his conservative colleagues to join the crusade by framing the issue as one of state’s rights. Several Republicans, including Reps. Dana Rohrabacher of Costa Mesa and Don Young of Alaska, are demanding an end to federal marijuana laws that intrude on the states. Their movement is slowly growing in Congress.

“This is a chance for us to express that federalism works,” said Gardner, who like some other Republicans was not a proponent of marijuana but took up the cause after his state’s voters endorsed legalization, “to take an idea that states have led with and provide a solution that allows them to continue to lead.”

California’s Re-adoption of Emergency Regulations for Cannabis Cultivation Goes Into Effect

Cannabis Business Times/June 7, 2018

PRESS RELEASE – CalCannabis Cultivation Licensing, a division of the California Department of Food and Agriculture, has readopted the emergency regulations for commercial medicinal and adult-use cannabis cultivation. This re-adoption of the regulations features several amendments, which are outlined here.

Effective June 6, 2018, all applicants seeking temporary licensure must submit the following attachments with every temporary cannabis cultivation license application:

  • A copy of a valid license, permit, or other authorization, issued by a local jurisdiction;
  • New! A proposed cultivation plan;
  • New! Identification of applicable water sources and the applicable supplemental information;
  • New! Evidence of enrollment with the applicable Regional Water Quality Control Board or State Water Resources Control Board for water-quality-protection programs or written verification from the appropriate board that enrollment is not necessary.

Please refer to Section 8100 of the emergency regulations for clarification of the temporary license application requirements at the link provided above.

Temporary applications that do not contain all the required information and documentation will be deemed incomplete and will be denied. Any existing temporary licenses or temporary license applications submitted prior to June 6, 2018, are not required to include the additional documentation.

The CalCannabis Licensing System is being updated to reflect these additional requirements. Until that update is complete, applicants may still submit the required documents in one of the following ways:

  1. Electronically

Upload the new required documents via the CalCannabis Licensing System and either:

  1. Add the attachments on the page labeled “Step 2: Attachments” prior to final submission of the application:
    Click the “Add” button
    Select document to upload and click “Continue”
    Select “Other” within the “Type” dropdown list
    Provide a brief description of the attachment
    Click “Save” when finished
    Repeat for each attachment

or

  1. Add the attachments after final submission of the application:
    While logged in, locate and select the desired application record in the “My Licenses” toolbar link
    Select the down arrow next to “Record Info” and select “Attachments”
    Click the “Add” button
    Select the document to upload and click “Continue”
    Select “Other” within the “Type” dropdown list
    Provide a brief description of the attachment
    Click “Save” when finished
    Repeat for each document you want to attach

A quick reference guide on how to add attachments after submission of an application is available here.

  1. By Mail

Submit a hard copy of the application form and all required documents to: California Department of Food and Agriculture, CalCannabis Cultivation Licensing Division, P.O. Box 942871, Sacramento, California 94271. The updated Cannabis Cultivation Temporary License Application is available here.

If you have questions about this notice, please contact CalCannabis Cultivation Licensing by calling toll-free 1-833-CALGROW (1-833-225-4769) or send an email to CalCannabis@cdfa.ca.gov.

 

Lessons from California: Licensing and Compliance Issues

New Frontier Data/February 19, 2018/J.J. McCoy

In this article we recognize the haphazard dance between state regulators and their would-be suitors for licensure and legal compliance.

“Given how massive a task it was to transition this market into facilitating adult use with a fully regulated and licensed medical market, I am pretty impressed with how smoothly things have gone overall,” said Khurshid Khoja, founder and principal of Greenbridge Corporate Counsel in Sacramento.

Disconnect between local and state licensing

Before the end of January, the state’s regulatory California Bureau of Cannabis Control (BCC) reported issuing about 800 licenses, while its Department of Food and Agriculture overseeing cultivation had issued around 700, and the Department of Public Health overseeing manufacturing had issued 455.

Currently, licensees have a free, four-month permit to operate while they hope to receive a state license. The trouble, however, is that for operators to be granted a temporary license, they first need to have a local license, and respective jurisdictions have been varying considerably in terms of their efficiency. Most notably, in Los Angeles “the regulators seem completely underwater,” according to Khoja. “Even state licensing agencies cannot get answers.”

Unforeseen disruptions to established business practices

Prior to the market’s opening, many operators did not anticipate issues with specific regulations. For example, established practices in the medical market allowed producers to provide free samples for dispensaries to test before offering on their shelves, or for dispensaries to provide to indigent medical cannabis patients. Now, Khoja notes, “operators are still figuring out who collects the taxes, how they get transferred, and whether the retailer also has to pay the excise tax for giving an indigent patient that free sample.”

Balancing small or medium operators against big players

The California Growers Association (CGA), representing about 900 cannabis cultivators statewide, argues that Proposition 64 was passed with intent to support small and medium-sized cannabis businesses.

Yet, the CGA claims in a lawsuit, a loophole in the regulations has allowed large farming operations to jump into the space. About 250 cannabis operators have been awarded small cultivation licenses (with 1-acre caps for growing space), yet 10 of those businesses control approximately 30% of all the licenses awarded. Two such cultivators — Honeydew Farms and Central Coast Farmer’s Market Management — have been awarded about 30 licenses apiece.

The contention, Khoja explains, is whether each licensee is limited to a total of 1 acre of cultivation, period, or that companies can obtain small and/or cottage licenses which can be stacked for an extensive canopy in overall terms of cultivation throughout the space.

Takeaway

“We went from zero to 60 [mph] in terms of regulations that people had to comply with,” Khoja said. “Lori Ajax (chief of the state’s Bureau of Medical Marijuana Regulation) said ‘we won’t bust people for being noncompliant before they can even get compliant,’ and [they] know it’s their job not just to regulate the legal market, but to help eliminate the illicit market. That serves the public, the industry, and the taxing authorities alike. It’s not an easy mandate, but they are aware of it, and that’s half the battle.”

Berkeley Declares It’s a Sanctuary City for Marijuana Users

Associated Press/February 16, 2018

BERKELEY, Calif. (AP) — Berkeley has declared itself a sanctuary city for marijuana users, a largely symbolic move that cements a policy prohibiting city employees from assisting federal officials in the enforcement of federal marijuana laws.

The Berkeley City Council voted unanimously Tuesday in favor of the resolution proposed by Mayor Jesse Arreguin and two city councilmembers.

“I believe we can balance public safety and resisting the Trump administration,” Arreguin said.

In a tweet after the vote, Arreguin said the move was a direct response to U.S. Attorney General Jeff Sessions’ “misguided crackdown on our democratic decision to legalize recreational cannabis.”

Sessions said last month it would be up to U.S. prosecutors in states where pot is legal to decide which marijuana cases they pursue. And while federal prosecutors have not acted against legal marijuana businesses, several states are considering so-called sanctuary status to protect them.

The measure in the famously liberal city does not prevent local officials from assisting federal agents in other drug-related crimes, Arreguin said.

Californians voted in November 2016 to legalize recreational marijuana and abolish a host of pot-related crimes, but using or possessing marijuana remains illegal under federal law.

California, Alaska, Massachusetts and Washington are considering bills that would bar using state resources in any federal efforts against businesses that are in compliance with state marijuana states.