Legal cannabis to generate over 400,000 jobs study finds

New Vision/January 8, 2018

The legal cannabis sector is expected to generate $40 billion and more than 400,000 jobs by 2021 in the United States, according to a study released Tuesday.

The estimate by consulting firm Arcview includes direct purchases by consumers of $20.8 billion and indirect revenue for growers and various subcontractors as well as money spent with businesses not affiliated with the sector, such as supermarkets.

The projection would represent a rise of 150 percent on the $16 billion revenue recorded in 2017, according to the study, released the day after recreational use of marijuana became legal in California.

Arcview and its partner in the research, BDS Analytics, expect $4 billion in taxes to be generated within three years.

The new regime will lead to the creation of nearly 100,000 cannabis industry jobs in California by 2021, about a third of the nationwide figure and 146,000 jobs overall when indirect effects are considered.

Customers and operators in California have complained however about the punitive sales taxes to be applied to cannabis and its derivative products, which can hit 35 percent when state, county and municipal levies are taken into account.

California, the most populous US state, became the largest legal market for marijuana in the world on Monday, and public reaction to the law change has been enthusiastic, with long lines and stock shortages reported at clinics already licensed and open.

Berkeley mayor Jesse Arreguin hailed the reforms at a ceremony on Monday at Berkeley Patients Group, one of the oldest dispensaries in the United States.

“I’m stoked about this historic moment, not just for Berkeley, but for the state of California,” Arreguin said, praising the state for “embracing this new economy.”

Cannabis possession remains illegal under federal law, and Arcview’s Tom Adams said fewer than 100 out of the 3,000 outlets and delivery services operating in California were ready to go with the required local and state permits.

“Those that were generally report doing multiples of their typical day’s business with a far more diverse and less experienced customer base that need a lot of hand-holding and educating from their bud-tenders,” he added.

“We were very cautious in projecting revenue growth from $3 billion to $3.7 billion in this first year of adult-use legality in California, but we’ll have to revise that upwards if, as now appears likely, San Francisco and Los Angeles are going to get permits issued more quickly than we expected.”

Australia Approves Medical Marijuana Exports as U.S. Threatens Crackdown on Industry

MG News Extract/January 4, 2018/Danny Reed

While U.S. Attorney General Jeff Sessions is threatening a possible crackdown on state-approved marijuana, which helped shield residents and businesses that follow state laws from federal prosecution, Austrailian authorities have announced a very different course of action.

Today, the Australian government announced that it plans to allow medical marijuana exports.

“In an important step for the development of the medicinal cannabis sector and to secure long-term supplies for Australian patients, the Federal Government will permit the export of medicinal cannabis products,” Australian health minister Greg Hunt in a statement today.

Hunt felt that the move could provide a boost for the Australian manufacturers and the country’s economy.

“This decision will help both the domestic supply and Australian producers by strengthening the opportunities for domestic manufacturers,” Hunt said.

Hunt also said the government’s focus was on the patients in Australia.

“This change will not come at the expense of Australian patients,” Hunt said. “In fact, by helping the domestic manufacturers to expand, this, in turn, helps to ensure an ongoing supply of medicinal cannabis products here in Australia.”

The plan will have to be approved by Australia’s federal parliament before becoming official. But the Labor Party, who is considered to be the main opposition to marijuana reform in Australia, has already signaled that they support the plan.

Australia joins Canada, Uruguay, the Netherlands, and Israel as countries that have approved similar measures.

Recreational marijuana use is still outlawed in Australia.

LA could become the biggest marijuana market in the world. But will the city be ready?

By GFarma News

September 15, 2017

With the cannabis industry set to be legalized in California at the start of next year, the pressure is on for Los Angeles, as some anticipate that the city will be among the hottest marijuana markets in the country, if not the world.

“It’s the California gold rush again – it’s the ‘Green Rush,’” said Greg Meguerian, owner of The Reefinery medical marijuana dispensary in Van Nuys. “The world’s paying attention, and at the end of the day, this is Los Angeles. It’s going to be the largest market in the world … it’s going to be huge.”

“If I’m a tourist from another country, why would I go to Washington if I can go to Hollywood?” he said.

The revenue projections appear rosy to those cannabis businesses looking to be a part of the Los Angeles market. Some believe that with about 10 million people in Los Angeles County, the market potentially eclipses entire states like Colorado and Washington, which have already legalized marijuana.

But with less than four months to go, city officials still have a hefty workload ahead of them as they race to meet a mostly self-imposed Jan. 1 deadline to set up a program that could potentially issue licenses to dispensaries, cultivators, distributors and other sectors in the industry.

And once licenses become available, demand is expected to be high in the Los Angeles area, compared to other parts of the state. A survey of cannabis businesses conducted by the state Department of Food and Agriculture in 2016 found that there were 2,718 companies interested in getting licenses in Los Angeles County, which is the highest number of the counties mentioned in the survey, followed by 1,415 for San Diego, 1,177 for Sacramento and 1,141 for Alameda.

Local licenses are critical because cannabis businesses must obtain them before they can even begin to apply for a license with the state.

But some groups representing cannabis businesses are concerned Los Angeles city officials may be cutting it close, and it could be well into next year before a licensing program is available to many that want to operate.

The city is not expecting to adopt local regulations until the end of October, with licensing applications expected to be made available in November. Hiring has not quite begun for the city’s cannabis department, which will be tasked with processing applications.

City Council President Herb Wesson has been leading the process for developing the regulations for L.A.’s cannabis industry, and says he is “guardedly optimistic” that the city will be able to get a licensing program running before January.

His aides said they are aiming to get regulations adopted by the end of October, and the application process started in November.

Businessman Brian Blatz, who has spent the last two years getting his marijuana distribution business ready to enter L.A.’s market, said that there have already been delays and any further ones would be hard to take, as he does not plan to start operating until a license is issued to him.

“I won’t move a stem until we have, at the bare minimum, a local license in Los Angeles,” he said.

Blatz said he is expecting to begin paying rent next month on a facility in Los Angeles, which means there will soon be more bills to pay, despite not being able to earn income.

“I’m interested in the city of Los Angeles, as I know a lot of people in this industry are, and they’re trying to be as patient as possible,” he said. “But it’s very difficult … I have investors, and I have money at risk. Every time that they delay or hold back on the licensing, it costs us a lot of money.”

Blatz said ideally he would want Los Angeles to make licensing applications available to businesses like his starting in November, so that he could be ready to apply with the state on Jan. 1.

Some businesses say that while they are eager to be a part of the Los Angeles market, if the process takes too long, they have other options.

“There’s definitely the desert cities around us that have moved much more quick,” said Ryan Jennemann, who co-founded THC Design, a cultivation company based mostly in Los Angeles.

“We are very actively looking at surrounding cities right now,” he said.

There are also a few legislative hurdles to get through for the city, before it can launch its cannabis licensing program. The L.A. City Council still needs to weigh in on a “social equity” component to the regulations that would give licensing priority to those that have historically been most affected by drug law enforcement policies, such as the federal government’s so-called “war on drugs,” a crackdown that led to many minorities being incarcerated.

With worries that L.A. may not be able to make licenses available to many operators by Nov. 1, some in the industry are pressing the city to develop an application process that can feasibly be completed by cannabis businesses in time before Jan. 2, so that those businesses are not left out when the state makes its applications available.

City officials have some motivation to get its licensing program set up sooner than later. The industry is expected to be a boon for city coffers, with estimates coming in at around $50 million in tax revenues for the first year of licensing, according to figures projected by Los Angeles City Controller Ron Galperin’s office.

Meanwhile, as city leaders work to shepherd its licensing program through the process, illegal cannabis businesses, including cultivators, continue to feel the threat of being shut down through ongoing enforcement by state and city authorities.

The City Attorney’s Office has filed criminal actions against more than 1,700 marijuana businesses and shut down more than 800, since the enactment of Proposition D, a ban on marijuana businesses. Rob Wilcox, a spokesman for that office, said officials continue to enforce the measure and pursue criminal cases against such businesses.

Erik Hultstrom, who co-founded the Southern California Coalition, a trade group that has lobbied on behalf of its cannabis business members, said that he believes “the city really wants to get it done right,” so the process to set up the licensing program might not go as quickly as some are hoping it would.

But that leaves some businesses, which supply cannabis or provide services to dispensaries, operating in a “limbo,” making them vulnerable to enforcement actions by the city, he said.

Some cultivators have complained of aggressive enforcement from the city, and say that they have had to let go of employees and take apart their facilities.

Hultstrom, who is also the president of a cultivators trade group, said he supports interim measures providing “short-term clarity,” that could “keep unnecessary enforcement from happening to the good operators.”

But some operators have been willing to take the risk, despite this uncertainty. Jennemann, who started the company in the Bay area, said he moved to Los Angeles in 2014 because he saw promise in L.A.’s market.

“I wanted to position my company to have a foot in the (door of the) largest market in the world,” he said.

“Granted I can make my product somewhere else,” he said. “But the bulk of it is still going to be sold in Los Angeles, so I’d like to have my roots in the city where most of it is being sold.”

Why the Elderly Are the Fastest-Growing Pot Demographic in the U.S.

By GFarma News

August 29, 2017

On a recent Friday at the Balfour Riverfront Park senior living facility in downtown Denver, an unusual event took place among the day’s regular activities. In between scrapbooking at the Sky Bar and water walking in the Pompeii Pool, the facility was hosting a “cannabis 101” seminar in the Moffat Depot community room.

As one of the 50 or so attendees bellows at his neighbors to quiet the chitchat, Joseph Cohen, medical director at Holos Health, a Denver holistic medicine and medical marijuana evaluation center, steps in front of the audience in the sunlight-filled room, tastefully decorated with golden chandeliers, chenille couches, and potted mock orange trees. “I will try to go slower than my usual pace for my talk,” he says into a microphone, noting he’d be discussing cannabis’ uses for a variety of age-related diseases.

“The idea is to minimize psychoactive activity and maximize therapeutic effects,” he says, then adds with a smile, “Unless you want to have psychoactivity. Then go for it.”

This free seminar is the brainchild of Stratos, a Colorado marijuana company that produces medical cannabis tablets. Since launching in 2014, the firm has found its simple and discreet product lines — which come in somber bottles with names like “Sleep,” “Relax,” and “Energy” — are a hit among one demographic in particular: seniors. “The baby boomer generation has been huge for us,” says Kate Heckman, Stratos’ sales director, who’s watching Cohen’s presentation from the side of the room.

Stratos stumbled upon a seemingly surprising phenomenon: According to a 2016 study, seniors are the fastest-growing pot demographic in the country, with marijuana use among those 55 and older increasing by 53 percent between 2013 and 2014. But the trend isn’t as unusual as it might sound: Many of the ailments cannabis is most often used to treat are those that often plague the elderly, such as joint inflammation and pain, insomnia, muscle spasms, and decreased appetite.

Many older consumers have disposable income to spend on marijuana, at least according to the sort of luxury senior-living amenities on view at Balfour Riverfront. The compound, nestled in the heart of Denver’s booming downtown and surrounded by modern condos and lush riverfront gardens, feels more like an all-inclusive resort than an assisted-living facility, with its valet parking out front and open-air patio bars. For the most part, the residents attending the cannabis 101 talk look hale and healthy, boasting the poise and vigor of those who’ve earned a comfy retirement. Cohen, with his comfortable short-sleeved shirt, well-manicured beard, and grey ponytail, fits right in.

Balfour is part of a growing trend of operations and organizations tackling the issue of seniors and marijuana use. For years, Harborside Health Center, a prominent dispensary in Oakland, California, has been hosting monthly support groups for patients over 50. In early 2017, New York City nursing home captured headlines for allowing residents to store and use cannabis on site. The storied National Organization for the Reform of Marijuana Laws (NORML) has organized cannabis informational sessions and lobbying efforts geared towards seniors under its so-called “Silver Tour.” And earlier this year, the Society for Post-Acute and Long-Term Care Medicine, a major organization of medical providers, discussed cannabis use at its annual conference. Judging from the interest at this cannabis 101 seminar, events like these won’t be the last of their kind.

Many nursing homes, whose higher level of care is regulated by the federal government, could be fearful of losing Medicare and Medicaid funds if they permit cannabis use. But an assisted-living facility like Balfour doesn’t have rules prohibiting its residents from consuming marijuana as long as they don’t violate the facility’s no-smoking policy. (In other words, no joints or bongs.) But there’s another barrier to entry for even those at Balfour: A lack of education. After long being told cannabis is no different than other dangerous street drugs, many could be confused about this bold new world of legalized marijuana.

That’s why, after some initial hesitation, Balfour agreed to Stratos’ proposal to hold these seminars, several of which are also taking place at other Balfour residences in the area. “For me, it’s really important for communities like Balfour not to be some kind of gatekeeper or paternalistic guardian,” says Balfour CEO Michael Schonbrun, who hasn’t noticed anyone actively consuming cannabis at his facilities — but adds that it doesn’t mean folks aren’t doing so. “We want our communities to be places where people are exposed to new ideas. Let people make their own decisions.”

Plus, adds Schonbrun, “When you get old, something happens to your body. If this is something that can help with arthritis, cancer treatments, diabetes, and a whole range of other illnesses, why not bring it to people’s attention?”

According to Cohen’s presentation, medical marijuana can help with all of those ailments and many more. Over his hour-long talk, aided by a text-dense PowerPoint presentation that’s devoid of psychedelic stoner images, the physician holds forth on every aspect of the modern cannabis industry. In a slow, droning voice, he covers marijuana research and the war on drugs, cannabinoid receptors and terpenes, transdermal marijuana patches, and ultra-high-potency “dabbing” (the latter of which elicits a rumble of concern from the audience). Cohen says his wife found relief from an autoimmune disease thanks to cannabis, and he speaks of the plant like a true believer, listing condition after condition it can be used to treat: Anxiety, opioid withdrawal, diabetes, osteoporosis, psoriasis, neuropathy, muscle spasms, Parkinson’s, cancer. He even recommends low-THC, high-cannabidiol strains for diabetic dogs.

But many of these treatments aren’t yet supported by thorough research. Studies related to marijuana use among the elderly are especially scarce, which is a concern since many older people have conditions or take pharmaceuticals that cannabis could impact in unexpected ways. “While they certainly are not the target of the new Big Marijuana industry, there are health and safety concerns [for this population],” says Kevin Sabet, president and CEO of the major anti-legalization group Smart Approaches to Marijuana. “For example, older people are more likely to drive unsafe and have weaker memories — marijuana, in particular THC, makes those things worse.”

To the contrary, at least one recent study suggested marijuana could actually improve cognitive functioning in elderly brains. But that research was preliminary; there’s still a lot we don’t know about cannabis’ potential benefits — and its risks. According to Cohen in his presentation, that’s because the “medical-industrial complex” and the federal government have long worked with doctors and universities to suppress science around the plant. “Welcome to America, folks,” he says with a wry smile.

At the end of Cohen’s presentation, an attendee stands up and introduces himself as a clinical professor of psychiatry at Brown University. “You do a very nice presentation, but you do yourself a disservice when you talk about medical facilities suppressing medical information,” he tells Cohen sternly.

A physician in the audience concurs. “I am very suspicious of people like you who accuse the medical establishment of suppressing medical research,” he says. “You said that up front, and you lost me.”

These seniors, it turns out, don’t need convincing that marijuana has been unfairly stigmatized for decades. They’re already okay with legalized cannabis use. Now they just want the facts, minus the hyperbole.

Cohen’s rabblerousing doesn’t turn off everyone at cannabis 101. After the talk, several folks approach Heckman about potential doses of Stratos capsules. Others will likely take part in upcoming Stratos-sponsored shuttle rides to a nearby dispensary.

Still, despite Cohen’s thorough presentation, questions remain. When the doctor asks if audience members have questions, a man with white tufts of hair sprouting above his ears raises his hand. “You have gone through this huge list of what it will do,” he says. ”But will it grow hair?”

Astrophysicist Neil deGrasse Tyson Agrees with Marijuana Legalization

MG Retailer/August 15, 2017/Danny Reed

Neil deGrasse Tyson is famous for his notable work in the field of astrophysics. He hosted the revival of Carl Sagan’s “Cosmos” and is following Sagan’s footsteps in another way as well.

Like Sagan, Tyson does not believe marijuana should be criminalized.

“The illegality of cannabis is outrageous,” Sagan wrote in the 1971 book “Marihuana Reconsidered.” “An impediment to full utilization of a drug which helps produce the serenity and insight, sensitivity and fellowship so desperately needed in this increasingly mad and dangerous world.”

Tom Angell, of Marijuana Majority submitted a question to Tyson at a public event asking the physicist about his views on marijuana.

“If you really analyze it,” Tyson said, “relative to other things that are legal, there’s no reason for it to ever have been made illegal in the system of laws.”

“Alcohol is legal,” he continued, “and it can mess you up way more than smoking a few J’s.”

Tyson is not an advocate for marijuana. “I don’t count myself among active recreational drug users,” Tyson said in a 2015 Reddit AMA. “For me, the least altered state of awareness I can achieve is the one I seek, because that one is most likely to be closest to reality.”

However, even if his job takes him into the cosmos, Tyson seems to have a grounded approach to marijuana. His views are in line with the majority of Americans. A recent poll showed that 94 percent of Americans support medical marijuana while 61 percent support recreational use.

California Treasurer on Cannabis Banking: “There May Be Some Magic in Our Efforts”

CBE/July 12, 2017/David Hodes

In December, 2016, California State Treasurer John Chiang created a cannabis banking working group of members who hail from business and government – Lori Ajax, chief of the Bureau of Medical Cannabis Regulation; David Haithcock, executive director of the California Community Banking Network; Courtney Jensen, California and Nevada Credit Union League and 13 others – that just wrapped up their fifth meeting since their first meeting on December 19th in Sacramento.

A sixth meeting is planned in August in Los Angeles.

The topic? Banking in general, and California’s increasingly important role as one of the largest states to have legalized both medical and recreational cannabis, and the first state with perhaps the right catalyst for getting the federal government to act.

At the most recent meeting, on July 7 in San Diego, in his opening remarks, Chiang said that “there may be some magic in our efforts” because of California’s size, a comment that was echoed by some of the 11 stakeholders testifying before the group.

According to John Hudak, deputy director of the Center for Effective Public Management at the Brookings Institution, testifying in a panel alongside Aaron Smith, executive director of the National Cannabis Industry Association (NCIA) and U.S. Congressman Dana Rohrabacher (R-CA), the biggest question of federalism of our time is how cannabis is legal and illegal at the same time. “This question of federalism touches on a whole host of areas, and banking is one of them,” he said.

Hudak added that the stakeholders in the room were not the people that the working group is trying to achieve access to banking for. “This is a public health and public safety issue,” he said. “This is as much about business operating effectively and efficiently as much as it is making sure that this industry can be tracked and traced and kept honest, and can be regulated efficiently, so that the individual knows exactly what product they are getting and where it came from, and that the tax money they hand to that dispensary ends up in the treasury where it belongs.”

He said that California has the opportunity to be a thought leader in the banking issue, echoing another point the treasurer made in his opening remarks. “The state truly does, because the problem with banking is no different here than it is in Colorado or Washington or the medical states across the country,” Hudak said. “What California does is have the opportunity to use scale as a means to demonstrate policy benefits and policy realities and policy possibilities.”

Smith said that the political climate has changed dramatically in the last seven years. “On the banking issues specifically, there are very few outspoken politicians saying that cannabis should have banking, but we are not seeing any vocal opposition to banking,” he said. “It looks like we now have majority support on both sides of aisle to fix the problem, but the general dysfunction now is the challenge that we are facing.”

He said that he hopes for constituents in the state to lean on Senator Dianne Feinstein  (D-CA) to take the lead “not for cannabis but for public safety.”

“This is a public safety issue and we should see coalition of law enforcement, regulators, and tax collectors get behind this,” Smith said.

Hudak added that California needed to get its own house in order. “There are difficulties at the local level and difficulties at the state level,” he said. “So the first step is figuring out how to get everyone on the same page in order to show the federal government that we can do this right. They are not going be welcoming or warm up to a halfway approach. But if you can show a full system from the smallest local municipality up to the way in which the state does business that other states follow, that is going to be the example that prompts the federal government to make a move.”

Poll of Likely Utah Voters Shows 73% Support for a Medical Cannabis Ballot Initiative Next Year

Press Release/June 28, 2017

SALT LAKE CITY, Utah — A February poll of 402 Utahns found that 73 percent of voters support a medical cannabis ballot initiative, with only 20 percent opposed and 7 percent were undecided.

“The poll results show overwhelming and broad support for medical cannabis in Utah,” said DJ Schanz, director of Utah Patients Coalition. “Voters believe that patients should be able to safely and legally access the medicine they need.”

Voters from virtually all demographic groups expressed support, including 64 percent of Republican voters, 63 percent of active LDS voters, and 75 percent of voters age 50 and above. Nearly 80 percent of all voters support medical cannabis in principle.

The poll found 72 percent support for allowing doctors to recommend medical cannabis as a treatment for chronic pain.

A 2014 study published in the Journal of the American Medical Association found that, between 1999 and 2010, states with medical cannabis laws had a 24.8 percent lower rate of opioid overdose deaths than states without medical cannabis laws.

“The opioid epidemic has already taken too many lives in our state,” said campaign spokesperson Christine Stenquist. “We should allow medical cannabis as a treatment for chronic pain for two urgent reasons. First, medical cannabis is a more effective treatment for many patients. And second, it can potentially play a significant role in reducing the rate of opioid overdose deaths in Utah.”

The poll was conducted with live callers on both landline and wireless phones. It was commissioned by the Marijuana Policy Project, a national marijuana reform organization that is supporting the 2018 Utah campaign. Fairbank, Maslin, Maullin, Metz & Associates, an opinion research firm, conducted the poll.

Changes Forthcoming for DOJ on Marijuana, Deputy AG Rosenstein Hints

The Washington Times/June 13, 2017/Andrea Noble

Deputy Attorney General Rod Rosenstein hinted Tuesday there are changes on the horizon as to how the Justice Department handles marijuana enforcement in states that have legalized use of the drug in some form.

“We follow the law and the science. From a legal and scientific perspective, marijuana it is an unlawful drug,” Mr. Rosenstein said Tuesday during an appearance before a Senate appropriations committee.

But he said there may be future changes to the Obama-era guidance issued by the Justice Department — known as the Cole memo — that limited federal enforcement of marijuana laws in states that had opted to legalize medical or recreational use.

“Jim Cole tried to deal with it in that memorandum. At the moment that memo is still in effort,” Mr. Rosenstein said of the policy. “Maybe there will be changes to it in the future but we are still operating under that policy which is an effort to balance the conflicting interests with regard to marijuana.”

Describing the hurdles legal marijuana businesses face, Sen. Lisa Murkowski, Alaska Republican, had asked the deputy attorney general to describe where DOJ is headed with regard to marijuana.

Alaska is one of eight states where residents voted to legalize adult recreational use of marijuana.

Uncertainly has lingered over what could happen to recreational or medical marijuana markets since Attorney General Jeff Sessions took the helm at the DOJ.

News broke Monday night that Mr. Sessions is asking congressional leaders not renew a federal law that afforded some protections to state medical marijuana laws. In a letter first obtained by Tom Angell of MassRoots, Mr. Sessions wrote to leaders last month asking that they not renew a law that restricts the DOJ from spending money to interfere with state medical marijuana laws.

“I believe it would be unwise for Congress to restrict the discretion of the Department to fund particular prosecutions, particularly in the midst of an historic drug epidemic and potentially long-term uptick in violent crime,” Mr. Sessions wrote in a letter sent to the Republican and Democratic leaders in the House and Senate. “The Department must be in a position to use all laws available to combat the transnational drug organizations and dangerous drug traffickers who threaten American lives.”

 

Claiming Your Stake: Real Estate Considerations for Cannabis Companies

Cannabis Business Executive/March 29, 2017/Jason Klein

Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”

– Theodore Roosevelt

Purchasing Real Estate with your Cannabis Company

Most cannabusiness operators would disagree with Mr. Roosevelt.  For them, real estate is not the basis of wealth—company cash flow is.  Real estate is simply a capital asset that the company needs to create cash flow.  Anyone who has ever sought to purchase or value a cannabis business knows this fact implicitly: the value of the company is dictated not by the assets it owns but by the cash flow and year over year sales it generates.

Although the value of real estate is not the primary driver of business valuation, owning real estate as a business asset offers some positive financial, legal and regulatory advantages. Some of these advantages can be particularly impactful for cannabis businesses.  For instance, owning your own property means you do not have a landlord to keep happy.  It also gives the business greater flexibility in financing since real estate is viewed as an investment with a virtually unlimited lifespan – so it can be financed with equity, mortgage loans, or sale-leaseback financing.

Some drawbacks are attendant to the ownership proposition as well – buying real estate carries a significant opportunity cost insofar as it could act to make further investment in the business more difficult.  These considerations – the value, the costs, and the opportunity costs – can all be incorporated into a model to help business owners decide what is best for them.

The Cannabis Commercial Lease

A commercial lease to operate a cannabis business is anything but standard – even a standard commercial lease agreement applied to a cannabis business has the potential to be interpreted very differently from what it otherwise would be in the case of another industry.  Both landlords and cannabis businesses must take into account the fact that cannabis remains a schedule I controlled substance under the Controlled Substances Act (CSA) and work to mitigate the potential negative outcomes stemming from this fact for both parties in the relationship.

Just one example involves state regulatory compliance. While it varies between states, every state has some level of regulatory requirement relating to the ownership of cannabis businesses.  A very popular provision often incorporated into cannabis lease agreements provides for a share of profits to go to the landlord.  In some states this profit-sharing arrangement could be seen by regulators as a form of de facto ownership in the business, hence implicating disclosures, background checks, and compliance vetting.  Suddenly, landlords who saw themselves as “silent” partners to the business could be subjected to unwanted and invasive regulatory reviews, and leaving the businesses and the valuable licenses they hold exposed.

Potential landmines exist even within the boilerplate language typically found at the end of every commercial lease.  Most commercial leases contain a boilerplate clause stating that any illegal use of the property in violation of federal or state law constitutes a default under the lease, and subjecting it to immediate termination.  Clearly that clause is not going to work for a cannabis business.  I recommend instead that leases use a clause forbidding only activities outside of the scope of those allowed under state – not federal – law, thereby allowing for the intended use consistent with the state license.

Another example involves dispute resolution.  Often overlooked in lease agreements and many other types of contracts, a dispute resolution clause stipulates how disagreements between the parties are resolved.  Parties need to be sensitive to the fact that some state courts have held that contracts for an activity illegal under federal law are unenforceable and void ab initio, meaning that it is as if the contract never existed.  An arbitration clause mandating the parties resolve their differences before an arbitrator rather than a judge could be a feasible workaround.

Location, Location, Location….and Compliance

Regardless of whether you end up buying or leasing, the property that you select has a big impact in determining your eventual success.  The right property for you will be determined by two primary considerations – suitability and compliance.  Naturally, dispensaries require vastly different properties from cultivation and processing facilities.  The former look for accessible retail locations conveniently located nearby target markets, while the later typically seek industrial or agricultural properties that meet their utility demands while still allowing for conducive supply chains.

Both businesses have to grapple with state regulations and local zoning.  Often states and cities require cannabis business be set back at least 1,000 feet from schools, parks and other places that children typically congregate, and it is good practice to stick to this approach even where local laws may allow a shorter buffer.  You should have a zoning review showing all local schools, parks, daycare centers, and playgrounds in the vicinity of the target property before beginning any negotiations for lease or sale.

Keep in mind too that a cannabis company moving into the area will attract the attention of neighbors.  Be a good neighbor and be sensitive to the concerns and questions coming from the local community.  On the whole, cannabis companies that engage their local zoning and neighbors will succeed at a greater rate than those who do not, and this is because local zoning boards and neighborhood associations, hold a great deal of power to make your business life frustrating, impractical, or even impossible.

Conclusion

Cannabis businesses by nature require real estate – either agricultural, industrial, or retail.  Your choice of property that fits your business criteria while still complying with the regulatory requirements is essential, and the decision about how to acquire use of the property, will go a long way toward determining the long-term success of your venture.

Industry Reacts to White House Comments on Recreational Cannabis Enforcement

Industry Reacts to White House Comments on Recreational Cannabis Enforcement

Cannabis Business Times/February 24, 2017/Brian MacIver

Hours after a Quinnipac University poll found that 71 percent of U.S. voters believe the government should not enforce federal laws in states that have passed recreational cannabis laws, the White House said there will be a crackdown on the adult-use marijuana industry.

“I do believe that you’ll see greater enforcement of it,” said White House Press Secretary Sean Spicer at Thursday’s press briefing. “I believe that [the Department of Justice is] going to continue to enforce the laws on the books with respect to recreational marijuana.”

Spicer cited the opioid crisis as reason for the President’s new tougher stance, saying, “I think that when you see something like the opioid addiction crisis blossoming in so many states around this country, the last thing that we should be doing is encouraging people,” Spicer said to a room full of reporters.

However, a recent study found the opposite: States that have legalized cannabis have lower rates of opioid abuse.

When Spicer was pressed for clarification if he did mean “greater enforcement,” he doubled down and said the DOJ is “going to continue to enforce the laws on the books with respect to recreational marijuana.” He indicated that law enforcement officials would not be targeting medical marijuana businesses.

Cannabis Business Times (CBT) reached out to the DOJ for further clarification. The department declined to comment. The cannabis industry, however, was quick to react to the news.

Mason Tvert, director of communications for the Marijuana Policy Project (MPP), said in a statement, “It is hard to imagine why anyone would want marijuana to be produced and sold by cartels and criminals rather than tightly regulated, taxpaying businesses.”

In an interview with CBT, Tvert added he believes that the end of recreational marijuana is not near.

“I think that’s an incredibly premature notion,” he said. “This was an off-the-cuff, bumbling answer to a question from a reporter. It was in no way a statement of policy, and it did not at all seem to be planned or even consistent within itself.”

Mark Malone, the executive director at the Cannabis Business Alliance, was extremely critical of the comments from the WH, saying, “Going after the legal marijuana industry would be a direct affront to the overwhelming numbers of Americans who have voted time after time to approve legal cannabis. It would also be an affront to the Cole Memo and a misuse of energy and taxpayer funds.”

Pueblo County Commissioner Sal Pace, a vocal supporter of the cannabis industry in Pueblo and Colorado, also said that local voters had an opportunity to revisit cannabis legalization in their community this past November and that support grew by six percentage points. He added that cannabis tax revenues were a boon to local initiatives.

“College scholarships, parks funding, impact studies, jailhouse improvements, veteran sponsorships, addiction treatment, homeless programming and school drug prevention programs have all been made possible here because of legalization. We know the rest of America agrees, let states decide for themselves.”

Tvert advises cannabis business owners to contact their representatives to urge them to support legislation that would resolve the state-federal conflict, including the Respect State Marijuana Laws Act of 2017.

“And they can certainly reach out to their local officials and state officials and encourage them to be prepared to stand up for the many jobs and tax revenue and public safety and health service that they provide their state by taking marijuana out of the underground market and controlling it,” Tvert said.

Secretary Spicer’s comments come just a week after four U.S. representatives formed a Congressional Cannabis Caucus that will work to create legislation for marijuana legalization and regulation.

“I am deeply disappointed by Sean Spicer’s statement that he expects states to see ‘greater enforcement’ and crackdown on adult use of marijuana,” commented Congressman Earl Blumenauer (D-OR) — who teamed up with Jared Polis (D-CO) and Republicans Dana Rohrabacher (R-CA) and Don Young (R-AK) to form the caucus — in a statement released today. “The national prohibition of cannabis has been a failure, and millions of voters across the country have demanded a more sensible approach. I’m looking forward to working with the leadership of our newly formed cannabis caucus to ensure that Oregonian’s wishes are protected and that we end the failed prohibition on marijuana,” said Blumenauer.

Additional reporting by Cassie Neiden

Photo at top: White House Press Secretary Sean Spicer’s response was precipitated by a question from Roby Brock with Talk Business & Politics Arkansas. (Photo courtesy: whitehouse.gov)