Cannabis Industry Daily News

California opens online system for temporary marijuana business licenses

California is taking applications to license its emerging legal marijuana industry.

The state on Friday kicked off the process of considering temporary licenses for what is expected to be thousands of retailers, distributors and testing labs in the new marketplace.

Top state cannabis regulator Lori Ajax says the opening of the online system moves the state “one step closer to issuing California’s first state licenses for commercial cannabis activity.”
The temporary licenses will not be effective until Jan. 1, and businesses need a local permit before applying for state licenses.

Recreational marijuana sales will begin in California on Jan. 1, joining the state’s long-running medical cannabis market.

More information from the state on California’s temporary licensing system can be found here.

– Associated Press

Tax court ruling on 280E case could come this month

A ruling from the U.S. Tax Court on whether the 280E provision should not apply to state-licensed marijuana businesses could come before the end of the year.

The case – which was tried in mid-2016 by San Francisco attorney Henry Wykowski – has the potential to reshape the U.S. cannabis industry by making law-abiding MJ companies truly profitable.

“The court previously advised me that we should expect a decision by the end of the year, and that date is approaching,” Wykowski wrote in an email to Marijuana Business Daily.

“Tax court decisions are notoriously slow, so I do not read anything into the delay one way or the other,” he continued. “I’m not interested in a fast decision, I want the right one striking down 280E or providing clarity as to how it should be applied.

“Next year is fine with me as long as we prevail.”

A brief was recently filed in another Tax Court case involving 280E, and there was another in which the Tax Court sided with the IRS over a Colorado dispensary in an October ruling, The Cannabist reported.

But the IRS win was based on the dispensary not providing business records to justify their deductions.

Maryland medical marijuana commission hires executive director

Only days after legal medical marijuana sales began in Maryland, the state’s MMJ commission has hired a new director.

Joy Strand, a hospital executive, is replacing Patrick Jameson, who resigned in November.

Jameson took the post in April 2016, succeeding Hannah Byron, the commission’s first executive director.

Here’s what you need to know:

  • Strand had been serving as CEO of Crisfield-based McCready Health, where she led a health organization that included a hospital and several other health care services.
  • In 2015, McCready Health partnered with Wellness Farms, a medical marijuana cultivation startup.
  • Strand takes the reins as Maryland works to award more licenses for its medical cannabis program.
  • When Jameson resigned, commission chairman Brian Lopez said the transition wouldn’t cause problems for licensees because the state has a compliance director and someone to monitor testing labs.

Key federal medical cannabis protection gets stay of execution – again

The only current federal statute protecting medical marijuana businesses from U.S. law enforcement agencies has been extended again, this time until Dec. 22.

The Rohrabacher-Blumenauer Amendment – previously known as Rohrabacher-Farr – will remain in federal law for at least another two weeks under a budget deal passed by Congress Thursday afternoon.

The budget bill, known technically as a continuing resolution, will keep the previous federal budget in place through at least Dec. 22 to give Congress more time to hammer out a new budget.

By retaining the previous budget, Congress also kept alive the Rohrabacher-Blumenauer Amendment, which prohibits the Department of Justice from using federal funds to interfere with state-licensed MMJ businesses.

This is the fifth time Congress has extended the budget timeline – and, in turn, Rohrabacher-Blumenauer, which has a sunset clause that requires annual reauthorization from Congress. The last time the amendment was formally reauthorized was in 2015.

In December 2016, Congress passed the first continuing resolution on this issue, which kept the 2015 federal budget in place.

Then lawmakers passed a continuing resolution in April 2017 that lasted less than a week before a third one was passed. A fourth continuing resolution was passed in September.

And now Congress has given itself until Dec. 22 to approve a new budget.

Whether the Rohrabacher-Blumenauer Amendment will be part of that new budget is still an open question, though lawmakers on both sides of the aisle have expressed support for it.

But the amendment has hit walls within Congressional committees, which could be a sign it’s in jeopardy.

If Rohrabacher-Blumenauer is allowed to expire, there will be nothing to prevent U.S. Attorney General Jeff Sessions from prosecuting medical cannabis companies under federal law, a path that Sessions has not yet completely ruled out.

280E fix in Congress still possible with tax bill, senator says

U.S. Sen. Cory Gardner tried but ultimately failed a week ago in his bid to include an exemption from 280E for state-compliant marijuana businesses in the landmark tax reform package passed by the Senate.

But the Republican from Colorado told Marijuana Business Daily on Thursday he’s still hopeful his amendment can make it into the final legislation.

A conference committee is currently working to resolve differences between the tax bills passed by the House and the Senate, and Gardner suggested his proposed 280E repeal for the MJ industry could end up being included as part of the negotiations.

“We, right now, continue to push it in conference committee,” Gardner said.

When pressed on the amendment’s chances of making it into a final tax reform bill that will be sent to the White House, Gardner replied, “It might. It’s an uphill climb, but we’re not giving up on it.”

Gardner said the amendment failed to make it into the Senate tax bill because supporters didn’t receive an analysis from the Joint Committee on Taxation before the floor vote last Saturday.

If the Senate had gotten the analysis in time, the amendment could have moved forward with a simple majority instead of a minimum 60 votes.

CBD manufacturer buys stake in Canadian maker of hemp, MJ pharma products

A CBD manufacturer with offices in Canada and California is moving further into the Canadian cannabis market, acquiring a 25% stake in a company in the final stages of licensing to make hemp and marijuana pharmaceutical products.

Isodiol International said it’s acquiring 25% of Canadian National Pharma Group, a pharmaceutical manufacturing company. Isodiol also has the option to acquire a controlling stake in the company.

The deal is subject to the Canadian National Pharma Group, called CN Pharma, receiving the marijuana license, after which Isodiol will pay $500,000 Canadian dollars ($391,000) cash and CA$1,000,000 ($781,000) in equity.

The deal would give Isodiol its first stake in a Canadian manufacturer.

Isodiol has headquarters in Vancouver, British Columbia, and in San Marcos, California.

Isodiol doesn’t currently grow cannabis in Canada, though it sells CBD products there.

CN Pharma has built a 9,750-square-foot grow facility in Abbotsford, British Columbia.

The company plans to grow and process both hemp and marijuana there in order to make cannabis and hemp extracts or isolate.

To sign up for our weekly Canada marijuana business newsletter, click hereTo sign up for our weekly hemp business newsletter, click here.

Neo-Nazi charges spur Oregon marijuana lab executive’s exit

The founder and executive director of a state-licensed cannabis testing lab in Eugene, Oregon, is stepping down amid allegations she is a neo-Nazi supporter.

Bethany Sherman also plans to sell the OG Analytical testing lab she founded in 2013, according to The Oregonian.

Her actions follow allegations by a local Antifa group that she and Matthew L. Combs – who also is listed as an owner of OG Analytical – have white nationalist ties.

However, Sherman said Combs hasn’t been active in the company for four years, according to The Oregonian, which also reported that the “two have a child but their relationship status (is) unclear” now.

Sherman – who is listed on the company website as the director of the Cannabis Safety Institute, a not-for-profit educational group – denied the Eugene Antifa allegations and told The Oregonian her “only crime is a thought crime.”

OG Analytical employees decided Sherman must leave if the company is to survive, lab director Rodger Voelker told the newspaper. Voelker called the allegations “horrific” and “disgusting.”

He also said the company has “seen a 100% decline in our business” because of the allegations, The Oregonian reported.

Pennsylvania boosting available hemp licenses by two-thirds for 2018

Pennsylvania’s hemp production is poised to expand dramatically after Gov. Tom Wolf announced plans this week to increase the number of available hemp licenses by 66% – and the total acreage by even more.

Wolf said Pennsylvania’s first year in the modern hemp market, 2017, was a “learning experience.”

Pennsylvania authorized hemp in 2016, with the first crop going in the ground this year. The state awarded 16 licenses out of a possible 30.

“Even with the small-scale research pilot projects of 2017, it was clear there is a tremendous enthusiasm among growers,” the Democratic governor said.

Pennsylvania will offer 50 hemp licenses in 2018, up from 30 this year. And hemp acreage on each application can go from 5 acres to 100 acres.

Hemp licenses so far have been concentrated in Lancaster County, according to Lancaster Online, which first reported the hemp expansion.

“We expect to see the full potential of this industry in 2018,” state Agriculture Secretary Russell Redding said in a statement.

Pennsylvania applications to grow hemp for the 2018 season cost $250 and are due by Jan. 19.

To sign up for our weekly hemp business newsletter, click here.

Will federal marijuana safeguard be extended again?

With the current federal budget set to expire Friday, speculation has swirled in Washington DC over whether Congress will once again reach a deal to keep the old budget in place temporarily and prevent the U.S. government from shutting down.

Medical marijuana businesses have good reason to pay attention: If the previous budget is not extended – as it has already been multiple times this year – it means the federal protections of the Rohrabacher-Blumenauer Amendment will also evaporate.

Specifically, the amendment – previously known as Rohrabacher-Farr – prohibits the U.S. Department of Justice from using federal funds to interfere with medical marijuana laws in states that have legalized MMJ.

The amendment does not protect state recreational marijuana laws or businesses.

Although 66 members of the House of Representatives last month called on congressional leadership to ensure the extension of the amendment, no such guarantee has yet been made.

But if Congress winds up passing another continuing resolution to keep the existing budget in place for a few weeks or longer, it will again extend Rohrabacher-Blumenauer.

At least temporarily.

California’s new marijuana regulations will hurt small farmers, two lawmakers say

In a bid to protect family farms, two California legislators are seeking revisions to the state’s marijuana cultivation regulations.

State Sen. Mike McGuire and Assemblyman Jim Wood support a 1-acre cap on grow sites to prevent small farmers from being pushed out by corporate farming operations, the Los Angeles Times reported.

A cap of licensed marijuana farms at 1-4 acres was originally proposed in the draft regulations, but the California Department of Food and Agriculture did away with the stipulation in the rules that go into effect Jan. 1.

The final rules recently released by the state have no cap on the size of cultivation sites.

According to the Times, the lawmakers wrote in a letter to the CalCannabis Cultivation Licensing Division that “this last-minute revision rolls out the red carpet for large corporations to crush the livelihood of small family farmers who should be given a fair chance to succeed in a regulated market.”

CBD sales spike in Indiana ahead of feared crackdown

Stores selling CBD in central Indiana are seeing a spike in sales after the state’s attorney general declared the products illegal with one limited exception.

Kokomo store owner Joan Johnson said sales and interest in CBD increased after Attorney General Curtis Hill issued his opinion last month, the Kokomo Tribune reported.

Hill said that CBD products are illegal to possess, make or sell in Indiana, except for people with epilepsy who are listed on a new state registry.

“There’s been a lot of interest because so many people are in pain, and they have not had success with the prescription pain medicine,” said Johnson, who sells several lines of marijuana-derived oils that customers often use to treat pain and stress.

Also last month, Gov. Eric Holcomb directed stores to pull CBD products containing THC within 60 days, or by late January.

“We try to assure people that everything we do here is legal,” Johnson said. “It’s a gray area as far as the state and the definition, and they need to clarify that because that’s what’s causing the panic.”

The owner of Dreem Nutrition, a Kokomo maker of CBD drops and patches, said demand is strong.

Owner Austin Rhodus reported that Indiana retailers selling Dreem Nutrition products have said they’re difficult to keep on shelves.

– Associated Press

To sign up for our weekly hemp business newsletter, click here.

L.A. City Council passes cannabis industry regulations

In a 12-0 vote Wednesday, the Los Angeles City Council approved a regulatory framework for licensing marijuana businesses ahead of California’s statewide cannabis market launch on Jan. 1.

The council voted to advance three ordinances to the mayor’s desk, all of which establish a wide-ranging set of rules for marijuana businesses that want to operate within the city, including a social equity program designed to involve minorities and those affected by the war on drugs in L.A.’s cannabis sector.

But council members emphasized Wednesday before the vote that they will be making plenty of tweaks to the law as the industry gets up and running.

“This vote is just one vote. There will be a series of others,” Council President Herb Wesson said. “Today is our moment to set the tone … for the rest of this country.”

Details of the three ordinances and records related to them can be viewed here, here and here.