Cannabis Industry Daily News

California gov appoints cannabis industry ally as state’s attorney general

The California cannabis industry is rejoicing over Gov. Gavin Newsom’s choice of Assemblyman Rob Bonta as state attorney general.

“Bonta has tackled some of the major cannabis issues in the state, advocating for workers, patients and cannabis operators,” the United Cannabis Business Association said in a congratulatory news release.

“As California Attorney General, he will be aware of the current problems that face cannabis operators due to the illicit market and will find reasonable solutions. We look forward to his continued leadership on cannabis policy in his new role.”

If confirmed, Bonta will replace Xavier Becerra, whom President Joe Biden chose to head the U.S. Department of Health and Human Services. As California’s AG, Becerra has not been an ally of the state’s marijuana businesses.

Bonta, an Oakland Democrat, has long been one of the leading cannabis-reform advocates among state lawmakers.

He was one of the principal authors in 2015 of California’s statewide medical marijuana regulatory system, and he ran bills in the Legislature for three straight years – 2018-20 – in attempts to lower state cannabis tax rates.

All of that gives cannabis industry insiders good reason to believe they will have a staunch ally in the attorney general’s office once Bonta is confirmed.

“I’m super happy about this. He’s one of us,” one industry insider wrote in a Facebook post about Bonta’s appointment.

Advocacy group for Hispanic marijuana entrepreneurs launches

The marijuana advocacy world just got another player: The National Hispanic Cannabis Council.

The organization launched Thursday.

According to a news release, the Denver-based group will be run by “Hispanic business leaders, legal professionals and prominent” marijuana businesses dedicated to “advancing cannabis education, entrepreneurialism and economic opportunity within the U.S.  Hispanic community.”

According to the release, founding board members include:

  • Can It Industries of Florida.
  • Cresco Labs, Illinois.
  • Folsom and Forge, Florida.
  • Moxie, California.
  • Trulieve, Florida.
  • Vicente Sederberg, Denver.

The National Hispanic Cannabis Council will be guided by Executive Director Antonio Valdez and a 16-member national board.

Valdez, a consumer marketing specialist, has marketed to the Hispanic community for more than 20 years, according to the release.

The Hispanic community is “significantly underrepresented in the legal U.S. cannabis industry and (has) long borne the brunt of cannabis prohibition and police action,” the release notes.

“The NHCC vows to boost Latino entrepreneurialism in the industry.”

New Jersey picks Black male for cannabis panel after NAACP pushback

New Jersey’s commission to regulate recreational marijuana received its first Black male member after the NAACP raised concerns about the panel’s makeup.

New Jersey Gov. Phil Murphy on Wednesday appointed Charles Barker, who is Black, to the state’s Cannabis Regulatory Commission, according to the Associated Press.

Barker is a staffer for U.S. Sen. Cory Booker and member of the Rev. Al Sharpton’s National Action Network.

The nomination came after it was pointed out that the five-member board lacked a Black man.

Murphy signed a state law last month that required at least one member of the board to come from a national or state branch of a national organization with a mission of studying, advocating or adjudicating against historical oppression of minorities.

With Barker in, William Wallace is out as a commissioner and shifts to a staff role for the panel.

Barker, a lawyer by training, has been a constituent advocate working for Booker since 2017. He managed several policy areas, including criminal justice reform.

Dianna Houenou, a Black woman, previously was chosen to chair the Cannabis Regulatory Commission. Other members are Maria Del Cid, Sam Delgado and Krista Nash.

US marijuana reform a ‘tall order’ for Congress, new MJ coalition chief says

The executive director of a newly formed alliance of business interests dedicated to influencing marijuana regulations believes full federal legalization remains years away and that it will be a “tall order” for the current Congress to get a comprehensive legalization bill passed.

“We’ll have some form of national legalization, either by state by state, or federal legalization, within the next four to five years,” Andrew Freedman, the executive director of the Coalition for Cannabis Policy, Education and Regulation, said Wednesday.

“But I think it’s a tall order” for the current Congress.

Freedman said his sense is disconnects remain among the various organizations that are advocating on Capitol Hill for marijuana legalization and that there needs to be more unanimity among stakeholders.

“First of all, there would need to be unity and consensus within all the groups who are pro-legalization,” Freedman said.

“There needs to be a pretty unified vision for what (legalization) would even look like. … There’s beginning to become that unified vision, but it’s going to take a lot more work.”

Freedman also said that industry feedback to the formation of the Coalition for Cannabis Policy, Education and Regulation was “excitement mixed with trepidation.”

The new group includes several companies from the alcohol and tobacco industries, which many smaller marijuana companies view with suspicion.

Freedman said his coalition’s work is intended to be “complementary” to those of other legalization advocates, “not combative.”

– John Schroyer

Pair convicted in bank fraud case related to cannabis transactions

Two businessmen indicted in 2020 for defrauding merchant banks on behalf of California cannabis delivery company Eaze have been convicted by a Manhattan jury.

According to Law360, Hamid Akhavan and Ruben Weigand were found guilty of conspiracy to commit bank fraud for tricking banks into processing more than $150 million in marijuana-related transactions for Eaze by disguising them as fake websites and dummy corporations.

The convictions follow a guilty plea by former Eaze CEO James Patterson last month in the same criminal case. Patterson resigned as CEO in 2019.

Eaze was not a defendant in the trial. The company “has said it cooperated with the authorities in the criminal probe,” Law360 reported.

Patterson admitted during the course of the case that he knew if banks were aware of the true nature of the transactions they wouldn’t be processed because most major banks still refuse to work with cannabis companies since marijuana is still federally illegal.

The trial, which commenced March 1 and wrapped up this week, concluded with jurors deliberating for a mere six hours before delivering guilty verdicts for both Akhavan and Weigand.

Prosecutors alleged that Akhavan and Weigand went to extensive lengths and told “layer upon layer of lies” to manipulate the banks into processing the transactions over a three-year period from 2016 to 2019.

Maryland adult-use marijuana legalization effort fails for this year

Adult-use marijuana legalization in Maryland must wait at least a year after bills failed to meet Monday’s “crossover” deadline for passing one legislative chamber and being sent to the other.

“Sponsors (now) are working on amendments to set the stage for legalization in ’22,” Karen O’Keefe, Marijuana Policy Project’s director of state policies, wrote in an email to Marijuana Business Daily.

Experts polled shortly after the November election had considered Maryland as one of the states most likely to approve a recreational marijuana market in 2021.

Democrats control the state Legislature, although Gov. Larry Hogan is a Republican who hasn’t exactly been friendly toward marijuana.

Maryland’s medical marijuana market has been ascending, with sales approaching a half-billion dollars a year.

But the adult-use bills, which included a focus on social equity and industry diversity, got stuck in committee.

Instead, it was neighboring Virginia, with only a nascent MMJ industry, that legalized adult use.

However, there’s a catch there, too: Virginia lawmakers must reenact key provisions of the bill next year in order to launch a commercial market by the scheduled Jan. 1, 2024, date.

Cannabis banking reform reintroduced in US Senate

Less than a week after pro-cannabis banking legislation was reintroduced in the U.S. House of Representatives, a parallel bipartisan measure was revived in the Senate – a move that drew applause from marijuana industry advocates.

Sens. Jeff Merkley, a Democrat from Oregon, and Steve Daines, a Montana Republican, and 27 co-sponsors on Tuesday reintroduced the SAFE Banking Act in the Senate, according to a National Cannabis Industry Association (NCIA) news release.

The bill would provide safe harbor to any financial institutions that work with state-legal marijuana companies, even while MJ remains federally illegal.

Industry insiders have long viewed such a move as a gateway to banking access, since most large financial institutions remain wary of connections with the industry, given marijuana’s status as a Schedule 1 controlled substance.

The House passed the same bill in 2020 with an overwhelming bipartisan majority, but the measure stalled in the Senate at the hands of then-Majority Leader Mitch McConnell, who was known to be unfriendly toward marijuana-reform efforts.

But now that Congress is Democratic-controlled, the bill’s chances are considered much improved.

“With new Senate leadership now firmly in favor of cannabis policy reform, we are optimistic that this narrowly tailored – but absolutely necessary – legislation will be allowed to progress through the hearing process,” Aaron Smith, CEO of the NCIA, said in the release.

Colorado enacts law to support minority marijuana entrepreneurs

Colorado Gov. Jared Polis signed a measure with initial funding of $4 million that will provide loans, grants and technical assistance to social equity marijuana licensees.

Lawmakers previously passed the bill, SB21-111, by a vote of 19-15 in the Senate and 40-23 in the House.

The so-called marijuana entrepreneur program will be funded initially with $4 million from the state’s marijuana tax cash fund.

The program will include:

  • Loans to social equity licensees for seed capital and ongoing business expenses.
  • Grants to social equity licensees to support innovation and job creation.
  • Technical assistance such as business-plan development, consulting services and funding to augment existing technical assistance programs.

The Colorado Office of Economic Development will submit an annual report to the governor detailing how the money is being spent.

Colorado took a first step toward bolstering industry diversity by passing legislation last year that defined how social equity license holders would qualify for mentorship programs and offered financial incentives to help get businesses off the ground.

A social equity licensee must be a Colorado resident who holds at least a majority ownership in a marijuana business. An applicant also must meet one of the following criteria:

  • The applicant or an immediate family member was arrested or convicted for a marijuana offense.
  • The applicant lived in a designated economically disadvantaged area for a minimum of 15 years between 1980 and 2010.
  • An applicant’s income is below a certain threshold.

West Virginia licenses medical cannabis testing lab

West Virginia regulators awarded a business license to a medical cannabis testing laboratory.

Crab Orchard-based Analabs was approved as an MMJ testing facility by the state Department of Health and Human Resources, the Bureau for Public Health and the offices of Medical Cannabis and Laboratory Services, according to Huntington TV station WSAZ.

The licensing of Analabs clears up a potential bottleneck in the supply chain for West Virginia’s licensed medical marijuana program.

Growers, retailers and processors have all been licensed – with many of the permits going to multistate marijuana companies. Several companies are creating vertically integrated businesses in the state.

Regulators are expected to begin issuing medical cannabis patient cards in spring 2021.

Colorado marijuana businesses provide THC products for MJ research

Two Colorado-based marijuana companies are teaming up with the University of Colorado Boulder to study the heath impacts of flower and infused edibles.

Native Roots, a Denver-headquartered medical and adult-use cannabis retail chain of 20 stories, will provide flower for the CUChange Cannabis Research Team’s study, and Wana Brands, a Boulder-based edibles company operating in more than 10 states, will provide edibles products, according to the Daily Camera.

The CU Center for Health, Neuroscience, Genes and Environment is conducting the study, which will last at least two years, the Boulder newspaper reported.

The study will research the “psychological, neurocognitive, physiological, genetic and epigenetic factors that are linked with health and risk behavior,” according to the CUChange website.

Representatives of the two cannabis companies said the hope is that the study will help confirm anecdotal evidence about marijuana’s benefits. They acknowledged the study could produce negative results, but, either way, they said, research such as the CUChange study is welcome.

“Everyone agrees that more research is better, but we’ve had our hands tied trying to do it. Now we don’t (have tied hands),” Joe Hodas, chief marketing officer at Wana, told the Daily Camera.

Court battle over one of Virginia’s five medical cannabis licenses

Illinois-based PharmaCann has taken Virginia to court over a medical cannabis business license that the company claims is rightfully theirs, even though state officials have solicited new bids for the permit.

PharmaCann’s suit requests that the application process be halted.

State regulators contend the license – one of five they awarded – is fair game because it has gone unused since Virginia launched MMJ sales last year.

According to the News Leader, the license is in limbo because of a failed 2019 merger between PharmaCann and California-based MedMen.

When the merger fell through, PharmaCann reportedly sold the permit in question to MedMen for $10.

But, a year later, Virginia regulators revoked the license because MedMen hadn’t opened an MMJ business at the Staunton site for which the permit was intended.

State regulators then reopened the application process with the goal of awarding the fifth MMJ license to a new winner by the end of March 2021.

But PharmaCann filed suit against the Virginia Board of Pharmacy in an effort to reclaim the MMJ permit, the Staunton newspaper reported.

Though there have been multiple hearings over the issue, the case still is pending before a Virginia court and the fate of the license remains unclear.

OK federal judge tosses marijuana residency suit, but issue unresolved

A federal judge in Oklahoma rejected a lawsuit challenging the state’s residency requirement for medical marijuana business owners, but the decision doesn’t resolve the issue.

U.S. District Judge Stephen Friot based his March 17 decision on the federal Constitution’s 11th Amendment, which broadly prevents federal courts from hearing certain lawsuits filed against states by citizens of other states.

But the judge is allowing the plaintiff, Olympia, Washington-based Original Investments, to file an amended complaint within 14 days.

The decision doesn’t settle the issue of whether Oklahoma’s two-year residency requirement to own a stake in an MMJ business is unconstitutional as claimed by Original Investments.

A similar suit by a dispensary has been filed in an Oklahoma county district court, and legal challenges to marijuana residency requirements have been filed in other areas of the country such as Maine, Missouri and Washington state.

Oklahoma’s MMJ residency requirement was enacted in 2019, a year after voters legalized medical marijuana at the ballot. Under the requirement, nonresidents can own up to only 25% of a medical marijuana business.

Original Investments, which does business as Dank’s Wonder Emporium in Norman, Oklahoma, claims the requirement violates the commerce clause of the U.S. Constitution.