Week in Review: RI rec push slows, pushback on California cannabis plan & China opportunity

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Adult-use legislation takes a hit in Rhode Island, California Gov. Jerry Brown’s proposal for cannabis regulation faces opposition, and a marijuana-related firm sets up shop in China.

Here’s a closer look at some notable developments in the marijuana industry over the past week.

Rhode Island rec resistance

Prospects for legalizing recreational marijuana in Rhode Island hit a speed bump this week after Gov. Gina Raimondo called on lawmakers to delay passing adult-use legislation this year.

Instead, she asked the legislature to create a 15-member study commission to make recommendations to lawmakers by March 1, 2018.

Rhode Island rec advocates haven’t thrown in the towel. Instead, they hope a compromise will lead the way to legalization this year.

State Sen. Josh Miller and Rep. Scott Slater both submitted legalization bills earlier this year and asserted there was support in both chambers for passage. Raimondo has been seen as open – if very cautious – to adult-use legalization.

That’s why Rhode Island was considered a state more likely to legalize rec this year. But now the math has changed.

In response, Miller has a new idea: Tweak any legislation so it legalizes products that lawmakers are comfortable with, such as flower. Edibles and concentrates, meanwhile, would be delayed. Miller wasn’t sure about vape products but said lawmakers would bang out those details in the revision.

Miller also would like any revised bill to include the kind of commission Raimondo wants. The panel would study products that concern lawmakers – namely edibles and concentrates – to determine whether they should be legalized.

“So, for example, we wouldn’t do edibles until a study commission chimed in on how we should do it,” Miller told Marijuana Business Daily.

Miller said the compromise proposal would be submitted “soon.”

Is he optimistic a compromise proposal can succeed?

“I think people are going to listen to it,” Miller said.

Negotiations in California

California cannabis industry executives hailed Gov. Jerry Brown’s proposed merger of the regulatory systems that will govern the state’s medical and recreational marijuana industries. Officials considered the plan “pro-business.”

But the proposed legislation got hit with cold water this week when the Los Angeles Times reported political pushback.

Resistance aside, the rec and MMJ regulatory systems will likely be combined, said California Cannabis Industry Association chief Nate Bradley. It’s just a question of what a final bill will look like and if the industry will have to make concessions when negotiating with lawmakers.

“Most likely, they’re going to merge, because if the governor’s bill doesn’t go through, then you’re going to have two separate systems and two separate bureaucracies, and that would really bog down everything,” Bradley said. “With that said, there’s going to have to be a lot of compromise on both sides … and the industry is going to have to most likely give on a few things.”

Among the issues likely to be debated:

  • Brown’s proposal to abolish an existing requirement that MJ businesses obtain both local and state permits. The CCIA supports Brown’s idea.
  • Third-party quality assurance, and whether that’s handled by a state agency or perhaps licensed marijuana testing labs. The CCIA prefers the latter.

According to Bradley, the MJ industry is likely to chalk up at least one key victory when it comes to who transports rec and medical cannabis across California.

The Teamsters union wants third-party distributors – i.e., trucking companies – in charge. MJ companies are opposed and call that a monopoly situation. Gov. Brown wants to quash the Teamsters’ approach, which is written into the 2015 Medical Cannabis Regulation and Safety Act (MCRSA) approved by the Legislature.

Bradley noted that Prop 64, last year’s successful ballot measure to legalize rec cannabis, overrides the MCRSA. Why? A voter-approved initiative trumps a law passed by the legislature.

Looking ahead, Bradley is “very confident” California remains on track to begin accepting business license applications come January.

Hemp opportunities in China

News that a U.S. medical cannabis tech company plans to open an office in China shouldn’t raise industry hopes that the world’s most populous nation is becoming friendlier toward marijuana. Hemp, however, is seeing continued development and added opportunities.

Marijuana business owners seeking to diversify their product lineups and expand internationally might consider China as a cost-effective supply source for hemp-related products.

For example, U.S. companies angling to sell hemp-derived CBD products in Japan – which is developing a customer base for that product as a food supplement – should look to China.

U.S. businesses owners could cut their costs by sourcing hemp-derived CBD in China and then shipping it directly to Japan. That would lower shipping and production costs.

Denver attorney Bob Hoban recently toured hemp operations in two Chinese cities in the southwestern province of Yunnan.

The hemp farms were “pretty impressive,” he said. “As far as the eye can see in every direction.” The hemp plants Hoban encountered were fibrous, thick and 16-20 feet tall. They’re used throughout the country for industrial purposes, including fiber and rope.

China’s government has issued a license to one of Hoban’s Chinese clients with U.S.-based operations to produce cannabinoid extract for export only, with the United States as a target market along with other Asian nations where such products can be sold as food, supplements or medicine.

Companies are not allowed to sell the extracts in China, however, and marijuana – both medical and rec – remains illegal.

Omar Sacirbey can be reached at omars@mjbizdaily.com

John Schroyer can be reached at johns@mjbizdaily.com

Bart Schaneman can be reached at barts@mjbizdaily.com