By Roger Fillion
National and International News
MMJ Businesses Get Breathing Room After Congress Extends Key Protections
Congress’ decision to pass a $1.1 trillion spending bill that includes key protections for legal medical marijuana businesses is a sign the federal government will take a hands-off approach to the MMJ industry – at least in the near term.
As a result, medical cannabis businesses can enjoy a level of certainty at least through September. That’s welcome relief for medical marijuana operators given the Trump administration’s mixed messages about cannabis policy. But recreational marijuana businesses are still operating in limbo, as the protections don’t extend to the adult-use side of the industry.
AG Sessions Indicates No Major Rec Marijuana Crackdown On Tap
Colorado Gov. John Hickenlooper (pictured, right) emerged from a meeting with U.S. Attorney General Jeff Sessions confident the recreational marijuana industry won’t face a widespread crackdown in the near future.
“He certainly was very direct and clearly said they’ve got a lot of priorities. And, at one point, he said, ‘Well you haven’t seen us cracking down, have you?’ I said, ‘No,’” Hickenlooper said during an appearance on MSNBC.
“He is very clear. He is anti-drugs in all forms and he’s not going to, in any way, encourage anyone to start a marijuana business to think it’s a great idea to do or even safe to do so,” Hickenlooper said. “That being said, he didn’t give me any reason to think that he is going to come down and suddenly try to put everyone out of business.”
Investors Reveal Plans to Pump $200 Million Into Cannabis Businesses
A California real estate investment firm and a Florida medical marijuana advocate separately pledged on the same day to pump $100 million each into cannabis businesses, marking a notable new chapter in the MJ industry. The combined $200 million is among the largest amounts of planned cannabis investments disclosed in a single day.
In California, StarGreen Capital – a new MJ subsidiary of StarPoint Properties, an established Beverly Hills real estate investment firm – unveiled plans to spend $100 million on California’s medical and recreational marijuana industries over the next year. In Florida, attorney and MMJ advocate John Morgan said he plans to invest $100 million in “the right opportunities,” adding that he’s also interested in acquiring a stake in a licensed MMJ business in his home state.
State News Developments
The U.S. Postal Service in Juneau refused to deliver a box of cash to Anchorage for a local recreational marijuana business that was mailing its regular tax payment to the state, saying the delivery would violate federal law. Rainforest Farms, a retailer and cultivator in Juneau, was mailing its state tax payment to Anchorage because it’s the only city in the state equipped to take cash deposits.
The state’s medical marijuana commission has had a change of heart. Instead of picking MMJ business winners and losers through a lottery, the commission will instead use a merit-based scoring system to award dispensary and cultivation permits. The change was made to a draft regulation after pushback from stakeholders at a public hearing. In other states, lottery-based systems have commonly resulted in lawsuits, though markets with a merit-based approach have also seen legal action.
Regulators released draft regulations governing the sale and use of medical marijuana in an attempt to bring uniform rules to the state’s free-wheeling MMJ market. The proposed rules – written by three state agencies – would govern the cultivation, testing, distribution and sale of medical cannabis in the nation’s largest MMJ market. Industry officials said the regulatory blueprint could entice entrepreneurs large and small to set up shop in the state and encourage cannabis investors to open their checkbooks for local businesses.
Denver, which could become the first major U.S. city to allow cannabis consumption at mainstream businesses like restaurants and clubs, proposed rules to govern places that want to allow marijuana use on their premises. Once the proposed regulations are finalized, the city is slated to start accepting applications in July from companies that want to allow MJ use. Under the proposal, companies would have to establish a ventilation plan if indoor vaping is allowed. And if the business has a liquor license, alcohol sales would have to cease while MJ use is occurring.
District of Columbia
Washington DC’s medical cannabis market is adding patients at a healthy clip – and new business-friendly regulations as well as increased public outreach could push the numbers much higher. In the 12-month period ending in April, roughly 1,400 patients joined DC’s medical marijuana program, an increase of nearly 40%. Although patient counts have fluctuated on a monthly basis in 2017, a correction in the way the Department of Health tracks enrollment is responsible for the variation, and the industry remains on solid footing.
Lawmakers agreed on legislation establishing rules for Florida’s full-fledged medical marijuana program. The compromise measure would create 10 new vertically integrated medical marijuana businesses on top of the seven licensed firms currently operating under Florida’s CBD-focused program. But the number of fresh opportunities would be tempered initially because a majority of the new licenses would be earmarked for previous applicants and special business interests such as citrus growers.
A medical marijuana company has become the first in the state to harvest its initial crop. Aloha Green Holdings – in Oahu – harvested the marijuana from an indoor grow facility. State regulators, meanwhile, have been working to line up an approved testing lab to permit Hawaii’s long-delayed MMJ program to get off the ground this summer. Hawaii has licensed eight vertically integrated MMJ businesses.
Seven Louisiana companies have applied to run a new medical marijuana operation overseen by Louisiana State University’s AgCenter, moving the state another step closer to a functional MMJ system. The applicants include Columbia Care Louisiana of New Roads; CB Medical of Alexandria; GB Sciences Louisiana of New Orleans; Citiva LA of Mandeville; Southern Roots Therapeutics of Baton Rouge; Terah Holdings of Shreveport; and Fournier House of New Iberia.
Medical marijuana sales continued to rise in 2016, but the pace of gains slowed considerably from previous years for a variety of reasons – including a jump in the number of caregivers who grow marijuana for patients. Figures from the state’s revenue department show that Mainers spent $24.8 million on non-edible marijuana products at the state’s eight dispensaries in 2016, a 5.3% increase over 2015 sales. However, the 5.3% boost pales in comparison with the 46% and 40% year-over-year growth that Maine dispensaries experienced in 2015 and 2014, respectively.
Regulators gave final approval to the first company to win a cultivation license under the state’s medical marijuana program. ForwardGro is based in Anne Arundel County, south of Baltimore. Separately, Maryland will conduct a study of the state’s developing MMJ industry to ensure opportunities for minority participation. Gov. Larry Hogan ordered the study in response to concerns expressed by the Legislative Black Caucus of Maryland.
A campaign to put a recreational marijuana legalization initiative before voters got the green light from election officials to start collecting signatures. The Coalition to Regulate Marijuana Like Alcohol announced that the state board of canvassers signed off on its initiative language, clearing the way for the group to start gathering the 252,523 signatures of registered voters that it needs to make the 2018 ballot. The group has 180 days in which to submit at least that many to qualify for the ballot.
The state’s two licensed medical marijuana manufacturers have lost a combined $11 million in just two years of sales, according to financial documents obtained by The Associated Press. The losses hint at systemic problems with the state’s tightly regulated program despite a recent expansion that allowed thousands more patients to buy MMJ. Minnesota Medical Solutions posted a $1.2 million loss in 2016, a year after losing more than $3 million. But LeafLine Labs’ losses worsened: The company said it lost $4.7 million last year after losing $2.2 million in 2015.
The early rollout of adult-use cannabis sales in Nevada may not start in July after a district court judge signed an order barring the state from issuing MJ distribution licenses under rules recently adopted by regulators. The order stems from a lawsuit filed by liquor wholesalers. They argue that under the voter-approved ballot measure, only licensed liquor wholesalers can hold MJ distribution licenses for at least the first 18 months of recreational sales.
A state panel of doctors recommended expanding the list of treatable conditions for medical marijuana to include chronic pain, a move that would likely widen the patient pool and boost MMJ sales. The Medicinal Marijuana Review Panel voted 5-1 to add people suffering from different types of chronic pain, Tourette syndrome, irritable bowel syndrome and anxiety related to autism or Alzheimer’s disease.
Reports from New Mexico’s seed-to-sale tracking system show that five of the state’s medical cannabis businesses sold roughly 200,000 more grams of MMJ than they grew from January through March. A review of quarterly MMJ reporting documents by the New Mexico Political Report found the biggest discrepancy with Giving Tree Organics, which sold nearly 28 pounds, or about 13,000 grams, more than it produced.
A majority of medical marijuana companies are suing to stop the state Department of Health from awarding new licenses, saying the competition could damage an industry that is operating below capacity because of a relatively small patient base. Four of New York’s five licensed MMJ businesses also claim that the state’s plans to license other operators will impair their ability to serve patients.
Entrepreneurs applying for medical marijuana business licenses – but worried about having the financial cushion required by state law – can tap a source that’s typically not considered a go-to business resource for MJ firms: an insurance company. Ohio’s medical cannabis law requires applicants to demonstrate their financial stability by showing escrow account balances of $750,000 for a Category 1 cultivation license and $75,000 for a Category 2 cultivation license. In lieu of capital, companies also may post a surety bond issued by an authorized insurance company.
Investors have pumped tens of millions of dollars into the local cannabis industry, according to a state senator who sits on the Oregon Marijuana Regulation Committee. He estimated that investments total between $60 million and $80 million. And that’s only in the last six months, said Sen. Floyd Propanski.
Philadelphia Mayor Jim Kenney endorsed legalizing recreational marijuana in Pennsylvania, saying it should be sold through state liquor stores instead of private retailers. Such a move would severely limit the business opportunities for entrepreneurs wanting to enter the retail side of the market. “We have the perfect system to set up the legal recreational use of cannabis through a controlled state store system, allowing the state to capture all the income that is going to the underground,” Kenney said.
A jury cleared a consultant of drug charges after he helped an American Indian tribe grow cannabis for a marijuana resort that the tribe once hoped would bring in millions of dollars. Eric Hagen, a 34-year-old consultant who worked with the Flandreau Santee Sioux Tribe, had faced charges of conspiracy to possess, possession by aiding and abetting and attempted possession of more than 10 pounds of marijuana. The plan for a resort north of Sioux Falls was ultimately abandoned.
Gov. Phil Scott vetoed a limited recreational marijuana bill, but he left the door open to a compromise this year. Scott, a Republican, said he wants to offer a “path forward that takes a much more thorough look at what public health, safety and education policies are needed” before the state launches a recreational cannabis industry. “I know we cannot ignore the fact that it is a widely consumed substance and that many states and an entire nation to our north (Canada) are in the process of making it legal,” Scott said.
New rules will allow existing marijuana retail license holders to increase their number of sales outlets from three to five. That and other changes to the state’s medical and recreational cannabis program result from Gov. Jay Inslee signing an omnibus bill. Under the new regulations, businesses that are approved for a license but fail to open a store within two years may have to surrender their permits. Also, recreational home growing remains illegal, but the state must study the possibility.
Regulators said they’re in the “preliminary stage” of developing a plan to implement the state’s medical marijuana law, including rules that will govern new business owners. The regulations “will begin with requirements for growers/processors so that those entities can come online and begin to produce products,” said a spokeswoman for the Department of Health and Human Resources. She said department regulators will then spell out requirements for dispensaries and physicians, followed by those for registering caregivers and patients.
Note: Entries sourced from Marijuana Business Daily and other national and local news outlets. These developments occurred before this magazine’s June publication deadline, so some situations may have changed.