The Massachusetts Recreational Consumer Council (MRCC) is an interesting nonprofit that recently launched an educational campaign, called Consume Responsibly Massachusetts. For many cannabis advocates who watched their states legalize the drug, consumer education is a very important part of moving forward. As states across the East Coast implement regulatory frameworks for the cannabis industry, there is a sense of urgency to make sure the rules are right the first time, and that cannabis businesses become responsible stewards of their new market.
In the wake of pesticide recalls in the west and related public health concerns, the issues surrounding consumer safety and how states protect that are now front and center. “The purpose of Consume Responsibly Massachusetts is to keep adult-consumers informed of their rights in the state,” says Jefferson. “It’s also an ongoing effort to bring consumers into the world of cannabis politics and science.”
The MRCC’s mission is to help protect the safety of recreational cannabis consumers by bridging the information gap between businesses, legislators and communities. “We work at the state and local level advocating for sensible recreational marijuana policy and regulations,” reads a press release. According to Kamani Jefferson, president of the MRCC, bridging that gap requires a lot of community engagement. “I was a field organizer on the Campaign to Tax and Regulate Marijuana here in Massachusetts so this is extremely important to me,” says Jefferson. “MRCC participated in this year’s Cambridge 5K Freedom Run.” He says getting out in the community like this is one of many ways to help provide educational opportunities, help promote local cannabis businesses and get rid of the “lazy stoner stigma.”
For the MRCC, the issue of craft cannabis is a significant part of the organization’s philosophy, in addition to product safety and others. “Craft Cannabis will benefit the consumer in an entirely new way,” says Jefferson. “Members of the community will have a chance to provide products and directly affect the economy.” Because local owners tend to be more involved in their towns, Jefferson says residents will get to make more of an impact than nonlocal owners. And he’s right- small, local businesses contribute substantially more to local economies and communities than large companies. Between 1993 and 2013, small businesses created roughly 63% of all new jobs in the United States. With the new cannabis market comes a promising opportunity for local economies.
“The Massachusetts cannabis industry is developing and growing fast,” says Jefferson. “Aside from the medical marijuana production sites, the new recreational marijuana law grants production participation in the regulated recreational marijuana industry to farmers, in the form of craft marijuana cultivator cooperative systems.” While he thinks this is a good opportunity for small businesses and communities alike to gain a foothold in the market, Jefferson is hesitant to endorse Massachusetts’ regulatory policies. “A lack of regulatory oversight from the CCC [Cannabis Control Commission] places the cannabis industry in a vulnerable position,” says Jefferson. “If we want clear, consistent standards for clean and safe products prioritized, then we need consistent testing data.” Jefferson is arguing for more regulatory oversight for safety issues, such as contaminant testing. This is one of a handful of issues they are pressing for sensible cannabis policy in Massachusetts.
Here are some of the issues they support:
Local Cannabis: Equitable licensing for small and medium sized local businesses from members of the community.
Quality Control: Access to a variety of clean and safe cannabis products in retail dispensaries, tested for harmful contaminants, mold, pesticides and fungicides.
Responsible + Safe Consumption: Access to educational materials about proper dosage, methods of ingestion, quality analysis, understanding product labels and general cannabis information.
High Potency Flowers, Edibles, & Concentrates: Access, non-restriction to high potency marijuana products of all forms.
Home Grow: Ability to grow at least 6 plants per person, 12 per household as stated in Question 4.
Social Use: The ability to consume in designated establishments outside of the household.
Expungement: Sentence commutation and record expungement for convictions involving non-violent marijuana charges that are now legal.
Research: University supported biological, behavioral and cognitive marijuana research to further our understanding and capabilities of the cannabis plant.
Making Cannabis Transparent: The Future of the Industry is Information and Data
The last decade has been marked by great strides in the cannabis industry, as public awareness surrounding the health benefits of marijuana-infused products has spread and products have become increasingly well researched and scientifically advanced. Despite this significant progress, however, cannabis legislation and regulations continue to vary widely between states, ultimately contributing to a lack of clarity within the industry.
This issue was at the forefront of the DispensaryNext Conference and Expo agenda held in Denver a few weeks ago. During the expo’s Consumer Safety and Education discussion, a panel of industry leaders including Kevin Gallagher, director of compliance and government affairs at Craft Concentrates and executive director of the Cannabis Business Alliance (CBA); Eileen Konieczny, registered nurse and president of the American Cannabis Nurses Association; Kevin Staunton, director of business development at RM3 labs; and moderator David Kotler, a partner at Cohen Kotler P.A., highlighted a number of important issues for cannabis patients and adult-use consumers, as well as what’s next for physicians, testing labs and dispensaries across the industry. A number of common themes resonated in their discussion of opportunities and challenges, ultimately pointing to a need for increased research and data, and most notably, a growing demand for transparency industry-wide.
Medical practitioners and dispensary technicians need qualified and legitimate information.
Konieczny opened by stressing that the industry must stop calling dispensary sales associates “budtenders.” “I prefer the term ‘dispensary technician.’ These are knowledgeable people who are on the front lines, helping patients understand the products available to them. They deserve a title to reflect that our industry and their knowledge is much more than ‘bud,’” says Konieczny.
These are knowledgeable people who are on the front lines, helping patients understand the products available to them. The most prominent information gaps in the industry lie at the level of dispensary technicians and medical practitioners. The ideal scenario for patients who are looking to use cannabis as medicine is that their medical practitioner is educated about the endocannabinoid system and that the products are available locally so that a treatment plan can be developed based on their needs. But the reality is that many patients enter their local dispensary without much knowledge or support at all, relying on the professionalism of the dispensary staff to help them navigate the dizzying array of products.
Putting the patient’s safety and success first, it is imperative that everyone involved has the proper data and information to make the best choices. However, dispensary technicians should be extremely careful to avoid making health or benefit claims. As Gallagher noted, “It is not only illegal, but also unethical to make medical claims as a dispenser. There is a difference between a claim and a personal experience. A dispenser can tell their customer that a certain strain helped them personally, but they cannot tell the customer that the strain will cure their specific ailment.”
The industry needs transparency.
New cannabis consumers may have a certain degree of misunderstanding of the products they are consuming and unfortunately, manufacturers do not offer a high level of transparency in disclosing ingredients, thereby preventing these customers from becoming better informed.
While educating the public is essential, educating the industry is of equal importance.Furthermore, labels often contain small barely legible type, along with confusing and unnecessary content. According to Gallagher, the labels need to be simpler. “Products are overloaded with redundant, confusing language that most consumers don’t understand. This turns them off—especially if they’re inexperienced in this realm,” says Gallagher. When customers who are new to cannabis find products off-putting, it hurts not only the industry, but also their own health. Ill-informed consumers may have trouble understanding how cannabis can help them, and therefore they can miss the benefits it provides.
While these issues are prevalent, there are many ways they can be resolved—with transparency at the core.
Research is critical and paramount.
For cultivators or manufacturers, research and data hold the key to attracting new consumers. By providing details about what is in a product and implementing certifications to show the product is contaminant-free, manufacturers are able to provide transparency and offer differentiation.
During the panel, Konieczny pointed out another common mistake that many manufacturers make—not sharing test results. “Not many are posting their test results, and yet this is one of the leading avenues that can increase revenue,” says Konieczny. “Most people just want to feel well again, so providing test results adds a layer of legitimacy for patients who are wary to try a new product.”
With all of this in mind, it is perhaps most important to consider the way that this information is conveyed. Facts and research are useless if they are not accessible to consumers, who may not comprehend complex data. “We need to present information in plain language, keeping it clear and simple to understand,” expressed Konieczny. The simpler the delivery, the better it will be understood and knowledge is a very powerful tool for patients, consumers and the bottom line.
Educating the educators.
While educating the public is essential, educating the industry is of equal importance. For instance, thoroughly training dispensary technicians to ask the correct questions and identify first-time users will ensure consumer safety while avoiding improper use.
The industry as a whole depends on transparencyEducating professionals on better product labeling is another critical way that the industry is working to improve itself. There has recently been a push at the manufacturing level for standardization in product labeling, as establishing a clear standard can aid customers in successfully using cannabis. “In working groups with Colorado’s MED (Marijuana Enforcement Division), we aim to standardize specific product categories, remove irrelevant names, and harmonize medical and retail labeling regulations,” says Gallagher. “Ultimately, we want to consolidate language and make it more transparent in promoting public health and safety so that it can be easily read and understood.”
All panelists agreed transparency is paramount for the future of the cannabis industry and for growing a brand. Using lab data can provide value, setting a brand apart and building loyalty among consumers looking for someone they can trust.
“Transparency is king,” Gallagher urges. “The more we educate consumers and professionals, the more clarity we will see at all levels, ultimately minimizing risk and creating greater demand among those consumers. The industry as a whole depends on transparency.”
The demand for medical cannabis in Florida might be growing steadily, with patient numbers soaring, but that doesn’t mean the market will grow accordingly. Due to hampering regulations and a lack of state guidance, the industry in Florida is tiny and patients have limited options for medical cannabis products.
A little more than three years ago, Governor Rick Scott signed a bill into law, legalizing medical cannabis, but only for terminally ill patients and only for one strain, Charlotte’s Web. That stipulated a low-THC, concentrated oil form of cannabis. That bill also set up the licensing framework for what is now an extremely limited market.
In November of 2015, the Office of Compassionate Use, now called the Office of Medical Marijuana, issued licenses for five dispensaries. To get a license, applicants needed to meet a variety of absurd requirements. That included being a nursery in business for thirty years, growing a minimum of 400,000 plants at the time of applying, paying $300,000 in fees and a $5 million performance bond.
Fast forward to Election Day last year when voters passed Amendment 2 by a wide margin, amending the state’s constitution and legalizing medical cannabis for a broader scope of qualifying conditions. What hasn’t changed, however, is the old vertical licensing framework. Critics have dubbed this a “pay-to-play” market, with massive barriers to entry prohibiting small businesses from gaining market access.
David Kotler, Esq., attorney and partner at CohenKotler P.A., says we shouldn’t expect to see a viable market for years as a result of all this red tape. “Honestly the State of Florida, with their limited licenses and odd requirements to qualify for licensure have stunted what could be a good market both for businesses and patients,” says Kotler. “It has been an inefficient roll-out and is truly an embarrassment for the state, legislature and the Department of Health.” Kotler says he’s heard reports of extremely limited product selection, poor quality, as well as no dried flower being offered.
But the patients are pouring in by the thousands- on July 27th, the Office of Medical Marijuana reported 26,968 registered medical patients, with more than 10,000 patients signing up since June 7th. “Despite my belief that it would be a slow roll out, it appears the patient count is picking up,” says Kotler. “The elimination of the 90-day doctor-patient relationship will certainly help this.” He is referring to the reversal of a waiting period policy, where patients had to wait 90 days before receiving a medical cannabis certification. “But there still seems to be a backup with issuance of cards and poor guidance from the Department of Health leaving many doctors unsure of what they should be doing,” says Kotler. The rules and guidelines for physicians participating in the program are still not established, but the Florida Board of Medicine expects to vote on them this week, reports say.
With seven licensees right now and a total of ten licensees by October allowed to grow and distribute cannabis products, the question remains if that is enough to satisfy the growing number of patients. According to Matt Karnes, founder and managing partner of GreenWave Advisors, the state is adjusting by adding more licensees and allowing them to operate more dispensaries, potentially trying to sate that demand. “Both of these amendments will likely serve as a catalyst for revenue growth but could be tempered by a lack of physician participation (as we have seen in other states) in the medical marijuana program,” says Karnes. “For every incremental 100,000 patients who register in the Medical Marijuana program, four more licenses will be issued and existing licensees will be allowed to open another four dispensaries (current cap is 25). We do not expect an incremental 100,000 patients until sometime in 2021.” His firm’s market projections account for those increases and edibles now being sold, but still no dry flower allowed. They project total sales figures in the state to reach $712 million by 2021.
Those figures are contingent on the increase in registered patients and more licensees. If Florida’s vertical licensing model remains, it’s quite possible the state will see a cannabis shortage, much like Nevada during their opening month of adult use sales. “Instead of learning from so many states before it, Florida forged a path down the rabbit hole that may limit Florida’s potential until either a legislative change or a backlash at the polls in the form of an amendment bringing forth adult use,” says Kotler. In New York, that vertical licensing model arguably created a monopoly, with only a select few businesses controlling the entire market. That doesn’t foster market growth; it hurts quality, keeps prices high and prevents real competition. “We see how that worked out for New York,” says Kotler. “We cling to that despite what could be a large patient base with the potential to service tourists who wish to have reciprocity.”
Florida’s market could be a powerhouse for the state, with the potential to generate millions in tax revenue, create thousands of jobs and actually help patients get the medicine they need. But until the state ditches their conservative, closed-door approach, we won’t see the industry truly flourish. .
Since the first session of the 115th Congress convened on January 3, 2017, twenty-four cannabis reform bills have been introduced, fifteen in the House and nine in the Senate. All of them address in varying ways the puzzles that have emerged as more and more states legalize cannabis in the face of federal prohibition. Some are narrow, some are broad, some are for medical cannabis only, some for recreational too, some have more bipartisan support than others, but all indicate in some manner the direction federal reform will eventually take.
Understanding the content and status of these bills and what they would mean for the industry if/when they are enacted, will help stakeholders anticipate changes that we know are bound to drop, and therefore be better prepared to adapt to them when they do.
Generally lacking in the journalism on cannabis is coverage and analysis of federal proposals deep enough to provide a useable understanding of the policies they stand to codify. As CIJ is dedicated to providing just such useable information to industry-insiders, this bill-by-bill review fills the gap.
All twenty-four bills fit rather neatly into one of three categories: De-scheduling/State Control Reform, Medical Cannabis Reform and Banking/Tax Reform. This second article in the series will look at the first category, and the next article will wrap up the last two.
De-Scheduling/State Control Reform
HR 1227 – Ending Marijuana Federal Prohibition Act of 2017
Policy:The bill proposes two major changes to the CSA. The first is to strike cannabis from the statute, essentially leaving the regulation or prohibition of it up to each state. The second is to insert into the CSA a provision that makes it a federal offense to transport cannabis from one state to another in any way that violates state law. In other words, if a state wished to continue prohibiting cannabis, it would be both a federal and state crime for anyone to transport cannabis into that state. Likewise, if a state wished to legalize and regulate cannabis, but wanted to prevent out-of-state cannabis from entering, the transportation provision would permit that state to do so.
Impact: Industries in states that have already legalized cannabis will structurally remain the same. Banking will open up for these state businesses, and so will the opportunity to write-off ordinary business expenses. Questions about contract enforcement and risks of federal prosecution will become moot, and when state regulatory bodies make decisions on how to govern the industry, they will no longer have to concern themselves with U.S. DOJ enforcement and/or prosecutorial policies. The big potential change will be seen if two or more contiguous states that have legalized cannabis decide to permit transport of the drug between their states. Markets will expand, opening access to new customers and challenges from new competitors. Licensees may also have the option to venue shop, and we could see states themselves competing with one another to attract cannabis business with the carrot of favorable regulations.
One possible pitfall to keep in mind is that this legislation could violate something in constitutional law known as the Dormant Commerce Clause—a topic CIJ will cover should it surface.
Introduced on February 27, 2017 by Representative Thomas Garett (R-VA)
Cosponsors: 4 Republican, 11 Democrat, 1 At-Large
Referred to House Committees on:
Subcommittee on Crime, Terrorism, Homeland Security, and Investigations
Energy and Commerce
Subcommittee on Health
HR 2528 – Respect States’ and Citizens’ Rights Act of 2017
Policy: This bill would add to the CSA a provision specifically declaring no congressional intent to preempt state cannabis laws.
Impact: HR 2528 would rule out the potential for a judicial resolution to the federalism controversy. Most legal challenges to state legalization regimes have relied on a theory of Supremacy Clause preemption. Most notably was the 2014 case initiated by Oklahoma and Nebraska against Colorado, which you can find broken down here. Although the Supreme Court denied to hear that case, the issue is outstanding and remains an important factor, if not the central factor, in cannabis cases currently pending in federal court. Under this reform, state cannabis laws would be safe from invalidation, but it is less clear whether a mere anti-preemption clause would strip the federal government of its other powers under the CSA, or alter in any way the current status of cannabis as a Schedule I controlled substance. Questions arising under such uncertainty would likely have to go through long and hotly contested litigation before we have concrete answers. So although this proposal would resolve the ticklish issue of preemption, it leaves unaddressed the many other conundrums posed by federal-state divergence.
Introduced on May 18, 2017 by Representative Diana DeGette (D-CO)
Cosponsors: 1 Republican
Referred to House Committees on:
Subcommittee on Crime, Terrorism, Homeland Security, and Investigations
Energy and Commerce
Subcommittee on Health
HR 1841 – Regulate Marihuana Like Alcohol Act
Policy:This bill sets to accomplish a number of different reforms: remove cannabis from CSA; allow for import and export except into states that wish to prohibit cannabis altogether and/or prohibit its importation into the state; decriminalize cannabis use on national forest land; require a permit from the Secretary of the Treasury to import cannabis and to engage in any cannabis business activity; mandate businesses that obtain a Treasury permit to also comply with all State laws (so if state wants to continue to prohibit, they may); share jurisdiction over the administration and enforcement of the new federal laws between the DEA and the Bureau of Alcohol, Tabaco, Firearms and Explosives which is to be renamed the Bureau of Alcohol, Tobacco, Marijuana, Firearms and Explosives.
Impact: If enacted, this bill will have many of the same impacts as the abovementioned HR 1227- Ending Marijuana Federal Prohibition Act of 2017. The IMPACT section for that bill will also pertain to this bill, with the following exception: by requiring a permit to operate a cannabis business from the Department of Treasury, the bill would add a layer of regulation on top of state law. Treasury Permits would be conditioned on permitees complying “with all other Federal laws relating to production, sale and consumption of marijuana.” Although §302 of the bill limits Treasury’s discretion in denying applications to only certain, enumerated disqualifying factors, the “other Federal laws” the bill refers to could embody any number of policy and jurisdictional preferences either enacted by the Congress or promulgated by the executive agencies charged with administration. At the current stage of speculation the best we can say is that descheduling cannabis under this bill would be a benefit to the industry, but out of all of the present proposals the provisions authorizing federal regulation present the greatest uncertainty for the shape the future of the industry might take.
Introduced on March 30, 2017 by Representative Jared Polis (D-CO)
Cosponsors: 1 Republican, 14 Democrat
Referred to House Committees on:
Energy and Commerce
Ways and Means
Subcommittee on Conservation and Forestry
Subcommittee on Federal Lands
Statute: Adds one sentence to the CSA that excludes its application to any person acting in compliance with State cannabis laws.
Impact:The bill would have the same impact as the above HR 1227 – Ending Marijuana Federal Prohibition Act of 2017, with the only exception that the transportation provision in HR 1227 makes it clear that states will be permitted to prohibit the importation of cannabis from other states if they want to. This bill, without speaking directly to the matter of interstate importation, could leave the question open-ended until resolved through judicial interpretation.
Introduced on February 7, 2017 by Representative Dana Rohrabacher (R-CA)
Cosponsors: 8 Republican, 12 Democrat, 2 At-Large
Referred to House Committees on:
Subcommittee on Crime, Terrorism, Homeland Security, and Investigations
Energy and Commerce
Subcommittee on Health
On Tuesday, August 1st, Senator Cory Booker (D-NJ) introduced the twenty-fourth cannabis reform bill. The bill has yet to be assigned a number or referred to committee, but it is called the Marijuana Justice Act of 2017, and makes some interesting contributions to the lineup of reform proposals.
For legalization purposes, the bill both removes cannabis from the CSA and removes prohibitions on importing and exporting. The above analysis for descheduling and import/export would apply to Booker’s bill in the same way. The interesting twist thrown in is how criminal and racial justice objectives are linked to incentives for states to legalize. The ultimate decision to legalize or not in a given state will continue to be the prerogative of each state, but the catch is that if a state does not legalize cannabis and the number of arrests for cannabis offenses in that state disproportionately impacts minority or low-income citizens, then the federal government will pull funding it provides to that state for criminal justice-related programs. This could push more states who would otherwise not legalize onto the reform bandwagon. Such states will have to pit how much they value federal funds against how much they value criminalizing cannabis. If the former outweighs the latter, policy logic will dictate that they legalize. Updates on this bill, and movement on any others, will be tracked by CIJ.
For the next piece in this series, we will review the bills currently pending in Congress that cover medical cannabis reform and banking/tax reform. Stay tuned for the latest on what’s happening around Capitol Hill and in federal cannabis policy circles.
Wana Brands launched their products in Oregon’s market in July 2016, about a year ago. Since then, their brand presence has grown considerably and their products are now in 240 of Oregon’s 375 dispensaries, according to a press release issued this morning.
Wana Brands is an infused products company; they make sour gummies, hard candies and caramels. The business originally launched in Colorado back in 2010 and as of 2016, they own 23% of the market share and had the most sales revenue of any edibles company in Colorado, according to BDS Analytics. The next closest competitor owns 12% of the market share.
According to Nancy Whiteman, co-founder and co-owner of Wana Brands, becoming a market leader in Oregon is a result of their product’s consistency and taste. At the end of last year they launched in Nevada and this year they will launch in Arizona and Illinois. In 2018, they expect to make a big East Coast push, expanding into Massachusetts and Maryland as well.
Election Day last year legalized recreational cannabis in a number of states, including Massachusetts, Maine and Nevada. About a week before Election Day, we interviewed Whiteman about those states coming online and her drive to expand. She said she saw a lot of potential in those markets and she was right. Nevada witnessed a massive surge in demand with the opening of recreational sales in the beginning of July and Massachusetts is expected to be another huge market potential.
In that interview, she explained a bit of their growth model: “The model we are pursuing is a licensing agreement where we partner with existing or new license holders in their state,” says Whiteman. “In many ways they are doing the heavy lifting, but we are providing an enormous lift by licensing our intellectual property to them.”
Now that her company has found enormous success in established markets like Oregon, Nevada and Colorado, they want to make a big push in those fledgling markets on the East Coast. “In both markets [Massachusetts and Maryland], we will be working with a partner who will be licensing our products,” says Whitman. “I think the East Coast is a huge opportunity. There are major population centers in New England, New York and Florida and the markets are almost completely undeveloped at this point.” Wana Brands is also currently entering talks with partners in California, Florida and Maine.
CanPay, a debit payment solution for the cannabis space, announced today their partnership with Harborside, the largest medical dispensary brand in the United States. The partnership will allow Harborside’s more than 200,000 patients to use a mobile debit app when purchasing cannabis through their delivery service, instead of bringing cash.
For deliveries, patients would use the CanPay app on their device “to generate a secure, single-use payment token that includes no personal identifiable information,” according to the press release. A Harborside delivery employee scans the token and the money is transferred from the patient’s checking account to Harborside. This allows for delivery employees to make less cash transactions and affords patients the luxury of not having to take out cash to get their medicine.
Harborside, founded in 2006, is recognized as the largest nonprofit cannabis dispensary in California, and the United States. They were reportedly the first dispensary to lab test their products. Being an advocate for patients and their safety, they offer a variety of free health and wellness services. “It’s important to us that we stay on the forefront of patient care and access to the products our community needs to improve their quality of life,” says dress wedding, co-founder of Harborside. “CanPay enables us to continue delivering on those goals by normalizing the payment process for our patients and staff.”
CanPay launched last year in November and has since expanded to over 50 dispensaries and six different states. The premise of their system is a secure and safe transaction for customers or patients of dispensaries. “To ensure privacy and security, all purchases are made using non-identifiable, single-use, and random payment tokens generated in the CanPay App,” reads the press release. CanPay is currently serving businesses in Washington, California, Colorado, Maine, Florida, and Oregon.
“Patients who rely on cannabis for preexisting medical conditions should not have to be inconvenienced or have their safety put at risk by a cash-only model,” says Dustin Eide, chief executive officer of CanPay. “Delivery is a mainstream solution and payments should be able to keep up with the industry. By partnering with Harborside, we are providing their patients the benefits of more secure, transparent transactions.” According to Eide, their service is compliant with federal medical cannabis policy and guidance. “CanPay’s service operates under compliance programs built around the Cole Memo and FinCEN Guidance issued by the Department of Justice and the Treasury, respectively, and updated on Feb. 14, 2014 which provided guidance to financial institutions on the conditions with which they can provide banking services to the state regulated cannabis industry without incurring federal action,” says Eide. “Also, CanPay utilizes the Automated Clearing House (ACH) network to affect our services in full transparency. While Visa and MasterCard have established clear rules prohibiting cannabis transactions on their networks, the ACH network relies on the individual financial institutions to determine what type of transactions may occur.” Because of that, Eide says, there’s no need to hide transactions, unlike services that use Visa or MasterCard that require using an obscure legal entity name or a financial intermediary’s name.
According to Dustin Eide, CanPay is designed to be a long-term solution for the cannabis industry’s cash transaction woes. “At approximately 2% fees to the dispensary (and no cost to the consumer), CanPay will be a low cost payment service compared to Visa and MasterCard when they do enter the market, which we’ve been told by our contacts at the companies that this won’t be until federal law changes,” says Eide. He thinks that when MasterCard and Visa begin working with cannabis businesses, they will charge higher transaction fees in the 3-4% range, given the high-risk nature of the market. “CanPay’s challenge is to gain sufficient breadth of coverage with dispensaries and adoption among cannabis consumers to be able to offer that value on a wide scale prior to Visa and MasterCard’s entry into the market.”
Looking to the future, Eide hopes the partnership with Harborside will lead to more business. “CanPay couldn’t ask for a better partner to enter into the California cannabis market, which is expected to top $20 billion by 2020, than Harborside, one of the world’s most respected and well-known cannabis organizations,” says Eide. “It is an honor to be chosen by Harborside, who has their pick of services for the cannabis industry, to facilitate their cashless delivery payments and enhance the safety and convenience of purchasing medicine from Harborside for both their patients and their employees.”
According to Todd Denkin, president of Digipath, that massive start hasn’t showed any signs of slowing. “I was in a dispensary yesterday and it was packed,” says Denkin. “There were 40 people in line and it was pouring rain outside.” He says the flow of customers to dispensaries hasn’t stopped since July 1st.
Because of that demand as well as the state’s testing requirements, Denkin is preparing to expand. “From a laboratory’s perspective, we expect a large increase in volume,” says Denkin. “Most of the medical cultivators we work with got their rec license as well so we’re working with a lot of the same clients and getting new clients on a regular basis.” Before the launch of recreational sales, DigiPath has been doing lab testing for medical cannabis for over two years.
Cindy Orser, PhD., chief science officer at Digipath, says they are on their way to receiving ISO 17025 accreditation via the American Association for Laboratory Accreditation (A2LA). According to Orser, labs in Nevada must go out and do the sampling themselves, then bring the samples back to the lab for testing. The testing regulations overall seem relatively similar to what we’ve seen develop in other states with required pesticide testing and microbial screening. “We have a list of 24 pesticides, (two of them are plant growth regulators) that we monitor for,” says Orser. “We have specific allowable limits for that set of chemicals.” For microbial testing, Orser says they enumerate total aerobic count (TAC), total yeast and mold (TYM), pathogenic E. coli and Salmonella spp., enterobacteriaceae and bile-tolerant gram-negative, a subset of enterobacteria, as well as screening for mycotoxins. All of the testing in the state goes through just eleven laboratories, including DigiPath.
In preparing for expansion, they are looking at California in addition to other states. California released a set of draft regulations for lab testing in the spring, which many say is an example of regulatory overreach. “We still don’t know exactly what’s going to happen in California,” says Orser. “The draft regulations that have come out are so restrictive.” As Digipath looks toward expanding more in Nevada, California and other states, all eyes are on regulators proposing requirements for laboratory testing. “The future looks promising,” says Denkin.
“The PA Medicinal Cannabis Education Tour seeks to rectify the current lack of education on medicinal cannabis by providing current, reliable information on medicinal marijuana and its uses,” reads the press release. The events come at an opportune time: Pennsylvania recently announced qualifying permit applications for growers and dispensaries. As the state moves forward with their plan to fully implement a medical cannabis program by 2018, those looking to learn more about the regulations can attend these talks throughout the state.
The PA Medicinal Cannabis Education Tour will make stops in six cities, one for each of the regions set by the Department of Health: Tuesday, July 25th in Philadelphia; Wednesday, July 26th in Allentown; Tuesday, August 1st in Pittsburgh; Wednesday, August 2nd in Erie; Tuesday, September 26th in Harrisburg and Wednesday, September 27th in State College. The educational content is developed by the Lambert Center at Thomas Jefferson, the only such program dedicated to cannabinoid therapy. “These programs will educate healthcare professionals on the basic science underlying the pharmacologic and therapeutic options associated with medical cannabis in patient care, clinical insights on the use of medicinal cannabis, and provide information on legislative measures of Pennsylvania state law on the use, recommendation and dispensing of medical marijuana for medical conditions,” reads the press release.
Last year, The Lambert Center hosted an accredited CME course as part of Greenhouse Ventures’ industry conference, Innovation in the Cannabis Industry: Future Outlook. “The Lambert Center for the Study of Medicinal Cannabis and Hemp at Thomas Jefferson University is proud to support and participate in the PA Medicinal Cannabis Education Tour,” says Charles V. Pollack, Jr., MD, director of the Lambert Center. “The Lambert Center is the only comprehensive academic resource for education, research, and practice for the therapeutic use of cannabinoids to be based in a US health sciences university. We view the PA Tour as an essential education piece to prepare Pennsylvania doctors and assist in a smooth rollout of Pennsylvania’s Medical Cannabis industry.”
Sara Jane Ward, PhD, is an assistant professor at the Center for Substance Abuse and Research at the Lewis Katz School of Medicine at Temple University and one of the course instructors on the education tour. She says a large part of the event series is to settle old misconceptions about cannabis. “There are a lot of misconceptions and misunderstandings on cannabis as a medicine in the medical community, because historically medical students are not taught about cannabis and the endocannabinoid system,” says Ward. “I’m looking forward to working with Greenhouse Ventures and The Lambert Center for the Study of Medicinal Cannabis and Hemp, to educate healthcare professionals across Pennsylvania on the health benefits of cannabis.”
“A common setback for states that are implementing medical cannabis regulations is the lack of interest and sign ups from doctors and patients,” says Kevin Provost, executive officer of Greenhouse Ventures. “With reputable medical institutions like Thomas Jefferson University providing entry level education on medicinal cannabis and the endocannabinoid system, hopefully healthcare professionals across the state will realize this is real medicine, that can bring significant medical benefits to thousands of patients, and that now is the time for them to learn, before the industry is open in Pennsylvania.”
The first event in the educational series will be in Center City, Philadelphia on Tuesday, July 25th in the Bluemle Life Sciences Building at Thomas Jefferson University.
Obstacles to American cannabis reform are creating a quirky if valuable market. Cannabis is still a “Schedule I” drug. From a practical perspective, this has created a multi-billion dollar industry that as of yet, cannot get reliable banking services. It also means that patients cannot get the drug covered under health insurance. There are no national safety requirements for growing, packaging, labelling or consumption.
This is certainly not the case elsewhere. Other countries are rapidly outpacing the U.S. in such regards even if their commercial markets are not (yet) of the same size. Outside of Canada right now, Europe is the place where most of these things are happening.
Just as in the U.S., however, there is no one single path to reform.
Who Is Interesting In Europe?
This is an evolving question, but here, for the moment are the market leaders and what is going on locally:
Germany. Cannareform auf Deutsch currently underway makes this the most exciting country in Europe right now. The country is basically the “California of the EU” as it were, with about 20 million more people.
As of January 19, the lower house of the German parliament voted unanimously to legalize cannabis for medical use. Further, they voted to cover it under public health insurance which covers 90% of Germans. Yes, this is a system in process. Yes, there are problems. Health insurance companies appear to have launched a tepid attempt to slow this down, but just as in Canada, they are already facing court challenges. It is a losing battle here. Both legal and legislative mandate are very clear.
This is an industry that will also begin to grow, per government estimates, at between 5-10,000 patients per year for the next couple of years. It could grow faster than that. With over 1 million potential patients already, and a high interest in plant-based and natural medicine, this is a market more than ready for cannabis products. There are now up to ten growing bids up for grabs here and those who have applied are waiting anxiously as the government is set to announce the winners this summer. The big push right now on the ground is doctor and patient education as well as getting patients signed up for trials.
Recreational reform is also far from dead here. The medical question, in fact, has only inspired activists to redouble their efforts to get recreational reform finalized sooner than later. Especially given developments elsewhere, including locally.
Switzerland. The Swiss are approaching the question of legalization in another unique way not seen anywhere else. That said, they are clearly inspired by events in other places. Since 2011, low-THC cannabis has been for sale in regular shops. However in the last quarter of 2016 and into the first of this year, the market all of a sudden seems to have woken up. There are now over 160 shops either selling the drug or applying to sell it. This is all product that is taxable.
Thanks to this, reformers are now pushing a bill federally that would legalize and tax the sales of all THC products – no matter their concentration. In effect, in other words, the Swiss are looking at tax revenue first. If they succeed, they will be the first country to enter the market this way. It will also push other countries, starting with their closest neighbours, to examine the question of legalization just on this front. The economic justification alone is compelling. Expect Austria to also look at the problem this way.
Spain. The country is widely billed as the “next Holland.” Why? Cannabis reform has been very similar procedurally. Due to loopholes in the current law, the Spanish have been able to establish a thriving “cannabis club” market. These clubs are member-driven and non-profit. However locals who are over the age of 21 can sign up and smoke in “semi-private.” Legislation now pending in the Spanish legislature would focus on better regulation of both the clubs and the existing grows that support them. The way the Spanish seem to be approaching the issue is to give larger cities and regions direct control over regulation of the industry. However for now, this is a market that is steadfastly resistant to commercial development on the scale seen in other places. Investors – especially from overseas, are avoiding the market because of this uncertainty.
Holland. Generation X reformers are used to the idea of the grey market created by the unique nature of Dutch culture and the plant. For the better part of 40 years, the entire industry here has been based on a unique market of seed producers and growers. That, in turn, supports the coffee shop culture. There are many proposals to change the law here, and the industry will probably begin to better regulate – starting with cultivation, as the rest of Europe turns its attention to this issue. It was Holland after all, that started this. What is next for Holland 2.0? It is likely that regional developments will also shape this market too. It is still part of the EU.
Italy. While a bit of an outlier, the Italians are also in the game now. How further reform will proceed here, however is anyone’s guess. The Italian military began growing and distributing cannabis to pharmacies last year. The first medically focused canna café has now opened in Rome.
The Eastern Bloc
Eastern European countries are all over the map on legalization – although most are approaching this as a medical issue. In Czech Republic, legalization has moved forward here steadily in large part because of existing national drug policy. Croatia began importing from Canada last year in the form of cannabis concentrates. Both of those countries have digital prescription systems to integrate with medical cannabis, as part of the legislation legalizing medical use in 2015. This digital dispensation system is also unique so far in Europe, although other countries will be entering this area quickly. Even Turkey has begun to implement reform, allowing producers to begin to grow the plant domestically for local medical use.
As CIJ readers are probably aware, last month Congress passed the Consolidated Appropriations Act of 2017—the annual budget, in other words. Lying within this 1,665-page document is Section 537, which for one year restricts the Department of Justice from using any funds to prevent states from implementing their medical cannabis laws. Medical cannabis businesses and patients can take some solace in this restriction. Last summer, the influential U.S. Court of Appeals for the Ninth Circuit, sitting in San Francisco, confirmed that this appropriations rider prevents federal prosecutors from bringing suit against medical cannabis businesses and users operating in compliance with state law. Two problems remain glaring, however: one, the protection only applies to medical cannabis activity, not recreational; and two, it is only guaranteed to last for one fiscal year.
To be sure, for the 115th Congress to address the profusion of issues emerging from the nationwide legalization movement, they must do something more. Various reform proposals have in fact been introduced during the current congressional session, and in order to fully digest where they stand and what they have the potential to accomplish, it will help to make sure that we know how they fit within federal legislative procedure.
Catching Up to Speed with the Legislative Process
Whenever confronting a question about government and politics, it is never a bad idea to start at the source of authority. In America, that source is of course the Constitution, and in Article 1, Section 5, Clause 2, We The People have given to Congress the power to “determine the rules of its proceedings”. When we remember back to the School House Rock cartoon for How A Bill Becomes A Law, the majority of political maneuvering behind the basic process taught in the cartoon actually happens according to these ‘rules’ or ‘resolutions’. In fact, at the beginning of each new Congress (every two years) each chamber, and each committee and subcommittee within each chamber, votes on the rules that will govern how they are to go about their legislative business. Traditionally, the rules from the previous Congress are carried over by this vote with only minor tweaks. On top of that, both parties in each chamber have theirown internal rules and procedures for setting their policy agenda, directing political strategy, and determining which members will be nominated to certain leadership positions and committee posts. Playing the game of politics according to this layer cake of rules is a necessary part of the work of a legislator, and is often as important a factor in how our country is actually governed as is who wins election to office and what substantive provisions are formally enacted into law. So for the purposes of understanding federal cannabis reform, let’s take a quick look into the procedural status of the relevant legislation and who is in a position to influence what happens to it; then, when reviewing the policies they stand to codify, we will also understand the legislative landscape they must navigate.
A good place to start is February 16, 2017 when Republican Congressmen Dana Rohrabacher (R-CA) and Don Young (R-AK) along with Democratic Congressmen Earl Blumenaur (D-OR) and Jared Polis (D-CO) launched the Congressional Cannabis Caucus. Under House and Senate rules, such a caucus must formally register with the House Committee on Administration as a Congressional Member Organization (CMO), disclosing its officers and members and declaring its purpose. These CMOs are sometimes referred to by different names: caucuses, conferences, coalitions, task forces, etc. The best known of these are the House and Senate Democratic Caucuses and the House and Senate Republican Conferences. By setting party policy, driving legislative strategy, promoting party cohesion and rewarding party loyalty, these largest of CMOs dominate partisan activity on Capitol Hill. Smaller CMOs, on the other hand, advance only specific interests and often cross the partisan divide. The Cannabis Caucus, for instance, was formed to catalyze a federal response to the nationwide legalization movement, and its “Path to Marijuana Reform” is a large part of the spate of bills that have been dropped into the congressional hopper over the past six months.
All in all there are twenty cannabis reform bills currently pending in Congress. In the House, all but two of the fourteen bills there have been referred to either the Energy & Commerce Committee or the Judiciary Committee, and all but one of the six in the Senate have been referred to either the Finance or Judiciary Committees.
A Note on Committees & Procedure
Under House and Senate rules, bills are referred to committees by matching the former’s subject matter to the latter’s jurisdiction. In the House, the Speaker may attach time limits for committee action, refer a bill or portions of a bill to multiple committees and determine the sequence in which they are to be considered. The Speaker may also convene an ad hoc committee to consider a bill, and “make such other provision as may be considered appropriate.” As can be gleaned, the Speakership holds substantial procedural powers, and is in fact the only congressional leadership position created by the Constitution. The Senate’s counterpart, the majority leader, has in comparison less discretion in moving along legislative business.
At the next step, both the House and Senate grant each committee the authority to make their own rules on how they are to consider bills. Once referred, committee chairs generally decide to further refer a bill to a subcommittee, hold hearings, subpoena evidence and witnesses, call ‘markup’ sessions to propose and debate amendments, and finally to schedule a vote to report bills back to the chamber floor. If a committee chair wishes to kill a bill, these procedural powers provide wide, though not absolute, authority to do so. Jockeying for a chairmanship is therefore big game in the life of a legislator. Ultimately, members are nominated and elected to their respective committees and chairs according to the rules of their parties’ caucus or conference, and upon a vote of approval on the floor. Seniority is only one factor in these votes, and so because nothing is predetermined, these intraparty contests can explain a great deal about member behavior.
With that background to help triangulate Capitol Hill politics, we should now be better equipped to look into the cannabis bills pending before the 115th Congress, the committees to which they have been referred, and their procedural status. Stay tuned for the next article in this series when we will begin our bill-by-bill review.