This week, the National Cannabis Industry Association (NCIA) hosted their annual Cannabis Business Summit in Oakland, California amid some alarming news in Washington. On Monday, a letter written by U.S. Attorney General Jeff Sessions back in early May made its way into the news, where he writes to Congress asking permission to prosecute medical cannabis businesses. The following day, U.S. Deputy Attorney General Rod Rosenstein spoke to the Congress Appropriations committee, saying that, “From a legal and scientific perspective, marijuana is an unlawful drug- it’s properly scheduled under Schedule 1.”
Those two statements identify the crystal-clear anti-cannabis stance of the two most senior-level officials at the Justice Department, a position that should alarm cannabis legalization advocates.
The former president of Mexico, Vicente Fox, a prominent legalization advocate, gave a press conference at the NCIA event, where he gave reporters his thoughts on cannabis and drug legalization, the Trump administration and Attorney General Jeff Sessions. To be blunt, he called Sessions crazy and Trump destructive and ignorant.
“I don’t know what happened to this administration,” Fox told a room of reporters. “A large majority of US states have already approved the use of medical cannabis, which I think is a great thing,” says Fox. “The state of California by itself produces more marijuana than what we do in Mexico. There is a conflict between the frameworks of law… there is no consistency in public policy.” To be clear, the former Mexican president advocates legalizing all drugs, attributing the violence in Mexico to the failed War on Drugs. “I don’t think prohibition has worked and we [Mexico] have paid a huge price for that.”
Former Mexican president Fox’s focus on international politics during that press conference sheds some much-needed light on the violence and other externalities linked to organized crime and the black market drug trade. “We are going to stand firm against what is going on- it is not only the fate of the United States, it is the fate of the whole world,” says Fox. “It is a real shame for this nation in front of the world- we are all pissed off out there hearing this crazy tweeting and crazy public policies that has nothing to do with the soul of this nation… No nation can isolate [themselves] behind a wall and still succeed.”
With the 2017 Cannabis Business Summit just around the corner, we sat down with Taylor West, deputy director of the National Cannabis Industry Association (NCIA), to hear about their lobbying efforts and what they’ll discuss in the keynote panel discussion on Taxes, 280E and the Path to Federal Reform. Henry Wykowski, Esq., attorney, Steve DeAngelo, founder of Harborside Health Center and Michael Correia, director of Government Relations for NCIA will join her on that panel discussion.
According to West, the 280E tax code issue has an enormous impact on the industry. This tax code essentially means that businesses cannot make deductions for normal business operations from the sale of schedule I narcotics. Because cannabis is still listed as schedule I, businesses touching the plant often pay a majority of their profits to federal taxes. “When they are handing over 80% of their profit to the federal government, which is a lot of money that isn’t being pumped into the local economy, that is a big problem,” says West. “We want to highlight how 280E isn’t just harmful to businesses, but also harmful to the local economies and states that have businesses dealing with cannabis in them.” As the primary organization lobbying on behalf of the cannabis industry in Washington D.C., they have three full-time staff as well as a contracted lobbying firm working there. “We are the voice on Capitol Hill for the businesses of the cannabis industry,” says West. “We primarily focus on a couple of core issues, and one of them is 280E tax reform since that is such a significant issue for our members touching the plant.”
Another important issue they have been lobbying on is banking access. According to West, banks and credit unions are regulated on the federal level, and as a result, are largely still reluctant to serve cannabis businesses. “The inconsistency between federal and state law means they are concerned their federal regulators will flag them for working with cannabis businesses,” says West. “It is very difficult to operate without a bank account- this creates a lot of transparency, logistical and safety issues. We are working with lawmakers to try and make a change in the law that would make it safe for banks to serve state-legal cannabis businesses.” NCIA’s lobbying efforts have long engaged a few core allies on Capitol Hill, including the representatives that formed the Congressional Cannabis Caucus. “They have been champions of broader reform issues around cannabis,” says West. “But we are also starting to see new faces, new members of congress getting interested in these issues, beyond the traditional champions.” A lot of NCIA’s recent lobbying efforts have focused on recruiting members of Congress for those issues.
One example of their success came by teaming up with Rep. Carlos Curbelo, a Republican Congressman from Florida serving on the House committee overseeing tax issues. “He hasn’t previously been involved with cannabis legislation, but because Florida moved forward with the medical program, he got more interested in the issue and we helped educate him about the problem with 280E,” says West. “Having a republican that sits on the committee dealing with these issues is a huge step forward as we build the case for reform in D.C.” A lot of these efforts will be discussed in greater detail at the upcoming Cannabis Business Summit June 12-14. “We want to talk about the work we are doing just now in Washington D.C.; we have been doing a significant amount of work helping to draft legislation that would fix the 280E issue,” says West. “We will talk about those efforts as well as what businesses are currently doing to deal with the issue of 280E.” For readers interested in getting tickets, seeing the agenda and learning more about NCIA’s lobbying efforts, click here.
In November 2016, residents in Denver, Colorado voted to pass Initiative 300, allowing businesses to seek social marijuana use permits if neighborhood or business groups also agreed and signed off. In the very near future, the process for how cannabis consumers purchase and consume cannabis will no longer be restricted to only going inside a dispensary to make your purchase and returning to a private residence to consume. Instead, it may be as simple as visiting a drive-thru and then going to a cannabis bar or social club to enjoy.
Cities such as San Francisco have had on-site consumption laws in place for some time, with notable locations including sparc, a well-known dispensary with two locations in the city, and the recently announced Power Plant Fitness, a gym slated to open in late 2017 that will allow members to consume cannabis while working out.
Social consumption of cannabis is not a new topic of discussion—just look at Amsterdam’s cannabis coffee clubs—but it is undoubtedly a legalization trend that will continue to be at the forefront as more states pass legalization or convert to adult-use markets. There remains one reoccurring theme, however: a lack of clarity on how these laws will be structured and how social consumption regulation will be put in place.
In Colorado’s state legislature, there was bipartisan agreement that the state needed to allow for venues to let patrons consume cannabis in order to deter residents and tourists alike from consuming in public places such as sidewalks and parks. A Republican-sponsored measure proposed in the state legislature would have allowed for the regulation of cannabis clubs in a similar format to how cigar bars are managed, but that legislation was put on hold for rewrite.
Within the state, there also exists a heated debate over whether or not the creation of social cannabis clubs would instigate federal intervention by the new administration, especially in light of Attorney General Jeff Sessions’ comments in opposition of the adult-use cannabis industry.
One thing is clear: since Denver’s passing of the social use ballot measure in November, there have been numerous halting attempts to put a law in place and the current law is vague. There remains much work to be done before Initiative 300 may be enacted.
For those interested in learning more or joining the discussion, the National Cannabis Industry Association (NCIA) will be hosting a panel titled “For Here or To Go? Evolving Regulations on Social Consumption of Cannabis” at its 4th annual Cannabis Business Summit & Expo in Oakland, June 12-14. The panel will be led by Sam Tracy of 4Front Ventures, who supports the company’s business development and communication efforts.
You can learn more about the Summit and see the full conference agenda on the Cannabis Business Summit & Expo website. In celebration of 4/20, NCIA has extended the early bird pricing deadline for conference registration from April 21 to April 24 to allow for busy cannabis business owners and operators to take advantage of the savings.
Cannabis Industry Journal readers may use discount code CIJ15 to save 15% on registration.
Emerald Scientific’s Inter-Laboratory Comparison and Proficiency Test (ILC/PT) was recently approved in Washington as an official cannabis lab PT program, according to a press release. The Emerald Test program measures the accuracy of individual labs as well as comparing their results to other labs for indicators of variability and performance improvement.
Washington requires certified cannabis labs to participate in proficiency testing and Emerald Scientific’s tests is the only approved program in 4 out of 5 of the categories: potency, pesticide, heavy metals and residual solvent analysis. The most recent round of The Emerald Test showed broad improvements in many of the testing categories.
Perry Johnson, a third-party lab accreditation service for ISO/IEC 17025 also decided that The Emerald Test “meets the audit criteria for the proficiency test participation requirement for the accreditation,’ according to the press release. The proficiency test is a key component of quality assurance, which is a major requirement for labs seeking ISO 17025 accreditation. “The Emerald Scientific PT ensures that the cannabis testing labs are performing their function to the best of their ability,” says Reggie Gaudino Ph.D., vice president of Science, Genetics and Intellectual Property at Steep Hill Labs. “Any lab that isn’t participating and exceeding the minimal passing requirements should be viewed as suspect. It’s that important.”
According to the press release, Emerald Scientific’s spring 2017 program has expanded from 5 to 6 tests. The residual solvents and pesticide analysis portions offer more comprehensive testing that previously. “The other tests include 2 microbial panels and a Potency Test, which measures 5 cannabinoids including THC, THCA, CBD, CBDA, and CBN,” says the press release. “New this spring is the Heavy Metals Test, which is offered in 2 parts, one solution for cannabis heavy metals and the other in a hemp matrix.”
Members of Congress last week announced the formation of a ‘Congressional Cannabis Caucus’ in order to organize and affect cannabis policy at the federal level. Representatives Earl Blumenauer (D-OR), Dana Rohrabacher (R-CA), Jared Polis (D-CO) and Don Young (R-AK) announced the creation of the caucus on February 16th. Cannabis advocacy and drug policy groups were quick to commend the formation of the organization.
In a joint statement issued on Friday, the National Cannabis Industry Association, the Marijuana Policy Project, the Drug Policy Alliance, NORML, Americans for Safe Access, Students for Sensible Drug Policy, Law Enforcement Action Partnership, Doctors for Cannabis Regulation, and Clergy for a New Drug Policy expressed commendation and excitement for the new group. “We commend Representatives Blumenauer, Rohrabacher, Polis, and Young for their leadership on the issue of cannabis policy,” reads the statement. “The establishment of a Cannabis Caucus will allow members from both parties, who represent diverse constituencies from around the country, to join together for the purpose of advancing sensible cannabis policy reform. It will also facilitate efforts to ease the tension between federal prohibition laws and state laws that regulate cannabis for medical and adult use.”
The members of Congress that formed the caucus all represent constituents in states where cannabis is legal for medical and adult use. “The formation of this caucus is a testament to how far our country has come on the issue of cannabis policy,” says the joint statement by the drug policy reform groups. “We look forward to working with caucus members to translate this growing public sentiment into sound public policy.” According to their statement, 44 states so far have adopted laws effecting cannabis prohibition on the state level, representing 95% of the U.S. House of Representatives and 88% of the Senate.
Representatives Blumenauer and Rohrabacher have been prominent cannabis policy reform advocates in the past. Blumenauer supported the bill to legalize adult use cannabis in Oregon back in 2014 and Rohrabacher introduced the Rohrabacher–Farr amendment to Congress, which prohibits the Justice Department from spending money on interfering with state medical cannabis laws.
According to an article on Roll Call, Blumenauer says the caucus will focus on more medical research and the tax and banking regulations hurting cannabis businesses.
President-elect Donald Trump nominated Sen. Jeff Sessions (R-AL) for Attorney General back in November. For Sessions to become a member of the cabinet and head of the Department of Justice, the Senate must approve the nomination during a confirmation hearing, taking place today in Washington D.C.
According to CNN’s coverage of the events, Sen. Mike Lee (R-Utah) mentioned the Obama Administration’s tolerance of states with legal cannabis. “There are federal laws prohibiting the use of marijuana, the sale of marijuana, the production of marijuana, that apply regardless of whether a state has independently criminalized the drug,” says Senator Lee. He then asks if Obama’s actions were indicative of a breach of “the understanding that we [Congress] are the lawmaking body.”
Sessions replied to that by saying that as federal law stands, cannabis is illegal. He says if keeping cannabis illegal is “not desired any longer, Congress should pass a law to change the rule.” He adds that it’s not the AG’s job to enforce or not enforce certain laws. “We should do our job and enforce laws as effectively as we’re able,” says Sessions.
In April of 2016 according to USA Today, Sen. Jeff Sessions was quoted saying “Good people don’t smoke marijuana.” Sessions has a history of making inflammatory remarks, including racist statements. He has also previously mentioned his proud support for the War on Drugs.
Sessions’ comments during the exchange today shed some much-needed light on his stance toward legal cannabis. National Cannabis Industry Association (NCIA) executive director Aaron Smith issued a statement on Sessions’ comments made today. In the statement, Smith sounds optimistic regarding Sessions’ comments. “In today’s hearing, Sen. Sessions indicated that the Justice Department’s current guidelines for marijuana policy enforcement are ‘truly valuable’ in setting departmental priorities,” says Smith. “That belief, along with the support for state sovereignty on cannabis policy expressed by President-elect Trump and his team, should lead Sen. Sessions to maintain the current federal policy of respect for state-legal, regulated cannabis programs if he is confirmed as Attorney General.”
“Sen. Sessions also highlighted the conflict created by a Congress that has failed to reflect the will of the voters on cannabis policy,” says Smith. “Voters in 28 states, representing approximately 60% of the nation’s population, have now chosen some form of legal, regulated cannabis program. National polling shows that 60% of Americans believe cannabis should be legalized. It’s time for federal lawmakers to represent the clear choices of their constituents.” Given the Republican support for state sovereignty and Sessions’ comments on Congressional lawmaking, Smith is hopeful that if Sessions becomes the new Attorney General, he will respect states with legal cannabis programs.
President-elect Donald Trump nominated Sen. Jeff Sessions from Alabama for Attorney General and Rep. Tom Price from Georgia as the new Health Secretary. Those appointments still require Senate approval before they are officially members of the cabinet. Neither of the picks to head the Department of Justice (DoJ) and the Department of Health & Human Services (HHS) is friendly to cannabis.
What’s the bad news?
Both of those agencies are at the center of any federal regulation of cannabis, including access for research. As Attorney General, Jeff Sessions would essentially have the ability to block any rescheduling efforts, as outlined in the Controlled Substances Act.
Sessions has made inflammatory, racist remarks and showed his disdain for cannabis users on multiple occasions. He disgracefully said at a Senate hearing in April, “Good people don’t smoke marijuana.” When he was a federal prosecutor, Sessions was a prominent advocate for the War on Drugs, and perhaps even still is.
Tom Price, a Republican Congressman from Georgia, has voted repeatedly against pro-cannabis legalization bills, including twice against the Veterans Equal Access Amendment as well as the Rohrabacher/Farr Amendment, which “prohibits the use of funds in the bill to supersede State law in those States that have legalized the use of medical marijuana.” NORML’s Georgia Scorecard gave Tom Price a D grade for his previously voting against pro-cannabis bills.
What’s the good news?
While Sen. Jeff Sessions is certainly no friend to legal cannabis, I believe he is not a serious danger to the cannabis industry. This op-ed on CNN does a terrific job at summing up Sessions’ potential threat to the cannabis industry, but also why it may not be cause for a total panic. The author mentions a laundry list of DoJ priorities over cannabis, but I think the larger issue at hand is states’ rights.
Republicans are historically passionate when it comes to keeping states’ rights sovereign. With cannabis’ big wins on Election Day, a majority of the country’s population now lives in states where cannabis is legal.
There is too much momentum behind legal cannabis for a new administration to waste precious resources and time on trying to disrupt it. States are getting too much tax revenue from regulating cannabis to just let the DoJ interfere with their economies. “Voters in 28 states have chosen programs that shift cannabis from the criminal market to highly regulated, tax-paying businesses,” says Aaron Smith, executive director of the National Cannabis Industry Association (NCIA). “Senator Sessions has long advocated for state sovereignty, and we look forward to working with him to ensure that states’ rights and voter choices on cannabis are respected.” Smith’s words in the NCIA statement are pointed and clear: this is a states’ rights issue at heart and they must respect that.
By forcing the states’ rights issue to the front, it is possible to put legal cannabis in a bipartisan lens, thus eliminating the possibility of a few old drug war stalwarts disrupting the industry. While rescheduling efforts could be thwarted for the coming years, I have faith that the federal government will not interfere with states that legalize cannabis.
According to Aaron Smith, executive director of NCIA, market intelligence was previously very scarce in the emerging cannabis industry. “We hear from our members all the time that one of their biggest challenges is the scarcity of reliable market intelligence and data in the industry,” says Smith. “Being able to offer this kind of data as an included benefit of NCIA membership is incredibly valuable. We’re proud to partner with BDS and grateful for their support of NCIA’s mission.”
The GreenEdge reports span numerous product categories as well as high-level market reporting. According to Roy Bingham, chief executive officer of BDS Analytics, NCIA member-businesses can take part in a tutorial to familiarize them with the interface. Bingham says they have extraordinarily comprehensive data on Colorado and Washington; they will have Oregon’s data ready in less than three months and roll out nationally to all major markets during the rest of 2016 and 2017.
Through using the interactive GreenEdge reports, we were able to identify key market figures and growth percentages, such as percent of the market share held by dry flower, average infused chocolate bar prices and much more. We found that Colorado’s recreational and medical markets totaled $996.5 million in 2015, just shy of a billion dollars. 28% of that market was held by infused products and concentrates, which grew by 111% over the previous twelve months. The average infused chocolate bar sold at retail in Colorado was priced at $14.47 last year. Overall, Colorado’s cannabis marketplace grew by over 41% between 2014 and 2015.
According to Bingham, for most mature industries, a ten percent transaction value of the market is sufficient to scale data so that it speaks to the entire market. “However, this is not a stable, mature industry so we are more comfortable with a sample size of around twenty percent of the total market,” says Bingham. “We are well over those numbers in Colorado and Washington.” In order to get the data, BDS Analytics makes direct arrangements with dispensaries on their panel to get access to their point-of-sale data, which can be done in almost real time or in a download at the end of each month. “It is then standardized with a learning software system, assisted by personnel, that gets better over time at categorizing data points,” says Bingham. “We use algorithms to scale the data to the total industry size, and there are a number of adjustments made to those algorithms to make sure the data is normalized.” The program has recorded more than 20 million transactions to date.
Dispensaries provide their data because they get the full service that comes with being a member of the panel, including details down to the brand level, according to Bingham. “This enables dispensaries to offer consumers what they are purchasing on average in their market,” says Bingham. “You get to see a breakdown of the most popular brands and items if you join the panel and submit data.” They have categorized more than 20,000 unique products, such as a number of different types of concentrates, different types of infused products and more.
The interactive data tool holds tremendous value for NCIA members and business owners in the cannabis space, giving them access to market data previously unavailable or difficult to find.
The National Cannabis Industry Association (NCIA) with their California affiliate, California Cannabis Industry Association (CCIA), hosted over 3,000 business professionals at this week’s Cannabis Business Summit in Oakland, CA. According to Aaron Smith, executive director of the NCIA, this event drew their largest-ever gathering of attendees and well over 100 sponsors on the expo floor. In an exclusive interview prior to the event, Smith expected this would be a wildly successful year. “Last year we had just over 2,000 attendees in Colorado and we are expecting over 3,000 this year in California,” says Smith. “There is tremendous interest in the California market and it is so great to be here with all of the excitement leading up to the ballot initiatives in November.”
The theme of the conference was set early on from industry progress to sustainable growth. “I am really proud that NCIA’s events always bring out the best and brightest in the industry,” says Smith. “It is mostly members of NCIA attending, which are the folks invested in the future of the industry and not just in it to make a quick buck; they are here to build a new business sector.” On Tuesday morning, Smith gave his opening remarks and introduced the first keynote delivered by Ahmed Rahim, co-founder and chief executive officer of Numi Organic Tea alongside Kayvan Khalatbari, founding partner of Denver Relief Consulting, to discuss the triple bottom line in business, emphasizing the need for social responsibility, which includes environmental stewardship, fair labor and trade laws and community integration among cannabis businesses. California Lieutenant Governor Gavin Newsom also delivered a keynote address that was received with a standing ovation after discussing the November ballot initiative, which would legalize, regulate and tax the adult use of cannabis in the state.
Newsom’s speech highlighted the state’s opportunity to make considerable progress in the cannabis legalization arena this November. The substance of his speech echoed that of many attendees focused on moving the industry forward sustainably. “We need to right the wrong of the failed war on drugs in America,” says Newsom. Boisterous cheers and applause followed almost every sentence as he continued to emphasize the need for social and criminal justice reform. “We are not doing this to be the next California gold rush or to make tax revenue; our purpose and focus is social justice,” adds Newsom.
The Lieutenant Governor also mentioned the sheer massive size of California’s market opportunity and their pragmatic regulatory framework in development. “The entire retail of recreational and medical [cannabis sales] in Colorado was just shy of $1 billion last year; we are talking about our 58 counties up in the northern part of this state that produce anywhere from $9-13 billion [sic] of wholesale cannabis- it’s a game changer,” says Newsom. “We have had the benefit of seeing where other states have fallen short or struggled [in regulatory frameworks] and will present that to voters this November.” Newsom also mentioned that members of the cannabis industry need to act as stewards of the environment and protect the small farmers.
Panel discussions throughout the afternoon and following day deliberated a wide variety of topics from laboratory testing standards to the state of affairs in education, training and certification across the country. John MacKay, senior director of strategic technologies at Waters Corporation, led a panel titled Validation of Analytical Methods, Lab Certifications and Standard Methods with Cynthia Ludwig, director of technical services at the American Oil Chemists’ Society (AOCS), Shawn Kassner, senior scientist at Neptune and Company, Inc. and David Egerton, vice president of technical services at CW Analytical Laboratories.
The panel addressed many of the current problems facing the cannabis testing space. “It is a very difficult plant to work with and labs are doing their best to provide reproducible results,” says Mackay. Cynthia Ludwig emphasized the need for collaborative studies and method validation in cannabis labs. “We [AOCS] provide official, validated laboratory testing methods, but the cannabis industry really has no official methods to work with,” says Ludwig. Egerton echoed Mackay’s concerns over difficult sample preparation and the difficulty of working with cannabis in the lab. “The problem is the matrix of the cannabis sample; the matrix is a critical aspect of method validation- ensuring we find the signal through the noise,” says David. “In the absence of official methods, cannabis labs need to perform method validation in-house for each type of sample, ranging from dry flower to different types of infused products and concentrates.” In addition to those difficulties of providing robust and reproducible lab tests, the panel emphasized that there is currently no laboratory accreditation program required by California regulators.
The cannabis industry in California is still rather unregulated and lacks consistency in safety standards across the market in almost every sector. Attendees seemed to look forward to the November 8th vote on the ballot initiative in California as a solution for the state’s current problems, hoping consumers and patients alike will find solace in a more regulated, standardized and safe market. The NCIA will be hosting a “Seed To Sale Show” focused on best practices and case studies January 31st and February 1st, 2017 in Denver. The next Cannabis Business Summit will be held from June 12th to the 14th of 2017 in Oakland, CA.
The bill would exempt states from the federal prohibition of cannabis via a waiver program. The Attorney General could grant those waivers to states that operate a robust regulatory framework and oversight of the cannabis marketplace. It also has measures in place to help prevent diversion of cannabis into the black market, protecting consumer safety and public health, eliminating criminal enterprise involvement and more.
Cody Stiffler, vice president of Government Affairs at BioTrackTHC, believes this bill could be a panacea for many ailments facing the cannabis market. “They [Congress] plan to give the U.S. Attorney General powers to offer waivers to state governments, exempting that state from federal law regarding cannabis, allowing banks and other institutions to take part in the industry without fear of federal backlash under the Controlled Substances Act,” says Stiffler. Perhaps the most significant effect this bill could have on the cannabis industry is knocking down the burden of the 280E tax code on cannabis businesses primarily because it would exempt states from The Controlled Substances Act. Click here to read the full guest post on the NCIA blog.