Public Meetings

California Legislature Holds Hearing on Legalizing CBD Sales

The California Legislature held a hearing yesterday on 5 cannabis bills that it must move forward ahead of the 2019 session’s closing date on September 13, 2019. The most important bill that was deliberated by the Appropriations Committee was AB-228, which will legalize the sale of CBD products in California.

Below are the 5 bills that the Senate Appropriations Committee discussed during its public hearing on August 12, 2019.

Florida Court Says State's Restrictions on Medical Marijuana Industry are Unconstitutional

Florida’s Court of Appeals ruled that the state’s medical marijuana rules are unconstitutional. Florigrown, LLC filed the lawsuit in 2017 against the Department of Health after it rejected Florigrown’s efforts to register as a medical marijuana treatment center as permitted by the state’s 2016 constitutional amendment. Florigrown argued that the state's 2017 legislation unconstitutionally limited the number of available licenses and developed a special class to receive these licenses.

The lower court agreed with Florigrown and issued an injunction against Florida’s DOH. The DOH challenged this decision and lost. The appellate court found that the state’s 2017 legislation to be unconstitutional as it unreasonably capped the number of medical marijuana licenses to 14 and forced licensee to be vertically integrated, both of which contradicted the definition of a medical marijuana treatment center as defined in the constitutional amendment. The court’s ruling makes both restrictions on the medical marijuana industry null and void.

The case shows the strength of voter driven initiatives to create a constitutional mandate for medical marijuana within a state. The court upheld the voter’s intentions and rejected the ability of the state legislature and regulatory bodies from arbitrarily infringing on a constitutional right.

What does this ruling mean for the industry, the current licensees and the state’s next steps in developing the medical marijuana industry? Florida’s market is about to open up and become significant. The legislature and Department of Health, as two-time losers, will need to adopt a framework closer to Michigan’s, which has no license caps and permits multiple license types. Florida has over 21 million residents and is one of the fastest-growing medical marijuana markets, which should make it attractive for many. The high water mark for a Florida medical marijuana license may have passed as the uncertainty of license caps has been resolved.

Michigan's Adult-Use Regulations Will Shape a Robust Industry

Michigan’s Marijuana Regulatory Agency released the emergency adult use cannabis regulations last week, which allows the agency to begin accepting applications prior to December 6, 2019. Local cities and prospective business owners have been waiting for the state to release the rules prior to finalizing plans for participating in the adult-use market.

To date, a significant number of local municipalities have opted of the adult use cannabis market. Other cities delayed the decision to opt in until the MRA’s release of the adult use regulations. These cities must quickly enact ordinances that permit establishments to engage in adult use cannabis activities so that businesses may locate available property ahead of the opening of the application window.

The state’s recreational market may be saddled with the same growing pains that the medical marijuana market is currently experiencing including a limited number of cities offering licenses, inadequate inventory from the limited number of licensed grow facilities, and the complexities associated with a nascent industry. State regulators will need to manage the public’s expectations in order to ensure a smooth rollout of the recreational market.

Michigan’ rules are forward thinking and encompass the newest license types that are being adopted by Colorado and California including marijuana event organizers, consumption lounges, and temporary events, which will allow the state to quickly build out a mid-west cannabis tourism scene. The rules also allow the inflow of capital to build out the market by permitting out-of-state investors and limiting the residency requirements to microbusiness and Class A growers.

Michigan’s rules permit institutional investors and establish thresholds for investor suitability reviews that are in line with other states. However, the requirements around franchise arrangements are more stringent in that it limits the franchiser’s ability to obtain a royalty based on a percentage of sales. A franchiser that enters into an arrangement other than a fixed fee may be considered an applicant under the regulations.

Like Illinois, Michigan will provide medical marijuana license holders with priority in the application process. The state will continue to use its two-step application process that requires applicants to be prequalified prior to providing final approval. Businesses that decide to obtain property in a city that requires applicants to be prequalified may be further delayed in building out their businesses.

Finally, Michigan’s rules require all adult-use applicants to include a social equity plan in their application. The social equity plan must describe how the business will encourage persons that have been impacted by the illegal marijuana laws to participate in the industry and positively impact the communities.

The rollout of Michigan’s adult-use market poses a significant risk to early entrants that are not currently in the medical marijuana market. Businesses will need capital and perseverance to successfully make it through the lengthy approval process, local permitting, early inventory shortages, and costly build out. We look forward to the real-time comparison of the different approaches to establishing an adult use market being used by Illinois and Michigan.

Bill Requiring California Cities to Permit Cannabis Stores Pulled From Consideration

California Assembly Member Ting pulled a controversial cannabis bill from consideration last week. The bill would have increased the number of cannabis dispensaries in the state by requiring each municipality where the majority of local electorate voted for Proposition 64 to permit one cannabis license for every four liquor licenses.

The legislation was intended to eradicate the black market by ensuring that California residents had access to a robust legal cannabis market. This is significant goal given that the THC REGS database for California shows that over 42% of cities prohibit cannabis altogether.

The League of California Cities opposed the bill indicating that it eroded a city’s ability to govern the type of cannabis business activity that occurred within its borders, which is contrary to the intent of Proposition 64. California cities banded together by submitting letters in opposition to the preemption of local control over these businesses and the arbitrary 1 for 4 license requirements.

Oregon Adopts Final Hemp Regulations: Has your CBD been tested?

The Oregon Department of Agriculture adopted final regulations for the hemp industry on May 15, 2019, which replace the temporary rules that were put in place in December. The DOA’s regulations govern the production and processing of hemp in Oregon including the creation of extracted hemp products. The DOA’s website indicates that over 3,500 applicants received a hemp license for 2019, and Oregon expects to produce over 20,000 acres of hemp.

Now that the rules are effective, hemp products that are intended for human consumption must be tested and labeled before they are sold to the public. CBD and other finished hemp products to be tested and reported to the state in the same manner as cannabis. The DOA may revoke the license of any grower or processor that fails to comply with this requirement.

Oregon’s hemp industry remains far ahead of other states, such as Connecticut, New Mexico and Utah, that are just enacting legislation to authorize commercial hemp programs. As a leader in the industry, Oregon urged the USDA to expedite the implementation of the 2018 Farm Bill so that growers and handlers could export products to other states.

Earlier this year, Oregon’s DOA issued a warning to the industry that states bordering Oregon were stopping trucks carrying hemp products, and charging the drivers with criminal violations. In the USDA’s response to Oregon’s letter, it indicated that the Farm Bill will be implemented for the 2020 growing season, which will open up interstate commerce.

Pennsylvania Bill Will Place Recreational Marijuana on 2020 Ballot

The Pennsylvania Senate introduced a bill titled the Legalization of Marijuana for Personal Use by Adults Referendum Act, which will give residents the ability to vote for legalizing marijuana in 2020. Unlike other states, the referendum will be nonbinding, and is only intended to provide the General Assembly with information on whether residents in the state favor legalization.

The ballot question will simply ask voters “Shall the Pennsylvania General Assembly legalize marijuana for personal use by adults?” Following the vote, the General Assembly may choose to follow the results of the referendum, and adopt regulations to allow or prohibit recreational marijuana.

There has been a recent uptick in activity in the state with Philadelphia introducing a resolution, that if passed, would ask the General Assembly and the Governor to enact legislation to decriminalize, regulate and tax recreational marijuana.

Washington Legislature Passes Bill to Implement Hemp Licensing Program

Washington’s Legislature passed a bill that creates a hemp licensing and regulatory program that is required to implement the 2018 Farm Bill. The Department of Agriculture (DOA) is responsible for implementing rules establishing the hemp production licensing regime by June 2019. Businesses that are already licensed under the industrial hemp research program can transfer over into the new program. Businesses will continue to operate under the current research program if the DOA is not able to meet the June 2019 deadline.

The legislation charges with DOA with developing standards for creating hemp extracts that is intended for consumption, and the production of nonhemp food in accordance with state and federal regulations. The Department of Agricultural and the Liquor and Cannabis Board to establish policies and buffers that would prevent the cross pollination of marijuana and hemp. The bill requires the policy to provide preference to the producer that was first to grow, and require the second to cease operations.

Free Cannabis Legislative Tracker For 20 States: Access THC, Hemp And CBD Bills

Access our free legislative trackers for Arizona, California, Colorado, Connecticut, Florida, Illinois, Kentucky, Massachusetts, Maine, Michigan, Missouri, North Dakota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Tennessee, Utah and Washington. Review and access the cannabis & hemp bills introduced by the State Legislatures in the 2019-2020 session. The trackers include a summary description of the legislation, status and link to the full legislative text. The legislative trackers will be updated on a weekly basis.

Illinois Holds Public Hearing Today on Cannabis Legalization Equity Act

The Illinois House will hold a public hearing today on HB 0902 the Cannabis Legalization Equity Act. The bill is socially progressive as it provides high cannabis possession limits, requires 51% of the cultivation and retail store licenses to be granted to communities that have been disproportionately impacted by the drug trade, and requires the state to automatically expunge prior cannabis convictions. The devil will be in the details as to how the state regulators will implement these concepts so as to create the intended equitable results.

Below are seven (7) things that cannabis businesses should know about Illinois’ cannabis legalization equity bill.

  • The bill requires the state authorities to automatically expunge cannabis convictions from the records within six (6) months of the law’s effective date.

  • The bill allows the personal possession, growth an transport of 24 mature plants. This limit is four times the 6 plant limit allowed in most states, and more than the two pound limit in New York’s recreational marijuana legalization bill.

  • The Department of Agriculture and the Department of Financial and Professional Regulation must adopt implementing rules within six (6) months of the law’s effective date, and begin accepting and processing applications within a year. This time frame seems quite aggressive, and probably unrealistic.

  • The Department of Agriculture and the Department of Financial and Professional Regulation must issue 51% of the cultivation and retail store licenses to persons in neighborhoods that have been negatively impacted by the war on drugs. These Departments are also prohibited from denying licenses for persons who are located in these areas. We question whether the licenses should be awarded to persons who were negatively impacted by prior cannabis policies rather than placing 51% of the cultivation and retail licenses in these neighborhoods.

  • A 10% excise tax will be added to the sales price on the sale or transfer of cannabis. The excise tax proceeds will be distributed to the General Fund, Illinois’ retirement systems, and to train state police on drug recognition.

  • A 10% local tax is charged on the net income of cultivation facilities, retail stores and on-site consumption facilities. Other states are sharing percentages of the excise tax charged on the gross sales with local municipalities. The proposed local tax on net income is not as generous.

  • Local municipalities may opt-in and permit marijuana establishments. The bill prescribes a robust approval process for municipalities including timelines for decision making. There are no caps on the application and license renewal fees charged by the municipalities.

7 Facts About Obtaining a Cannabis License Under New Jersey's Adult Use Legalization Bill

Tomorrow at noon, you can watch the New Jersey Assembly Appropriations Committee review the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act. The Cannabis Regulatory and Expungement Aid Modernization Act legalizes recreational marijuana, expedites expungement proceedings for persons previously convicted of cannabis crimes, and creates the Cannabis Regulatory Commission to oversee the recreational and medical marijuana industries.

The proposed legislation is progressive in that it prioritizes applications for New Jersey residents who live in an economically and socially disadvantaged areas, or persons who utilize union labor. The bill also allocates a certain percentage of licenses for New Jersey residents who are (1) minorities, women or disabled veterans, (2) within certain income ranges, and (3) who want to operate an micobusiness.

The Commission will have six months to adopt initial rules, and thirty (30) days after the adoption to accept applications. Permanent rules must be adopted the following year. The legislation creates a regulatory framework for creating four (4) classes of licenses to serve as a grower, processor wholesaler or retailer. Initially, New Jersey will establish a process to quickly issue conditional licenses. Conditional licenses will account for thirty-five percent of the each class, and persons applying for a conditional license must have a plan for complying with all local and state rules. Persons applying for full licenses must be in compliance with all local rules and regulations prior to the Commission’s approval of the license.

Seven (7) things that you should know about the legislation includes:

  • The legislation priorities applications of persons who has resided in an impact zones for three years prior to submitting an application, and those who intend to use union labor. Impact zones must have a population of at least 120,000 people; ranks in the top third of New Jersey cities for small possession arrests in the year preceding the bill taking effect; a crime index of 1000 or higher, and whose unemployment rate is ranked in the top 15% in New Jersey.

  • The legislation creates an Office of Minority, Disabled Veterans, and Women Cannabis Business Development that is responsible for creating policies and procedures for certifying minority, disabled veterans, and woman owned businesses including the formulation of a social equity program designed to ensure that persons from economically and socially disadvantaged communities receive at least 30% of the new recreational retail licenses and 30% new of the medical cannabis licenses. The Office would also be responsible for ensuring that at least 15% of the licenses are provided to minority, disabled veterans or women owned certified cannabis businesses.

  • The legislature requires that 35% of the licenses for each class would be conditional licenses be granted to a significantly involved persons who are New Jersey residents for two years prior to the submission of the application, and the person’s wages during this period must not exceed $200,000 a year or $400,000 a year if filing a joint return. The significantly involved person must own at least 5% of an investment interest or a group of people who own at least 20% and has the authority to make controlling decisions.

  • The legislation requires that 10% of the licenses in each class or 25% of the overall licenses would be designated for microbusinesses. Microbusiness licenses may only be held by persons who have been residents of New Jersey for two years prior to the date the application is submitted. The microbusiness license can also be a conditional license.

  • Local municipalities may elect to prohibit cannabis establishments or certain activities. Local ordinances prohibiting cannabis activities that were adopted prior to the bill’s enactment are null and void. Cannabis activities will be allowed in cities that fail to adopt an ordinance within six (6) months of the Commission’s adoption of the initial rules.

  • The bill authorizes indoor and outdoor consumption areas.

  • A state sales tax of 5.375 percent will be charged on the retail sale of recreational cannabis items. This tax is in addition to the current sales tax of 6.625 percent. Local municipalities may adopt an ordinance to charge an additional 2 percent sales tax on recreational cannabis.