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Highs and Lows as California Regulations Unfold

June 23, 2016 | G. Takagawa

 

 

We knew we were in for a roller coaster ride ahead when the Medical Marijuana Regulations and Safety Act (MMRSA) set forth an ambitious timeline for implementing a comprehensive regulatory framework for California’s cannabis industry. But the past few weeks have really toyed with our emotions, with a return to raids and rallies alongside groundbreaking reaches for equity. A quick recap:

 

  • A raid on CBD Guild (Care By Design and AbsoluteXtracts) in Santa Rosa with $5,000,000 bail set for Dennis Hunter – who was then released without charges within 48 hours

 

  • Oakland passed an equity provision to promote ownership by communities disproportionately affected by the war on drugs, and the Oakland Cannabis Regulatory Commission recommended improvements for implementation

 

  • Placer County, which crafted a pioneering video on the merits of cannabis regulation, reacted to a community backlash by passing an ordinance limiting cultivation to small, personal, indoor grows

 

  • California’s Lt. Gov. Gavin Newsom called for cannabis community to lead campaigning on adult use of marijuana

 

 

Your voice matters. Take action now.

 

California is going through massive changes, and the common thread in these recent events is that activism matters.

 

Our cannabis industry is built on community engagement and advocacy groups. Whatever your interest, experience, or passion, we need you and your friends and neighbors to engage in a dialogue about this plant. Your story could convince a voter or a council member of the merits of medical cannabis, or the logic of legalization.

 

First steps include:

 

  • Find a Facebook group and join the conversation. We recommend the East Bay Cannabis Community for casual convos, and the California City and County Ban Watch for updates on the #banthebans movement as well as ordinance-related news around the state.

 

  • Join cannabis industry groups, and attend events. Here are a few to get started: Supernova Women, Minority Cannabis Business Association, Cal NORML, Marijuana Policy Project, Drug Policy Alliance, Students for Sensible Drug Policy, California Growers Alliance, California Cannabis Delivery Alliance, and more.

 

  • Attend your local city council meetings and talk to your local representatives. This is where activism can translate into policy and regulations. California’s MMRSA requires applicants for state licenses to have a local permit first – so these local conversations are truly the first step to our legitimate industry as of 2018.

 

Will the raid on CBD have a chilling effect?

 

On June 15, armed law enforcement officers raided CBD Guild facilities considered to be a model for extraction facilities in the future under MMRSA. More than three dozen lawmakers and regulators were welcomed by CBD Guild only weeks before, as part of a transparent approach seeking to set industry best practices.

 

Articles abound about the rationale and implications of the raid, with mixed reviews on the likely impact.

 

  • Chris Roberts at SF Weekly believes fierce competition for extraction-based products will limit the impact of any “chilling effect” – but acknowledges industry enthusiasm will be tempered by the raised awareness of the risk of raids.

 

  • David Downs for SF Gate recognizes community activism (hundreds-strong protest, letter-writing campaign, and more) as part of the process of clearing Dennis Hunter, but points to political connections and the MMRSA framework as critical to the action’s success.

 

 

  • Mickey Martin at Reform CA presents a skeptical view of MMRSA, and the damage this raid has done to the trust current operators have in the new regulations.

 

  • Denis Cuff at the Mercury News brings up Livermore's hard line against medical marijuana, as dozens show up outside the Pleasanton courthouse on June 22 to support Chris Phillips (Dabbenport Extracts) and others

 

Special thanks to life-long activist Granddaddy Mike for being a pivotal organizer in the rallies for both Dennis Hunt and for Chris Phillips.

 

 

How can we advance social justice in our industry?

 

At the Minority Cannabis Business Association networking event on June 22 at the Gateway Incubator in Oakland, Sue Taylor reminded us: “The laws are different for us.”

 

For minorities in the cannabis industry, Sue explained, absolute adherence to legalities and following the regulated path is critical to mitigating racial profiling and repressive consequences. After decades of disproportionate impact from the war on drugs, the barriers to entry are much higher for communities of color and individuals with marijuana-related criminal records.

 

  • Jeannette Ward, MCBA Vice Chair and Director of Data & Marketing at MJ Freeway, alerted us to the progress Portland is making, voting unanimously to approve a ballot initiative for a 3 percent recreational marijuana tax with money specifically allocated to supporting economic opportunity and education for communities disproportionately impacted by cannabis prohibition.

 

  • Amanda Reiman, Manager of Marijuana Law and Policy at Drug Policy Alliance and representative of the Oakland Cannabis Regulatory Commission (CRC), brought the audience up to speed on Oakland’s equity permit process, and recommendations from the CRC to broaden the access to these equity permits by communities disproportionately affected by cannabis prohibition – Sign up to the CRC’s newsletter and attend their monthly meetings for more updates.

 

  • Lauren Vazquez, the Fired Up Lawyer, reminded the audience of the critical importance of understanding the regulations in order to protect yourself and your business

 

  • Nina Parks and Andrea Unsworth, owner-operators of cannabis delivery businesses Mirage Medicinals and StashTwist, respectively, and representing SuperNova Women, shared their stories and the shaping of their success through community-building

 

  • Steve DeAngelo, founder of Harborside Health Collective, responded in a Q&A session, reminding us to look to local hiring and training and offering low-barrier programs to enable everyone to enter the industry (such as Harborside’s free cultivation classes), telling us to look forward to the ripple effects of the lawsuit Harborside won against 280E taxation, and demonstrating the powerful effects of mentorship with Sue Taylor’s success

 

  • David Muret from Viridian Staffing followed up the presentations with a small group discussion on what employers are looking for in the cannabis industry

 

Thank you to Charlo Greene (Activist and Host of Charlo’s Place) and Seth Adler (Cannabis Economy) for the top-notch emceeing and moderating.

 

 

 

Despite early leadership, Placer County passes restrictive cultivation ordinance

 

Earlier this year, Placer County launched a groundbreaking video summarizing the reasons why regulating cannabis makes more sense than banning it.

 

Activists across California have shown this video to city and county councils as a key tool for explaining why our communities will be more successful if we #banthebans.

 

Yet on June 21, Placer County chose to pass a very restrictive ordinance – the most restrictive option on the table – allowing only indoor cultivation of up to 50 square feet per patient. The County estimates that this will cost the County $969,000 – versus three commercial cultivation alternatives with permitting fees that would reduce the net county cost to $75,000 without a tax.

 

The 3-2 vote demonstrates the critical importance of engaging our neighbors on the benefits of regulations.

 

Placer County is just one example of the conversations taking place. Follow the Facebook group “California City and County Ban Watch” to find out more about what is happening across the State, and get involved in your own community ordinance.

 

 

AUMA opens doors to educating friends and neighbors

 

In November 2016, California will vote on the Adult Use of Marijuana Act.

 

The cannabis community is divided in opinion on AUMA, in part because of questions over whether or not the initiative goes far enough. Even the authors agree it is not the end goal – but argue that it is a step in the right direction. Having written into the ballot initiative language that allows the legislature to improve (but not regress) on the conversation covered, the authors call for passing the AUMA this year, while also starting the work towards proposing improvements in the next legislative sessions.

 

Regardless of your stance on this or other considerations in the AUMA, the fact that it is on the ballot opens the opportunity to discuss the merits of marijuana with our friends and neighbors. This will lead to a more informed electorate in November, but it also means we can help protect patients by pushing for informed decisions on local ordinance.

 

 

 

 

Expand Your Coincidences: First Annual First Friday Recap

June 23, 2016 | J. Stebner

 

 

Psychiatrist Carl Jung defined “synchronicity” as a phenomenon of energy that occurs with no apparent causal relationship but appears to be meaningfully related.

 

Also described as a ‘togetherness principle,’ synchronicity was in full force at our last event.

Not only did two of our raffle winners share the same unique name, ‘Mandisa’, but the third raffle winner, Dominic, had been the one to introduce them to each other that evening.

 

And even more extraordinary - it was also one of the Mandisa's birthday.

To quote her directly, ‘Truly the best birthday party I never had to plan’.

And welcome to new member of our community Karen who was also a lucky raffle winner!

 

We spent a few minutes chatting with Melodye Montgomery, personal marijuana use consultant in Oakland.  As we gazed mesmerized at the gorgeous glass bowl she was carrying, another community member came up and asked where she had got it. She promptly retrieved the business card of the talented glass blower who created it and just like that, a new connection was made.

 

This is our First Friday Cannabis Community in action.

 

Enjoying and spending time with this plant makes one so grateful for the gift of slowing down, allowing more time to notice and celebrate life’s phenomenal moments.

 

 

Giving Back to Our Community

 

As our group and the cannabis movement evolves, so does the event. We're happy to announce that we have started giving activists, local canna-businesses, and community non-profits a place at First Friday to share what's important to them in this fast-changing landscape.

 

Creative activities are some of the major building blocks of child development.  Our community cause for last month was Youth Spirit Artworks and we were thrilled to receive so many of the essential supplies necessary to help keep these kids inspired and creative.  So necessary in an age where most school curricula are shifting farther and farther from the arts. Thank you!

 

 

Missed our event? You can still help.

 

Youth Spirit Artworks are still looking for the following items to be donated:

-- Silkscreen inks primary colors
-- Drawing paper
-- New paint brushes (all sorts)
-- Blank new white tee shirts all sizes
-- Coffee for percolators (1-2 lb containers)
-- Sugar
-- Non dairy creamer
-- Plastic utensils (forks, spoons, knives)
-- Paper plates
-- Paper napkins
-- Paper cups

 

You can contact them by clicking on Youth Spirit Artworks. Thank You!

 

 

We are connected by meaning.  Our common goals of helping and healing our shared communities bring us together, and through our shared experiences and insights we are synthesizing new realities.

 

Creating new businesses and imagining futures colored by our own dreams and imaginations. This is real. This is Oakland. The power of the people and the resources are here. By gathering we are better able to support each other and our businesses and continue to prop each other up.

 

It just keeps getting better each time.

 

Mark your calendars for July 1st and we’ll see you back at the lake.

 

 

Join our Facebook community!

 

 

 

Why cash is still king in cannabis

June 10, 2016 | J Stebner

 

 

Have you ever made a large purchase with cash? Did you feel nervous or awkward? Did the cashier or retail associate give you a strange look? Maybe they held the higher denomination bills up to the light and then marked them with a special pen.

 

Most of us find debit or credit cards more convenient than cash, especially for large purchases. It is also often safer, reducing the risks of theft and physical assault.

 

However, in the cannabis industry, cash is the only option.

 

Since the Controlled Substances Act passed in 1970, cannabis has been listed as a Schedule 1 drug – meaning the federal government claims it is marked by a high potential for abuse and has no accepted medical use in treatment in the United States. As such, it is an illegal substance and those caught in possession or found to be dealing in it can be subject to the harshest penalties usually reserved for violent criminals.

 

Because of this, the Bank Secrecy Act of 1970 (BSA) applies to all transactions involving marijuana, whether medical or not. The BSA requires all financial institutions in the U.S. to assist government agencies in detecting and preventing money laundering. To do this, the BSA requires banks and businesses to keep records of cash purchases, report deposits of more than $10,000 a day and report any suspicious activity by bank clients that may signify money laundering, tax evasion or any other criminal activities. All cannabis businesses are considered, at the federal level, to be trafficking illegal drugs, and as such cannot have legal banking access or legal, above-board debit or credit transactions.

 

So how do we solve the problem of cannabis and banking? How do we prevent these new businesses from exposing themselves to the risks of armed robbery and endangerment of patients and other community members?

 

On February 14, 2014, the federal government took steps forward with the Cole Memo and the FinCEN (Financial Crimes Enforcement Network) guidelines. These documents provide guidance to attorneys and law enforcement regarding the enforcement of the Controlled Substances Act as it relates to marijuana-related conduct and the potential financial crimes it could precipitate.

 

These guidelines do not change the federal law, but they do offer a way for financial institutions to support the nascent cannabis industry. Reports show that, increasingly, banks and credit unions are beginning to open these accounts – at a steep cost.

 

The Cole Memo and FinCEN guidelines are intended to protect public safety and to ensure financial services are only provided to legitimate cannabis businesses. That means vetting, due diligence, and close oversight for both the cannabis businesses and the financial institutions supporting them.

 

Verifying state licensing and registration. Background checks. Developing an understanding of the normal and expected activity. Reviewing publicly available sources for any negative information about the business or any of its related parties. Monitoring for suspicious activity identified by FinCEN, and submitting appropriate Suspicious Activity Reports.

 

Filing Suspicious Activity Reports, in three flavors:

 

  • Marijuana Limited: The financial institution reports that a customer is working in the cannabis industry but has not violated state law or any of the Cole memo priorities, and is operating in accordance with the FinCEN guidelines.

 

  • Marijuana Priority: The financial institution files this upon suspicion of a marijuana-related business violating state law, a Cole memo priority, or the FinCEN guidelines.

 

  • Marijuana Termination: The financial institution reports that the marijuana business not playing by the rules, and the institution is terminating the financial services in order to maintain an effective anti-money laundering compliance program. The FinCEN guidelines encourage this financial institution to alert other financial institutions of potential illegal activity.

 

With these stringent requirements for reporting and monitoring, in some cases account executives at financial institutions that could normally handle at least 100 accounts are instead only able to keep up with the compliance standards for two. As a result, fees and rates skyrocket – and often, a few months later, an executive at the institution decides the risk is too high or the compliance costs too much and the institute closes the account.

 

Back to cash.

 

But that isn’t the end of the story. Some pioneering cannabis businesses are navigating the banking maze, in different ways in different states. Over the next few months, we will dig into the details of some innovative banking strategies that financial institutions throughout the United States have come up with to help local cannabis businesses begin normalizing their relationships with the banking world.

Finding a Dispensary Location in Arizona

June 10, 2016 | G Takagawa

 

This summer's license allocation in Arizona is driven in part by a desire to limit the number of patients who are able to home grow – or in other words, those who are at least 25 miles away from a dispensary.

 

The initial license allocation using Community Health Analysis Areas (CHAAs) did a great job at accomplishing this goal, but Arizona allows dispensaries that have been open for three years to move. As a result, Arizona is seeking to ensure that patients continue to be covered by dispensaries and cannot begin to grow cannabis at home.

 

How does this look in practice?

 

Here are the steps the Arizona Department of Health Services (ADHS) will follow in order to allocate dispensary registration certificates this summer:

  • ADHS will release a list of 31 CHAAs, with one dispensary registration certificate available in each. This list will be based on qualifying patient population

 

  • Applications must be complete and compliant to be considered

 

  • Of those complete and compliant applications, each will be scored solely on the nearby number of patients and dispensaries:
    o [Total qualifying patients] divided by [the number of existing dispensaries plus one for the proposed dispensary], all within a 10 mile radius of the proposed location

 

  • If the top applicant is tied or within 0.1 percent of one or more other applicants, DHS will hold a lottery to select the winning applicant

 

  • If the top applicant has a score 0.2 percent or higher more than the next best applicant, the top will win the license – no lottery required.

 

Take a look at that formula again:

 

[Total qualifying patients] divided by [the number of existing dispensaries plus one for the proposed dispensary], all within a 10 mile radius of the proposed location

 

Here's the example ADHS uses:

 

For example, if the proposed dispensary location is within 10 miles of one operating dispensary, the number of qualifying patients who reside within 10 miles of the proposed dispensary location will be divided by 2. If the proposed dispensary location is within 10 miles of two operating dispensaries, the number of qualifying patients who reside within 10 miles of the proposed dispensary location will be divided by 3.

 

In other words, this allocation process prioritizes dispensaries that serve patients not already served by a dispensary.

 

Location, location, location.

 

Remember that the landlord or property owner at the time of application submission must sign a form verifying approval of property use for a marijuana business.

 

Local ordinance also applies, and may have additional requirements, such as zoning or distance from existing marijuana facilities.

 

Once the Arizona Department of Health Services (ADHS) releases the list of CHAAs, competition for real estate will become even more fierce. This list is anticipated on June 16, 2016.

Will 2016’s progress at the state level drive federal cannabis reform?

June 10, 2016 | G Takagawa

 

Not yet halfway through 2016, but already halfway through the States.

 

With governors in Louisiana and Ohio both signing new medical cannabis laws into force this week, 26 of the 50 states have now legalized cannabis for medical use.

 

Yes, we still have the plant’s Schedule 1 status to contend with, and all its associated challenges with banking, research and risk. But, on other contentious issues from women’s suffrage to abortion, our nation has tended to change its mind following a flurry of state activity:

 


via Bloomberg (2015)

 

Although there are no guarantees, 2016 could be that year for medical cannabis. We have Pennsylvania and Ohio – two major new markets – passing medical cannabis laws. Louisiana, Illinois, and New York are working to fix their existing medical cannabis laws and increase the patient population. Texas established the first laws with a workable way for a physician to “prescribe” instead of “recommend.” Arizona and Delaware are expanding their networks of medical cannabis dispensaries. In our own backyard, California, the nation’s biggest medical cannabis market, is rapidly evolving from nebulous legality into a structured system shaped by local ordinances.

 

This year has also seen strides for social justice. Oakland established the first equity provision of its kind, requiring that at least half of all new marijuana business licenses in the city must qualify under equity conditions. Oregon will be automatically expunging all records for drug offenses involving marijuana within the last 10 years, and providing refunds for fines and fees along with reparations for pain and suffering from incarceration for these offenses.

 

A new poll found that 89 percent of US voters support medical cannabis, and 54 percent in favor of cannabis for adult use.

 

And while the progress so far has been substantial, later this year more than a handful of states have prospective cannabis ballot initiatives for November 2016, either for medical or recreational legalization:

  • Verified on the ballot: California, Florida, Maine, Nevada
  • Potential others: Arizona, Arkansas, Massachusetts, Michigan, Missouri, North Dakota

Will 2016’s progress at the state level drive federal cannabis reform? Only time will tell.