News Nuggets – December 2018

Bay Area

Nevada Officials Tour Cannabis Lounges in San Francisco

Sen. Tick Segerblom and six other lawmakers from Nevada toured Harvest and Barbary Coast cannabis lounges on Nov. 19 in San Francisco. The group of officials included Nevada  Assemblymembers Steve Yeager, William McCurdy, Daniele Monroe-Moreno, Chris Brooks and Sarah Peters, as well as North Las Vegas Councilmember Isaac Barron. The purpose of the tour was to gather insight into how Nevada lawmakers might tackle handling cannabis lounge rules and regulations. “Setting the standard!” Barbary Coast posted on social media regarding the lawmaker visit. “We hope eventually every medical and recreational state will adopt ordinances for consumption lounges, it’s the only way!” Segerblom introduced several statewide attempts at regulating consumption lounges in Nevada, but earlier attempts failed to clear the Nevada Assembly. A Las Vegas city ordinance could be introduced to city council soon and sent to a recommending committee as soon as early December.

Quarterly Tax Report Indicates Cannabis Industry Shortcomings

According to the latest quarterly numbers released on Nov. 14 from the California Department of Tax and Fee Administration (CDTFA), cannabis tax revenue increased in the state, but fell short of industry projections. “The California Department of Tax and Fee Administration reported increased revenue numbers today for cannabis sales for the third quarter of 2018,” the report reads. “Tax revenue reported by the cannabis industry totaled $93.1 million for thirrd quarter returns received through Oct. 31, 2018, which includes state cultivation, excise and sales taxes. It does not include tax revenue collected by each jurisdiction.” The state also collected $52.4 million in excise tax, $12 million in cultivation tax and $28.7 million in sales tax. But according to the Legislative Analyst’s Office, the numbers for the first six months of 2018 reflected over $100 million below earlier forecasts.

Colorado

Longmont Welcomes First Recreational Dispensary

Terrapin Care Station, Longmont proper’s first recreational cannabis dispensary, opened on Nov. 19. The city of Longmont reversed a cannabis dispensary moratorium in September 2017, allowing existing Colorado dispensaries to apply to operate in the south Boulder area. On July 2, city officials announced that Terrapin Care Station was one of four applications approved. To better its involvement with the local community, Terrapin has gotten involved in five local nonprofit groups including Out Boulder County, Longmont Community Justice Partnership, Centennial State Ballet, Homeless Outreach Providing Encouragement (HOPE) and The Reentry Initiative. Longmont City Council officials are welcoming Terrapin and are thrilled with the company’s participation in the city’s wellbeing. “Terrapin looks forward to a positive and healthy relationship with the Longmont community, and as we continue to plant local roots, we hope to forge a long-lasting partnership with our friends and neighbors,” Terrapin CEO Chris Woods stated in a company news release. The Boulder-based store chain officials are excited to expand their services to more people in the county they started in.

Record-Breaking Cannabis Sales Recorded in Colorado

Undoubtedly, 2018 will mark a record-breaking year for cannabis sales in Colorado. From Jan. 1 through June 30, combined recreational and medical sales in the state generated over $1 billion and $200 million in tax revenue, according to the Marijuana Enforcement Division’s 2018 Mid-Year Update. The progress report shows the growth or decline of the industry during each year. Colorado’s total cannabis sales increased by 1.4 percent during the first six months of 2018, when compared to the first six months of 2017. With numbers and a pace like this, the Centennial State is on pace to break its existing record of $1.5 billion in annual sales by the end of the year. In terms of weight, and comparing the same six-month periods, total pounds of flower sold increased from 30,769 to 35,865. Some of the most compelling figures come in regards to edibles and concentrates; edible sales grew 13.8 percent and concentrate sales grew 94.6 percent during those same first six months of the year, proving their popularity and demand in the industry.

Los Angeles

Malibu Voters Approve Recreational Cannabis Regulations

On Nov. 6, Malibu voters approved Measure G by 70.09 percent, implementing a 2.5 percent general tax on gross receipts for non-medical cannabis businesses. It also permits existing medical cannabis dispensaries to sell and deliver recreational cannabis. “This will allow, regulate and tax the adult use of marijuana and also allow home delivery,” said Arnold G. York, publisher of The Malibu Times. “Marijuana is here to stay and in medical cases, it’s a much maligned but very useful drug for cancer patients and others.” Measure G Co-author and 99 High Tide Collective Co-owner Yvonne DeLaRosa Green sadly lost her home to wildfire damage, just days after the bill’s historic passage. The measure will allow Green and others to tap into the recreational market and potentially increase profit margins. The measure could also bring $75,000 to $150,000 in tax revenue to the city annually.

Judge Strikes Down Portions of Flawed Fontana Cannabis Ordinance

On Nov. 9, Judge David Cohn of the San Bernardino Superior Court struck down most of the sections of Ordinance No. 1758, stating the Fontana City Council had overstepped its bounds. The judge struck the bill down because under the ordinance, certain adults would be restricted from growing cannabis at home, even though Proposition 64 clearly states that any California resident 21 years of age or older is permitted to grow six cannabis plants at home. Fontana residents would have to apply for a permit and pay $411.12 for something that is already legal. “The issue in this case is how far a city can restrict the category of persons who are entitled to grow marijuana plants and the circumstances under which they may grow the plants without running afoul of the [state’s] requirement that regulations be reasonable,” said Judge Cohn. “The city of Fontana has gone too far.”

Michigan

Judge Places Hold on Pending Cannabis Cases 

On Nov. 7, the day after Michigan voters approved Proposal 1 legalizing recreational cannabis, 63rd County Judge Jeffrey O’Hara announced that he will be putting cannabis cases on hold for the time being. One man and two women were among the first defendants in Kent County to have their cases handed back to prosecutors. All three cases were adjourned. “Given the fact that the voters voted yesterday regarding the issues of marijuana, the court is going to enter a plea of not guilty in regard to this matter, and I’ll have you speak with an attorney and a prosecutor, and we’ll go from there,” stated Judge O’Hara. Kent County Prosecutor Chris Becker said he is not sure what to do yet with the pending cases. Even if the defendants end up getting convicted, their charges could be expunged by Gov.-elect Gretchen Whitmer, who appears to take a soft stance on cannabis.

Michigan State University Rules Won’t Change Following Passage of Proposal 1

Michigan State University (MSU) issued a formal statement on Nov. 12 indicating that the university’s cannabis policies will remain intact even though voters recently approved adult-use sales. Michigan voters passed Proposal 1 with 56 percent approval. “ . . . the new state law will not change University of Michigan policy or federal law, both of which prohibit the possession and use of marijuana on university premises, and in the conduct of university business away from campus,” the statement read. The statement was written by Denise Maybank who serves as vice president and associate provost of Student Affairs and Services, Vennie Gore, vice president of Auxiliary Enterprises and Sharon Butler, associate vice president of Human Resources. Concern of an increase in cannabis consumption has led some institutions like MSU to take preventative measures to discourage cannabis consumption on campus.

Oregon

Falling Prices Drive Recreational Cannabis Sales

Due to excessive overproduction, prices for recreational cannabis in Oregon have dropped 50 percent while sales have soared, according to a recent state analysis released on Nov. 14 by the Oregon Office of Economist Analysis. The retail cost of cannabis dropped from $15 in 2015 to $7 in 2017, which in turn precipitated a surge in recreational cannabis sales. But analysts are more concerned about other products than common flower sales. “The real economic impact from recreational marijuana will come not from the growing and retailing, which are low-wage and low value-added market segments,” economists wrote in the financial forecast. “It will come from higher value-added products like oils, creams, and edibles, in addition to niche, specialty strains.” Despite the falling value of cannabis grams, the cannabis industry continues to generate a robust revenue stream thanks to the state’s sheer volume of cannabis sales.

Oregon Liquor Control Commission Releases Punishments for Six Businesses

Members of the Oregon Liquor Control Commission (OLCC) met on Oct. 26 and approved fines and punishments for six Oregon recreational cannabis businesses that were caught violating compliance regulations. “At its monthly meeting October 26, 2018 the Commissioners of the Oregon Liquor Control Commission approved the following fines and/or marijuana license suspensions based on stipulated settlements,” the OLCC report reads. Five of the six businesses received temporary suspensions and fines, and the sixth business license was revoked. Cannabis & Co, Head Stash Horticulture, Cannabis Corner, Headwater and Way High 101 received suspensions lasting 30 days to 55 days, plus hefty fines ranging from $4,950 to $9,075. Oregon Bud Works, found guilty of 10 violations, received the harshest punishment and unfortunately must surrender its recreational cannabis producer license. The OLCC routinely screens Oregon cannabis businesses for potential violations.

San Diego

Chula Vista City Council Approves Recreational Cannabis Tax Bill

After Chula Vista voters approved Measure Q during the midterm elections, the Chula Vista City Council officially approved the results on Nov. 27. The bill allows the city to adopt an ordinance to regulate recreational cannabis manufacturing, cultivation and testing companies, as well as dispensaries and delivery services in the city, and it imposes a tax scheme ranging from five to 15 percent of gross receipts. “The tax measure would impose an excise tax, in an amount and form yet to be determined, on all Commercial Cannabis Businesses,” Ordinance No. 3446 reads. “In the event the proposed tax measure is not approved by the voters, or is suspended or invalidated for any reason, the provisions of this ordinance permitting Commercial Cannabis Businesses shall be void without any further action required by the city.” The bill allows up to eight dispensaries in the city, and if and when the city reaches the limit, four additional delivery services can be added on top of that.

Washington

MJ Freeway Still Working on Seed-to-Sale Issues

Washington cannabis businesses continue to struggle with the industry’s traceability software, Leaf Data Systems. After MJ Freeway released Leaf Data Systems with some critical issues, the Washington State Liquor and Cannabis Board (LCB) gave the company until Nov. 6 to fix the glitches, but it has yet to deliver an improved product. Jeannette Horton, vice president of Global Marketing & Communications for MJ Freeway, told CULTURE that the software is working, and it’s just a matter of fixing a few glitches. “There have been numerous enhancements and improvements to the Washington Leaf Data Systems platform over the last year to bring licensees and regulators a better system for the growing Washington cannabis market,” Horton said. The LCB contracted a third-party firm, Garner Consulting, to issue a report on the persistent issues between the two parties, which found both parties liable. Hopefully the new year will bring a resolution to these issues, and cannabis businesses will have access to a fully-functioning traceability software system.

LCB to Improve Cannabis Testing Requirements

In October, an organization hired by the Washington State Liquor and Cannabis Board (LCB), called Patients United, released the Washington State Department of Agriculture’s lab test results on cannabis from recreational stores. The tests, which contained data from March 2017 to July 2018, indicated that 43 percent of samples contained either banned pesticides or illegal amounts of legal pesticides, with some of the tests showing cannabis containing over 90 times the allowable limit of pesticides. Up until now, pesticide testing was not a requirement unless a complaint was made, but the LCB is looking to make it mandatory along with a few other testing requirements. “Yes, we opened the [Preproposal Statement of Inquiry] CR-101, which is the notice of intent to make rules. Requiring testing for pesticides will be part of that rule making,” said Brian Smith, the LCB communications director. In addition to mandatory pesticide testing, the new rules propose mandatory potency testing, heavy metal testing and several other testing-related rule updates.

National

New York Health Department Releases Medical Cannabis Report

The New York State Health Department issued its latest two-year report on the state’s medical cannabis program on Nov. 14. The report outlines recommendations including allowing doctors to prescribe cannabis at their discretion and allowing doctors who can prescribe controlled substances to become registered providers. It also recommends initiating a pilot study to explore insurance coverage for medical cannabis. “New York’s Medical Marijuana Program has grown quickly since its launch almost three years ago,” said Health Commissioner Dr. Howard Zucker. “Nearly 81,000 certified patients and more than 2,000 registered practitioners are now participating in the program. The recommendations in the two-year report are part of the continuous work to improve the quality of this program to help New Yorkers who are suffering from serious and debilitating conditions.” The report also recommends making amendments to promote research and allowing third-party contractors to work as security officers.

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