Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Possibly the biggest news this week was the first ever Congressional hearing on cannabis banking.  From the hearing’s webpage, you can watch the hearing, read the committee’s memorandum and read the witnesses’ prepared statements.   The committee memorandum has a great graphic of state marijuana laws – only three states allow no marijuana consumption in any form.

And speaking of state laws, several jurisdictions are moving forward with some form of legalization.  A full legalization bill was introduced in the Illinois legislature; a full legalization bill was passed out of a Senate committee in Hawaii; a House committee in New Mexico has passed another such bill, but more committees will need to weigh in before the full chamber votes.

In New York, those in favor of legalization are pushing for changes to Gov. Cuomo’s bill introduced last month.   And the City of Baltimore has decriminalized marijuana possession, even though recreational cannabis is not legal in the state of Maryland.

Although no bill has yet been introduced, the Lt. Governor of Pennsylvania meanwhile has embarked on a listening tour to gather input on whether that state should legalize.

And the federal bill with the easy-to-remember number has now been introduced in the Senate.  S. 420 is a companion bill to H.R. 420 introduced last month.

One of the arguments used in favor of legalization is the amount of sales (and sales tax) generated by legal cannabis.  Colorado is looking at $6 billion in sales in 2018, and Oklahoma‘s medical marijuana program saw over $4 million in January 2019.

Since people are starting to throw their hats in the ring for the 2020 Presidential election, here’s the first in what will doubtless become a series: “Where the Candidates Stand on Marijuana.”  Kamala Harris (D-CA) has indicated that she is in favor of legalization.

And finally, the Massachusetts marijuana industry may be getting some publicity from an unlikely source: billboards in Connecticut.

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Let’s start off this week’s post with some international news.  The World Health Organization is recommending that cannabis should be removed as a controlled substance under international treaties.  The recommendations will come up for a vote in March of this year.

Banking for the cannabis industry is a subject we watch closely.  In California, it’s been revealed that a credit union has surreptitiously (until now) been providing financial services to several marijuana businesses for the past year.

Turning our attention to the Midwest, which does seem to be the latest hotbed of cannabis activity, we find that Ohio medical marijuana sales have been very strong.  Illinois is now allowing those prescribed opioids to obtain temporary certification for medical cannabis.  Yet another indication that full legalization is in the cards?

Following up on our Tennessee coverage, the legislature is now considering validating out-of-state medical marijuana cards for use in the Volunteer State.  And Arkansas has now licensed 32 medical cannabis dispensaries, with sales possible by April.

New York looked as if it was on the verge of full legalization, but that may have changed.  Governor Cuomo’s budget does not include any additional money for law enforcement dealing with a new set of circumstances after legalization.  We’ll keep our eye on this situation, obviously.

And finally, if you had to pick a stock ticker symbol for a cannabis company, could you do any better than POT?

 

Cannabis and CBD-driven business format franchising is coming.

Franchising in the United States has deep historical roots in a nearly endless array of industries, from Benjamin Franklin’s Franchise-esque Printing Business to the Singer Sewing Machine’s profit-share model (1851) to Martha Matilda Harper’s Creation of the Modern Franchise with the Harper Method – all sixty-plus years before Ray Kroc created the World’s best-known franchise.

Where business innovation has happened in the U.S., franchising has soon followed: the early automobile industry was promptly followed by the first franchised car dealerships (General Motors, 1898), with the first drive-in restaurant franchises right on their back bumper. Innovative franchise giants like Coca-Cola (1899), A&W Root Beer Stands (1925), Kentucky Fried Chicken (1930), and Howard Johnson Restaurants (1932) paved the way for new industries to grow through franchising, like retail automotive parts (Western Auto, 1909), car rentals (Hertz, 1925), dance studios (Arthur Murray, 1938), carpet cleaning (Duraclean, 1940s), and tax preparation (H&R Block, 1956). The most popular industries for franchising today include childcare, senior care, business opportunities (think ATMs and vending machines), cleaning, recruiting, and tutoring services.

And so naturally, with the dawn of a new $150 billion global industry, more than a few cannabis entrepreneurs are likely to test out franchising as a business growth model. At least one Cannabis company is already trying it out in the U.S., and franchise opportunities are available in Canada as well. Cannabis dispensaries are where it will start, but we expect to see cannabis roll out in a number of other franchised businesses as well, whether in retail (accessories, core products, ancillary products such as cosmetics and body rubs), or in restaurants, home health care, and pet care, for starters. Given the landscape where these franchisors will plant their seeds, success will depend not only on the quality of the system, branding and thought leadership, quality and integrity of products, but just as much upon franchise experience and savvy, and a creative and knowledgeable legal team.

The cannabis industry is fertile ground for franchising. It’s a fresh open market, and so the competition for growing brand recognition and market share is wide open. New emerging brands with pipe dreams of being “the Starbucks of weed” will compete to accelerate growth, and there’s no faster way to grow your own (brand) than a nationwide business format franchising program. Proprietary products (think custom strains of plant, proprietary edible products, and the like) will provide valuable intellectual property ripe for national distribution. And entrepreneurs who are jonesing to get into the field will be lining up for turnkey systems and consumer-loyal brands to get them started, without the time investment, equipment and property overhead, or expertise necessary for a full farm-to-pipe grow operation.

But the legal landscape is very complex for the would-be cannabis franchisor or franchisee.

First and foremost, cannabis, including for medical use, is still categorized as a Schedule I drug under the federal Controlled Substances Act (21 U.S.C. § 811). And while the Department of Justice has not prioritized prosecuting cases involving use that is legal under conflicting state laws, that could change virtually overnight, leaving the franchisor and franchisee not only in danger of losing their business, but their freedom as well. A budding franchisor may be willing to take that chance in hopes that the federal government will legalize, but it’s a big gamble for franchisor and franchisee alike, and perhaps not worth it to a prospective franchisee with safer options.

Even where the franchisor is willing to take a chance within its own state, federal law enforcement would not likely be willing to look past the (rather public) transportation of cannabis and many related products across state lines, even between two contiguous legalized states. Thus a franchisor who sought to franchise outside of its home state would face a dilemma: maintain consistency of product through interstate distribution but at tremendous legal peril, or risk brand inconsistency by not distributing from a central grow facility.

Perhaps the biggest challenge to any cannabis business is the reluctance of most banks to serve the cannabis industry. Because of the federal prohibition, banks that accept cannabis industry money risk violation of federal money laundering and other laws. While individual businesses may be able to work around this challenge by using local banks, running cash-only businesses, and perhaps the eventual institution of state-backed banks or the establishment of private cannabis banking, interstate transactions (such as payment of a franchise royalty) would necessarily risk implicating federal law, opening the franchisor and franchisee to potential criminal liability and even seizure of funds.

Additional questions and challenges await the franchisor, such as the application of federal franchise disclosure laws to the federally prohibited business, and how to properly disclose business and legal risks under state and federal disclosure laws. Under these laws, franchisors are required to provide prospective franchisees with a prescribed franchise disclosure document (“FDD”), in which the franchisor must provide information about a variety of aspects of the business, including risks and laws that will apply to the franchised business. The franchisor will need to rely upon experienced and creative franchise attorneys to artfully craft the document in a manner that satisfies the legal requirements, adequately informs the prospective franchisee, and mitigates against potential legal risks.

And there are dozens of other industry-unique questions that will arise: franchisors and their attorneys will have to start from scratch in designing the franchise system, training and operations manuals, advertising materials, and supply channels. Risk will be shared between franchisors and franchisees, and only a carefully crafted franchise agreement will prevent the parties from throwing each other under the bus if the law comes knocking. And with legalization will come regulation, perhaps including strain-specific and branding intellectual property battles (who “owns” the trademarks to names of strains? are new hybrid strains patentable?), product safety regulations, and labeling restrictions.

Given the expected growth of the cannabis industry and the entrepreneurial hunger surrounding the “Green Rush”, it’s just a matter of time before pioneering brands emerge as the franchise leaders in the industry. We’re probably just a few years from knowing who had the right combination of risk acceptance, creativity, system quality, creative legal support, and luck to become the household names in the industry.

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

One of the states we  thought might legalize in the near future was Illinois.  The Cook County state’s attorney has come out in favor of cannabis legalization and the expunging of misdemeanor offenses.  That prediction is looking pretty solid.

Another state we’ve been watching is Minnesota.  We don’t think they’re likely to be the next state to legalize in the Midwest, but new legalization legislation (try saying that three times fast) has just been introduced.

Meanwhile, on the East Coast, the governor of New Jersey has added opioid addiction to the list of conditions that are eligible to be treated with medical marijuana.  And the governor of Pennsylvania, seeing the trend towards legalization in nearby jurisdictions, is talking about recreational cannabis.

In our latest installment of “Places You Wouldn’t have Guessed Are Talking about Legal Marijuana,” West Virginia lawmakers are considering an adult-use cannabis bill.  Granted, its passage is a long shot, but they’re talking.  Plus, medical marijuana legislation is being drafted in Kansas, and decriminalization has been introduced in the Tennessee legislature.

In the city of Baltimore, marijuana possession will no longer be prosecuted.  And that’s regardless of the amount or the criminal history of the possessor.

And in news that brings cautious optimism to those in the cannabis industry, Attorney General nominee William Barr has indicated, in writing, that he will not be going after marijuana businesses in states where they are legal.  He has not stated that he will re-instate the Cole Memorandum, but promises to look into that question if confirmed.

 

 

 

The 2018 Farm Bill lifted the ban on hemp, creating a lot of buzz about products derived from hemp, including hemp-derived CBD oil.

Although this creates an exciting market opportunity for veterinarians and members of the pet industry, some important issues still need to be resolved.

Passing the Farm Bill did not legalize “pot for pets” — but it does mean pets can enjoy the benefits of CBD derived from industrial hemp. Continue Reading Pets and Pot: Cannabis and Pet Products

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Arizona’s medical marijuana sales jumped a whopping 41% in 2018 – sales are estimated to have been $400 million.  Not chump change by anyone’s standards.

Regular readers will doubtless recall that Arkansas’ medical marijuana program was off to a sluggish start.  They have finally issued the first dispensary licenses and cultivation sites are now all under construction.

Connecticut is looking to legalize marijuana – a new legalization bill has just been introduced.  New England is rapidly giving the West Coast a run for its money as a leader in cannabis legalization.

Turning our attention to the Caribbean, Puerto Rico marijuana businesses are now without a banking option.  Not surprisingly, those in the industry are concerned about the safety issues inherent in operating in a cash-only environment.  Meanwhile, in the U.S. Virgin Islands, medical marijuana is now legal.  The hope is that this may spur additional tourism.

CBS has announced that it will not air a medical marijuana ad during the Super Bowl.  One wonders if this is the kind of decision that will provoke laughter in years to come.

And finally, if you’re a furloughed federal worker, check out the website offering free cannabis.

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Although most people following AG Nominee William Barr’s hearing before the Senate Judiciary committee may have been listening for his views on the Mueller investigation, those of us with an interest in marijuana were wondering how he feels about legalized cannabis.  In an apparent break from his predecessor, Jeff Sessions, Barr said he would not go after cannabis companies.

In other federal news, Rep. Earl Blumenauer (D. – Oregon) has introduced a new bill (H.R. 420, of course) that would legalize marijuana nationwide.

And in yet another sign that marijuana is becoming more mainstream, the Cannabis Trade Federation has hired 15 lobbyists to argue for major new cannabis legislation.  Because you’re not really a legit industry until you have lobbyists.

The governor of New York has a plan for marijuana legalization.  No new legislation has yet been introduced.  Rhode Island, meanwhile, perhaps feeling surrounded by its larger neighbors and their embrace of cannabis, is looking, albeit reluctantly, at legalization as well.

In Midwestern marijuana news, dispensaries have opened in Ohio, the new governor of Wisconsin has announced plans to begin legalizing medical cannabis, and a group in Minnesota is pushing for marijuana legalization there.  The slogan “Fix pot holes with pot taxes” may resonate in an area with long winters.

Finally, a beer company in South Africa is looking to capitalize on the recent legalization of marijuana in that country.  Poison City Brewing is pushing its latest Durban Poison cannabis beer into the market.

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

The big news this week is that the governor of Washington is going to issue pardons to those convicted of misdemeanors involving marijuana.  Known as the Marijuana Justice Initiative, the program has limitations on who is eligible for the pardon but is expected to effect over 3,000 citizens.

Further down the West Coast, times are changing in California.  This week marked the end of the state’s unlicensed medical marijuana dispensaries.  They had been allowed to operate as medical cooperatives for a year after the issuance of guidance from the Bureau of Cannabis Control, but as of January 10, they need to get permits.

Meanwhile, is there a border skirmish going on involving Oklahoma and Arkansas?  Arkansas’ medical marijuana program is two years old, but no licenses have yet been issued to patients or dispensaries.  Patients interested in purchasing cannabis had been looking to neighboring Oklahoma, whose seven month old program has already issued multiple dispensary licenses and seemed eager to accept Arkansans as customers.

So what’s the hitch?  Customers from out of state need to have valid licenses from their own state in order to be able to buy marijuana in Oklahoma.  Happily, this week, Arkansas has issued licenses to medical marijuana dispensaries in the state.  But (and isn’t there always a but?), the governor of Arkansas has warned patients that transporting cannabis across state lines is still a crime.

In other Oklahoma news, the governor has given her OK (no pun intended) to new rules for medical marijuana edibles.

And in a new segment we’re calling, “Places You Wouldn’t Have Guessed Are Talking About Legal Marijuana,”  our first spotlight shines on Idaho, South Carolina, Kentucky and Virginia.  Clearly, it’s a big spotlight.

Finally, in a mash-up of cold brew and cannabis, one Missouri coffee company has a new product.  We at WIW are a bit confused as to exactly what this concoction is supposed to do.  To quote from High Times,  “Many have pointed out that the merger combines two substances with what may seem like contradictory effects, given CBD’s reputation as a relaxer.”

That’s all for this week – see you next Friday!

 

Texas is joining the states weighing whether to expand legalized uses of marijuana, with state legislators filing almost a dozen bills related to marijuana use in advance of the legislative session, which began on January 8.  (In Texas, the state legislature meets biannually for a 140-day session.)  Texas first established a limited compassionate use program for medical marijuana in 2015, and three dispensaries are currently in operation under that program.  However, due to limitations in the conditions for which medical cannabis can be prescribed, less than 1,000 people have been able to avail themselves of the program. (Under the Texas compassionate use program, in order to receive a legal prescription for low-THC CBD oil, a patient must (i) have intractable epilepsy, (ii) have already failed at least two other legally prescribed therapies and (iii) have approval from two state-recognized specialized neurologists.)

Certain bills would expand the list of conditions for which medical cannabis can be prescribed, including glaucoma, cancer, Alzheimer’s, autism, Crohn’s disease and PTSD.  Another bill, which would institute more sweeping changes, decriminalizes possession of less than one ounce of marijuana.  The Harris County (which contains the City of Houston) District Attorney’s office, has, for the past year, experimented with a diversion program for individuals who possess less than four ounces of marijuana.  Individuals who participate in the program, which was created by the county because of expenditures on enforcement efforts with a limited public safety benefit, can avoid arrest, court dates or criminal records if they agree to participate in an education program.  The prospects for these bills remain uncertain given the lack of support from key state leaders, particularly Governor Greg Abbott and Lieutenant Governor Dan Patrick, who leads the Senate.

Additional uncertainty remains given that cannabis remains a Schedule I controlled substance under federal law.  The Obama administration Department of Justice (DOJ) had shown some flexibility on state efforts to legalize uses of cannabis; however, Trump Attorney General Jeff Sessions rescinded that guidance.  With Sessions’ resignation in November 2018, and the AG position currently vacant, it is unclear what the future will hold, although a return to the more flexible Obama-era policy is unlikely.

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Welcome also to a new year of Week in Weed; after the many cannabis-related events of 2018, one can only imagine what will be occupying our attention in 2019…

This week, saw the release of a disappointing report on the possibility of cannabis banks in California.  Not feasible, as they would face insurmountable hurdles.  Read the full report for yourself here.

Meanwhile, in Florida, the procedure for licensing medical marijuana businesses has come under question.  In addition to the constitutional issues, the dispute between the Department of Health and a circuit court judge centers around how many licenses can be issued and whether vertical integration should be required.  Stay tuned for more on this issue, as the case has been appealed.

And in Massachusetts, a state Senator has plans to introduce legislation that would prevent employers from firing workers for off-duty cannabis use.  We’ll be keeping our eyes on this as well.

After Michigan legalized marijuana, we speculated that Illinois or Wisconsin might be next.  A state that seems unlikely to follow their neighbor’s lead is Indiana, where the governor is not a fan.

One big state that hasn’t made a move on cannabis is Texas.  Could that change in the new year?  Only time will tell.

In international news, St. Vincent and the Grenadines has decriminalized marijuana.  And what about Ireland?  They’ve made noises about legalizing medical marijuana before; could 2019 be the year?

We’ve got a lot to look forward to in 2019 – see you next Friday!