New York lawmakers failed to pass any cannabis legislation before the session adjourned on Wednesday night, including their “plan B” – broad decriminalization for possession by adults, the Adirondack Daily Enterprise reports.
“I was asked earlier this week on a radio show if I would settle for decriminalization as a backup, and I said I keep fighting and only ‘tend to give up on hour 20 when there’s four hours left in the session.’ We have now reached ‘hour 20.’ – New York Gov. Andrew Cuomo (D) to the Daily Enterprise
The bill was met with strong resistance by the New York State Sheriff’s Association, the New York State Parents Teachers Association, a statewide physicians lobby, drug treatment advocates, and Smart Approaches to Marijuana – the latter of which spent $10,000 on anti-cannabis billboards in the state and $14,500 on anti-legalization lobbying efforts during the session.
The decriminalization bills introduced at the 11th hour would have allowed criminal records for low-level cannabis-related crimes to be expunged, but lawmakers also failed to pass that bill. Another measure to expand the state’s medical cannabis and hemp programs were never brought to the floor for a vote.
Democratic state Sen. Liz Krueger, the bill’s primary sponsor, said the Democratically-controlled legislature had come “close to crossing the finish line” but “ran out of time.”
“I have no doubt that prohibition is an outdated and irrational policy, and its days are numbered,” she said to the Daily Enterprise.
The bill’s failure to pass was the result of disagreements by lawmakers regarding local control and how the revenues derived from the industry would be spent. The state’s session reconvenes in January.
Colombia’s Constitutional Court has ruled parts of President Iván Duque’s 2017 Police Code are unconstitutional, including the ban on public cannabis consumption, according to an L.A. Weekly report. The ruling effectively legalizes public cannabis use in the South American nation.
Cannabis, and other illicit drugs, were decriminalized in Colombia seven years ago and medical cannabis use was made legal three years ago, but recreational cannabis use is still outlawed. Under the medical cannabis law, Colombians can grow up to 20 plants but there is otherwise not a legal consumer market.
Senator Gustavo Bolívar indicated that the ruling was based on “technical legislative errors” rather than a desire to change the law 2017 law.
“The Police Code was put into effect in 2017 as a political attempt to limit and punish cannabis usage after medical use was approved, and many portions of its code are considered onerous and unjustified.” – Bolívar, to L.A. Weekly
In 1994, the nation’s Constitutional Court ruled that punishing drug use violates the right to privacy, an individual’s autonomy and the free development of personality,” which are guaranteed under Article 22 of the United Nation’s Declaration of Human Rights.
“A law can not create general restrictions on freedom; it must be specific regarding time, place and circumstance and subject to reasonableness and proportionality,” the ruling states.
President Duque said while he “accepts and respects” the court ruling, “the free determination of personality is not above the free determination of drug addiction.” He added that police would continue imposing penalties and confiscating cannabis “even if doses are considered legal for personal use.”
The Colombia Legislature convenes today and the report indicates that many expect the body to tackle legalization legislation.
Health Canada’s new regulations for cannabis edibles, extracts, and topicals set THC caps for food and drink products at 10 milligrams per package and 1,000 milligrams per package for concentrates and topical products.
The packaging rules for edibles forbid the products to be “appealing to young persons” or make any health or nutrition claims. Producing edibles and cannabis in the same facility is also banned to “ensure the safety and integrity of Canada’s food system,” the regulations state.
For extracts, producers are prohibited from using some flavors that would appeal to children and teenagers and from using “sweeteners and colorants, or ingredients that could increase the appeal of cannabis extracts.”
Topical packaging is also banned from including “any claims respecting health or cosmetic benefits on the label.”
Dana Larsen, a legalization activist, and cannabis retailer, called the 10-milligram limit “the equivalent of selling alcohol only in little airline bottles to stop people from getting too drunk.”
“We are treating cannabis 10,000 times more severely than alcohol, which is clearly the greater risk to health and public safety. … All these little portions individually wrapped is really going to create a lot of extra packaging and waste.” — Larsen, to the Vancouver Sun
Larsen added that he has some cancer patients who use 500 milligrams via cannabis suppositories per day and “no one wants to put 50 things up their butt.”
A Deloitte study earlier this month estimated the market for the new products in Canada could reach as high as $2.7 billion and that edibles would comprise the lion’s share of that figure at $1.6 billion.
The new rules take effect Oct. 17; however, Health Canada indicated that products would likely not be available in stores or online until mid-December. Licensed retailers will need to seek an amendment to their licenses to sell all of the new products.
The Minnesota hemp farmer who is suing the state over a cease and desist order has been charged with two felonies and one gross misdemeanor after his seized crops tested 10 times higher for THC than the legal limits for hemp, the Twin Cities Pioneer Press reports.
Luis Hummel, owner of 5th Sun Gardens is charged with drug sale and two counts of drug possession in Fillmore County. The criminal charges stem from a traffic stop, during which a county sheriff’s deputy seized hemp-derived products from the driver who indicated they were from Hummel’s farm.
According to the criminal complaint outlined by the Pioneer Press, the driver told the deputy that the products were illegal. The complaint also alleges that Hummel told authorities that he tries to make his hemp products more like cannabis products to “entice the buyer” and that THC levels in his hemp products go up when they are concentrated.
Hummel received the cease and desist letter on May 1 informing him that he was being removed from the state’s industrial hemp pilot program and his license had been revoked for a year. The letter also ordered him to destroy his entire crop. Hummel contended that the individual stopped was not charged with possession and the letter was premature because the products had not violated tests for high levels of THC.
Paul Johnson, president of the Minnesota Hemp Farmers and Manufacturers Association, said Hummel’s crop had tested within the 0.3 percent threshold for hemp when it was evaluated by state regulators. He said the case underscores the need for more specific regulations regarding hemp production, noting that THC levels often rise when hemp is concentrated.
“My concern is that again, it shows how the regulation is not contemporaneous with what is really happening.” – Johnson, to the Pioneer Press
Hummel’s lawsuit against the state argues that the cease and desist and order to destroy the crop violated his due process rights. Hummel had estimated his business is worth $3.5 million.
The Ohio-based Cleveland School of Cannabis has expanded into Columbus, marking its first physical expansion after opening two years ago, Crain’s Cleveland reports. The expansion comes three months after the school reported it had tripled its revenues after running in the red for its first 18 months.
The CSC is the only state-approved cannabis school in the state, offering both in-person and online courses in horticulture, dispensaries, and medical applications of cannabis; there is also an “executive” program that combines all three.
In March, the school reported they had graduated 111 students and that another 115 were enrolled in programs. According to the school, 70 percent of its graduates are employed in the industry. According to a CNBC report, cannabis industry wages are 11 percent higher than the national median and job openings rose 76 percent from December 2017 to December 2018.
In March, CEO Austin Briggs indicated that the employment rate for graduates might be higher if students were willing to move but many were waiting for jobs to open up closer to their homes.
In Ohio, the first medical cannabis dispensaries opened in January but the program has been marred by delays and, currently, just four of the state’s 40 licensed medical cannabis processors are operational. Last month, state sales figures showed medical cannabis sales in the state had topped $5.8 million, selling more than 750 pounds of flower to the state’s more than 30,000 patients.
Briggs said the school plans on expanding out of Ohio by 2021, naming New Jersey and Florida as possible destinations.
Nearly two-thirds of California military veterans reported using cannabis to treat chronic pain, anxiety, post-traumatic stress disorder, depression, and insomnia instead of prescription medication, according to a study published in the American Journal of Drug and Alcohol Abuse outlined by the Mercury News.
The study was conducted by researchers from the Department of Veterans Affairs, Harvard Medical School and the University of Pennsylvania, surveying 93 veterans who received donations of medical cannabis from the Santa Cruz Veterans Alliance. Seventy-nine percent reported using cannabis to treat both mental and physical symptoms; most of the veterans enrolled in the study – 85 percent male – indicated they preferred smoking cannabis; just 16 percent said they used concentrates. About half said they preferred high-THC cannabis rather than high CBD.
“Given that cannabis use is associated with a much lower dependency potential and risk of overdose compared to other substances with a risk of misuse, this finding could suggest a positive impact of reduced barriers to medicinal cannabis access among veterans.” — Excerpt from the study, published on May 28
Nearly 70 percent of veterans reported using cannabis for chronic pain; 66 percent used it for anxiety; 59 percent for PTSD; 56 percent for depression; and 51 percent for insomnia.
Another 63 percent said they used cannabis to replace “any substance”; while 47 percent said they had replaced prescription medications with cannabis. Thirty percent replaced alcohol with cannabis and 24 percent said they had replaced tobacco with cannabis; another 12 percent of veterans said they used cannabis as a replacement for other illicit drugs.
“Results of the current study suggest that military veterans with reduced barriers to access cannabis could be making both helpful and harmful choices regarding their cannabis use,” the study concludes. “These findings suggest that more guidance on the selection of cannabis-based products in this population is warranted, particularly as barriers to medicinal cannabis access are reduced.”
Seth Smith, Santa Cruz Veterans Alliance’s vice president of communications and public affairs, said the research confirms what the organization has “been seeing on the ground for … coming up on a decade … veterans are not only finding benefits from using cannabis medicinally, but are also using it to replace pharmaceutical drugs that they are being given by the V.A. that they find harmful or more dangerous.”
New York Gov. Andrew Cuomo is pushing for cannabis legalization as the end of the state’s session nears and lawmakers appear close to striking a deal, New York State of Politics reports.
On Sunday, legislative leaders introduced a legalization measure that does not include a regulated market – similar to what Vermont lawmakers passed last year – but Cuomo prefers the state “do it all together.”
“I don’t think we should do one component now and then come back and do another component. Let’s just do it. We’ve talked about it, let’s make the hard decisions and let’s make them now.” – Cuomo, in a WAMC interview, via NY State of Politics
The major issue, Cuomo said, is for local governments to be able to opt in, or out, of allowing cannabis industry operations.
“What level – is it just county or is it local government?” Cuomo said during the interview. “If a county opts in, must all local governments be included? Second option, it’s the locality that opts in, not the county. … I think there’s a balance we have to achieve here, but I don’t think we can roughshod over local governments, nor should we.”
According to the report, lawmakers appeared close to striking a deal on Friday, but they could not come to an agreement on the details of local control or how the revenues derived from the industry would be spent.
The legalization plan included in Cuomo’s budget – which was ultimately pulled after legislative leaders pushed back – would have sent the monies to a ‘Marihuana Revenue Fund’ after enforcement costs and earmarks for drug treatment programs.
Cannabis compliance company MJ Freeway has rebranded as Akerna after merging with MTech Acquisition Corp. and will begin trading on the NASDAQ today. It will trade under the KERN and KERNW symbols and is the first such company to list on the exchange.
“As legalization of cannabis expands across the world, we believe it is imperative that businesses, patients, consumers, and governments have the tracking and compliance technology they need to make informed decisions and comply with applicable regulations. We believe Akerna is well suited to meet these needs with the ability to scale rapidly across the world and offer a robust and innovative platform for growing industry demands.” – CEO Jessica Billingsly, in a press release
Following the merger, former MJ Freeway equity holders will own approximately 62.7 percent of Akerna’s outstanding shares of common stock, former MTech stockholders will own 27.7 percent of Akerna’s outstanding common stock, and the investors in MTech’s previously-announced private placement that closed concurrently with the business combination own approximately 9.6% of Akerna’s outstanding shares of common stock.
Scott Sozio, CEO of MTech, said compliance solutions “will underpin the industry’s rapid growth, and serve as a backbone for sustained success.”
“We are very pleased to close this transaction and look forward to capitalizing on the substantial operating and financial benefits we believe the combination will create,” he said in a statement. “From here, we believe we are well positioned to pursue our acquisition strategy to drive transformation for future growth in the regulatory technology sector.”
To date, MJ Freeway, which launched nine years ago, has tracked over $15 billion in cannabis sales. In 2017, the company’s seed-to-sale software suffered two outages which forced companies to keep sales records manually. The company has also encountered issues and delays while implementing its tracking software in Washington state.
Medical cannabis company Columbia Care has launched its own credit card for patients in New York, with plans to offer the card next in Illinois, the Chicago Tribune reports. Company CEO Nicholas Vita said the service was necessary because the all-cash nature of the industry is “like 1974.”
“We’ve seen what happened when we introduced access to this capital, and it has a huge impact in giving patients access to the products they need and want,” he said in the report.
The company is working with financial institutions in the 12 states it operates to offer the card, which has no fees but a 15.99 percent annual percentage rate — the national average for credit cards in 17.73 percent.
During the card trials in New York, Columbia Care found that customers spent 18 percent more when using the credit card, Vita said, adding that it allows patients who have to travel long distances to a dispensary make less frequent visits. Vita indicated that having a credit card for cannabis purchases also helps normalize the industry.
The all-cash nature of the cannabis industry is nothing new. Cannabis is a Schedule I drug according to federal law, which prevents many financial institutions from serving the industry, including credit card processing services. Morgan Fox, spokesperson for the National Cannabis Industry Association, called it an issue that has “plagued” the sector.
“Since people have been looking for viable alternatives, people have been trying to fill that gap in lieu of better federal policy.” — Fox, via the Tribune
There is a bill in Congress to allow canna-businesses to access financial services without fear of reprisal by federal law enforcement and regulators; however, Idaho Sen. Mike Crapo, the Republican who chairs the Senate Banking Committee, has indicated he may not allow the SAFE Banking Act a hearing in the chamber.
Some states with legal cannabis programs are working toward normalizing banking for the industry on a state level. West Virginia is currently seeking a bank to serve its medical cannabis industry while California’s Senate last month approved legislation to create state-chartered banks to work with both medical and recreational cannabis businesses.
In an op-ed in the Daily Press on Saturday, Virginia Attorney General Mark Herring called for cannabis decriminalization in the state, asserting that prohibition “is needlessly creating criminals and burdening Virginians with convictions.”
Herring points out that arrests for low-level cannabis possession in the state have increased by about 115 percent from 2003 to 2017 — from 13,000 to 28,000 — and the number of first-time cannabis convictions along have also spiked from 6,500 in 2008 to 10,000 in 2017. Herring said prosecutions and incarcerations associated with cannabis criminalization cost the state $81 million annually “in addition to the staggering human and social costs.”
In the editorial, Herring cites a Virginia Crime Commission, which found that African-Americans represent 46 percent of all first-time cannabis possession arrests made in the state despite only comprising 20 percent of the state’s population. That report estimates that 10,000 arrests could be prevented if Virginia decriminalizes cannabis.
“So what does a more rational, just, and equitable cannabis policy look like in Virginia? It’s a question that will require thought, consideration, and input from a wide range of stakeholders, but the time is right to begin working toward legal and regulated adult use.” — Herring, Daily Caller op-ed, June 15
Herring joins Gov. Ralph Northam in advocating for cannabis law reforms in the state. Northam has previously pushed for state-wide decriminalization and, as Lt. Governor, wrote a letter to the Crime Commission pointing out that the $67 million the state spends per year on cannabis enforcement could create 13,000 pre-k openings.
There are currently two bills in the Virginia Legislature to tax and regulate cannabis sales; both remain in Committee for Courts and Justice.
The University of Connecticut is bringing its cannabis horticulture class online after more than 400 students — less than half of those interested — enrolled in the on-campus section last semester, the Hartford Courant reports. The online class, Horticulture of Cannabis: from Seed to Harvest, will be available to students nationwide.
The class focuses primarily on hemp cultivation but also focuses on the biochemistry of cannabinoids. UConn Professor Gerry Berkowitz noted that the course is the first of its kind to be offered online by a U.S. university and that, currently, similar classes are only available through for-profit companies. He indicated that many of those classes are not evaluated by an independent, third-party or supported by peer-review science.
“It’s [the online class] all about trying to bring rigor and scholarship to growing cannabis — to understand the basis for why we can and cannot say that applications of this compound, this technique is working, and the basis for all that is we’re trying to have hard science.” — Berkowitz, to the Courant
Berkowitz recommends that students interested in the class have some background in science-related fields; about 100 students dropped the on-campus class last semester after, perhaps, finding it too difficult. He called the current research on cannabis “a complete dark room,” noting that private companies often don’t publish their research and “the government funds nothing” related to cannabis.
He hopes to split the class into introductory and advanced sections next spring and that, along with his colleagues, the college could offer a course on the extraction of organic materials.
The U.S. Postal Service has updated its Hazardous, Restricted, and Perishable Mail regulations to clarify that hemp – and CBD – products are legal to mail so long as the products comply with local laws and compliance records are maintained.
In April, the U.S. Hemp Roundtable, an industry association, sent a letter to the USPS seeking clarification to the agency’s rules regarding hemp. The organization had included proposed criteria for demonstrating the mailing is compliant, including a signed, self-certified statement that indicates the legality of the products, and test results.
“Once the 2018 Farm Bill is fully implemented, and states begin to propose plans, it is expected to further modify the conditions under which hemp and hemp-based products may be transported.” – USPS, Publication 52 Revision: New Mailability Policy for Cannabis and Hemp-Related Products, June 6, 2019
Private delivery services have their own policies in place. According to the UPS website, the company will ship hemp products that are not in plant form, including CBD products, but “will not accept shipments containing hemp products from any location that sells marijuana or marijuana products.”
FedEx includes “hemp plants, hemp leaves, hemp oil, hemp seed oil and CBD derived from hemp” on its prohibited items list.
The USPS changes come as federal agencies begin to reassess their policies in the wake of last year’s Farm Bill, which removed hemp from the Controlled Substances Act. In April, the U.S. Department of Agriculture released guidance for importing hemp seeds, while earlier this month the Food and Drug Administration held its first-ever hearing on CBD products — the agency, however, did not announce any policy updates.
Texas Gov. Greg Abbott has signed the hemp legalization legislation that also allows CBD production and sales. The measure was unanimously approved by both legislative chambers, passing the House in April and the Senate in May.
Agriculture Commissioner Sid Miller told the Dallas Morning News that he was “excited” about the reforms, which he called “another tool for farmers that are looking to diversify their farming.”
“Texas will be a leader in hemp production, and we will be submitting our plan and writing rules to follow the 2018 Farm Bill and the law recently enacted in Texas.” – Miller, via the Morning News
The bill’s passage comes nearly two months after the Texas Department of State Health Services removed hemp from its dangerous drugs list.
The reforms require farmers to pay a fee for cultivation licenses and for THC content lab tests. The state can inspect registered farms to ensure they are complying with the law. While the law takes effect immediately, it’s unlikely that the state plan will receive USDA approval for this growing season.
The Department of Agriculture is responsible for overseeing the farms and issuing licenses to grow the crops while all products make for human consumption in the state will be regulated by Texas Health and Human Services.
Texas joins several other states, including Iowa, Connecticut, Hawaii, and Florida, in legalizing hemp production following the passage of the 2018 Farm Bill, which removed hemp from the federal Controlled Substances Act. That law requires state plans to get USDA approval; however, the agency has not yet approved any state-submitted plans.
The Cincinnati City Council voted on Wednesday to decriminalize possession of up to 100 grams of cannabis within city limits, the Cincinnati Enquirer reports.
The day after the approval, the plan was criticized by Gov. Mike DeWine.
“I don’t think it’s a great idea,” the Republican governor said of the plan to the Enquirer. DeWine also reiterated to the paper that he is “against legalization” of cannabis.
“Some people look at marijuana as just some benign drug, and it’s really not,” he said in the report.
Once the ordinance becomes law, Cincinnati will be the fourth municipality in Ohio to decriminalize cannabis possession, following Dayton, Toledo, and Norwood. Cincinnati Mayor John Cranley has indicated he would not veto the bill.
Under state law, possession of fewer than 100 grams is a misdemeanor, punishable by a $150 fine. Possession of 100 to 200 grams is a jailable misdemeanor offense, and possession of more than 200 grams is a felony in the state. State law does supersede city law; however, police officials told the Enquirer that they would use the city law in prosecutions.
The City Council could consider another proposal by Councilor David Mann that would decriminalize smaller possession amounts. Other council members are working on local legislation to expunge low-level cannabis crimes.
Counselor Christopher Smitherman said that cannabis laws predominately target the city’s African-American communities and create a “permanent underclass.” Smitherman indicated that if his plan is rejected by the council, he would start a ballot initiative petition to put the issue to voters.
Colorado’s cannabis industry has raised $1 billion in revenue for the state since legal sales began in 2014, according to state data. To date, cannabis tax, license, and fee revenues is just over $1.02 billion and cannabis sales are over $6.56 billion.
There are currently 2,917 licensed cannabis businesses in the state along with 41,076 individuals licensed to work in the industry.
In a statement, Gov. Jared Polis (D), noted that cannabis revenues help fund public school construction, programs to prevent youths from consuming cannabis, and public health and safety programs.
“Today’s report continues to show that Colorado’s cannabis industry is thriving, but we can’t rest on our laurels. We can and we must do better in the face of increased national competition. We want Colorado to be the best state for investment, innovation and development for this growing economic sector.” – Polis, in a statement.
Tista Ghosh, Colorado Department of Public Health and Environment’s chief medical officer, indicated that more than 50 communities have received cannabis-derived funds to expand local efforts to prevent youths from using cannabis.
“Today, more adults know the laws around retail marijuana, more parents are planning to talk to their children about the risks of marijuana use, and most young women know the danger of marijuana use during pregnancy and breastfeeding,” she said in a statement.
According to Department of Revenue figures, from January to April more than $522.5 million worth of cannabis has been sold in the state and January marked the highest sales in the state since legalization for combined medical and recreational markets.
Nevada has become the first state to prohibit employers drug testing applicants for cannabis use on a pre-employment drug test, according to an ABC News report. The law, however, does not apply to people seeking public safety jobs, emergency medical technicians, or firefighters.
An amendment to the bill was also added to allow pre-hiring drug testing for operators of motor vehicles or other jobs that “in the determination of the employer, could adversely affect the safety of others.” The caveat was added following objections to the proposal by the Nevada Trucking Association.
Gov. Steve Sisolak, a Democrat, called those exceptions “common sense.”
“As our legal cannabis industry continues to flourish, it’s important to ensure that the door of economic opportunity remains open for all Nevadans.” – Sisolak in a statement, via ABC News
Assemblywoman Nina Neal (D), indicated that she sponsored the legislation because the ballot initiative approved by voters to legalize cannabis in the state “said it needed to be treated the same as alcohol.”
“I felt like we needed to have a policy to deal with it because we had a significant amount of people using on the weekends,” Neal said in the report.
Sisolak also signed legislation to create a Cannabis Compliance Board and Cannabis Advisory Commission in an effort at “reforming and strengthening” the state’s legal cannabis industry and ensure “the economic opportunities it creates are available to all Nevadans,” according to a press release from the governor’s office.
“Our marijuana industry is now a key part of our state economy, and to make sure it stays that way, we must hold it to the highest standard while empowering the industry to continue thriving,” Governor Sisolak said in a statement. “Nevada’s first-ever Cannabis Compliance Board will ensure this critical part of our state’s economy is positioned to become the gold standard for the nation.”
Researchers in China have found evidence that cannabis was used in mortuary rituals as early as 500 B.C, according to a study published Wednesday in the journal Science Advances. The researchers’ analysis also suggests that the ancient population might have been selectively cultivating cannabis high in THC for their burial rituals, perhaps for mind-altering purposes.
The team found 10 wood brazier fragments at a burial site but noted that their “immediate use was not clear.” After using gas chromatography-mass spectrometry on the wood fragments and burnt stones lining the burial site, they found higher levels of CBN – a cannabis biomarker.
“THC is the most potent psychoactive component in cannabis, but it readily decomposes and oxidizes into CBN if exposed to air, light, or heat. CBD, another biomarker of cannabis, is not psychotropic, and cannabis with a high THC content often contains a low level of CBD,” the researchers explain in the study. “The cannabinoids detected on the wooden braziers are mainly CBN, indicating that the burned cannabis plants expressed higher THC levels than typically found in wild plants.”
They added that wild cannabis plants would contain “relatively equivalent amounts of THC and CBD” and that evidence of CBD degradation were undetected in the burning residues.
“Modern perspectives on cannabis vary tremendously cross-culturally, but it is clear that the plant has a long history of human use, medicinally, ritually and recreationally over countless millennia.” – Robert Spengler, an archaeobotanist at the Max Planck Institute for the Science of Human History, who worked on the study, via the New York Times
The study authors also suggest that their discovery might imply “that the ritualistic ‘smoking’ of cannabis was gradually popularized from the elite class to the common people in the eastern Pamirs in China at least 2,500 years ago,” since those buried at the plot do not appear to be of the upper class.
Despite federal hemp reforms last year, many CBD-focused companies throughout the U.S. still lack basic financial services, such as business bank accounts and credit card processing. The problem, it appears, is less with federal policies (although CBD remains a thorny issue with the Food and Drug Administration and Department of Agriculture) and more with financial institutions unwilling to serve the industry, which they consider “high risk.”
Banks back away
Many of the industry operators interviewed for this piece pointed to the sudden decision by U.S. Bank subsidiary Evalon to stop providing merchant services – namely credit card processing – to CBD businesses in March after they started serving the industry last fall.
All entrepreneurs new to the industry pointed to the federal changes, which they believe to have given them the green light to open their CBD business.
Kyle Rapoza, the co-founder of Vermont-based Mansfield Provisions, which distributes online and through retailer partnerships, lost his credit card processing services on May 31, when Evalon banned the industry. He explained that, in the wake of Evalon’s action, many of the industry operators he knows and does business with are moving back to high risk (and high fee) accounts. Fortunately, Rapoza has been able to access more traditional business accounts through a state credit union.
“We didn’t have an e-commerce website a year ago because it was 10 percent fees and the accounts were in Amsterdam, which is kind of sketchy,” he said in a phone interview with Ganjaprenur. “We have processors asking us for $10,000 in an escrow account plus 10 percent of monthly transaction fees.”
Prior to getting credit card processing services in February, Mansfield sold online by accepting checks and money orders and has since moved back to that system as the company tries to find a replacement for Evalon. Rapoza said the company had “built a pretty good following” with their mail-order system and he prefers to wait it out than pay the high fees. He thinks Congressional action, namely the SAFE Banking Act, will pass and solve the problem; however, he recognizes that CBD is still considered a controlled substance to the feds.
“It’s definitely frustrating right now considering how easy it was two weeks ago,” he said, adding that his small, regional, company has lost between $1,000 to $2,000 per week since they lost credit card processing services.
A “high-risk” industry
Don Andrews, owner of Upstate CBD in New York’s Capital Region, which he opened just last month, said that while he has banking access, he has no way to take credit cards at his fledgling business.
He said that a company had installed a credit card machine at the location and “everything was all squared away,” but when he went to make his first credit card sale it kept getting declined. The credit card processing company explained that due to his high-risk business they would not process credit cards but customers could still use debit cards; however, the processor is gutting Andrews with near-8 percent per transaction rates.
He said that while his customers have been understanding – and many do get cash at an ATM across the street – “a lot of people live off of credit and that’s what they want to use and they’re forced to not buy anything.”
Andrews is considering getting an ATM on-site to serve his customers while he continues his search for a credit card processor – or move his CBD business (he also owns two head shops) to all cash.
“The credit card processing company said I was ‘good to go with credit cards, good to go with debit cards, locked in at 3 percent.’ Now it’s a whole ordeal – the percentage rate went up and they’re not accepting credit cards at all,” he said in an interview. “I wish I had known this before setting it all up.”
Many CBD companies can no longer process credit card payments via online or brick-and-mortar stores. Photo credit: Pixabay
In California, Sister Kate, real name Christine Meeusen, of Sisters of the Valley has been without banking since May. While they are still able to process credit cards via their website, they have no bank account in which to deposit the funds, which remain with the credit card company.
In an interview, she said the California Tax Authority and the Internal Revenue Service told her to “switch to cash.” She said that at least one bank she contacted would approve her for a business account if she kept a $60,000 minimum balance which would be charged 3 percent in fees on that balance annually along with a $2,000-per-month “compliance fee.” Sister Kate said she is actively looking for banks in states with no medical or recreational cannabis program which, she thinks, plays a role in the sweeping denials.
Since the loss of banking, Sister Kate described her business as “torpedoed to the bow” adding that she and her order cashed in all of their savings and retirement to keep the business afloat while she waits on “over $100,000” from the credit card companies that are holding her funds until she is able to open a business account.
“We were doing about $4,000-a-day going into this and we are doing about half of that now,” she said in a phone interview, adding that the banking issue is compounded by a recent decision by Merced County officials to ban hemp production.
“It’s irritating not to get the tools and services that everyone else gets,” she explained. “It makes me mad. … I’ve been applying to banks who say they’ll serve our industry and the underwriters don’t let them serve our industry.”
Sister Kate fears that if she doesn’t get access to banking services soon, she’ll “have to put the business down.”
Startups struggle, entrepreneurs reconsider
And it’s not just entrenched small-business owners whose businesses have been negatively impacted by canna-bias of financial institutions – some would-be entrepreneurs are ready to open shop but can’t access either banking or credit card processing, or both.
Lekisha Leonard, owner of Milwaukee, Wisconsin-based Future Leaf Organics, an online CBD store, has been unable to start sales via her online shop because she cannot find a credit card processor. In the meantime, she is accepting orders via Paypal and plans on using e-check processing so she can get the business off the ground. Leonard explained that in addition to being a CBD company – one that’s registered with the state’s hemp program – some merchant services won’t provide her accounts because she’s a startup.
Leonard had been rejected for business accounts by two traditional banks “due to high risk,” she said, but was approved by an online bank, despite their policies to not serve businesses that offer “marijuana derivatives.” She said that while she did expect some pushback from financial institutions, she considers her businesses health and wellness, rather than cannabis.
“My take on it is that CBD is not a derivative of marijuana, it’s part of the hemp plant,” she said during a phone interview. “My products do not contain any THC in them at all.”
The experience so far has Leonard reconsidering whether she wants to open a brick-and-mortar location. She noted that she has started other businesses – in the real estate and transportation sectors – and did not face the same trials.
“The challenges I am facing right now with merchant services and banking – it’s just like, I hope this won’t be an issue,” she said, adding that she has attempted to get business loans for the expansion but would have to procure them as personal loans.
In Grand Rapids, Michigan, April Moayyer is “one-click” away from launching her CBD online store, Shah Saffron, but has been unable to find a merchant services provider. She was able to find banking services through Chase bank, but their merchant services won’t provide credit card processing services.
“It’s crazy. If you’re going to market yourself as CBD-friendly – be consistent,” Moayyer said in an interview. “Don’t tell me I can open a checking and savings account and then drop me when I tell you what I am selling. You’ll take my money but not process my payments? Be full-service.”
Moayyer indicated she had contacted 13 merchant service providers in the day preceding the interview and one – Square – said they do serve CBD businesses but the program is an invite-only beta. She said that two other companies approved her business, but the rates were either “outrageous” or getting them set up could take at least three months.
“Rates like, 7 percent interest, plus 30 cents per transaction, plus $200 per month,” she explained. “I feel like some companies are just taking advantage blatantly.”
Cannabis and hemp companies alike face heavy scrutinization from banking service providers despite federal so-called protections. Photo credit: Rory Savatgy
Even in states with recreational cannabis sales, CBD businesses are being shut out of financial services.
Irene Shen, a California entrepreneur trying to launch a web-based CBD business, said opening a bank account was “the first thing” she thought she’d be doing but is “pretty stuck there.” She said she spent “several weeks” trying to find a bank that would serve her – targeting small regional banks – to no avail.
“When I called them they would just say ‘Oh, no, no no,’” she said in an interview. “They just start having this tone with you, ‘That’s against federal law, we don’t do that.’”
Shen ultimately got in touch with MMJ Fin Sol – a firm that connects canna-businesses with banking and financial services – hoping to get an account. She said that the firm found her a bank, but the lengthy application process is still under review. Shen admitted that part of the reason banks have, so far, refused her business is that she’s a one-person startup but she hasn’t shopped any business loans.
Moreover, Shen said, that one CBD supplier that she spoke with told her to identify her company as health and wellness and not mention CBD but she hesitates to do anything duplicitous and would rather remain “above board.” She admits that she felt safe to open the business after the passage of the Farm Bill, but pointed out that a San Francisco CBD store was ordered by city health officials in March to remove all of its edibles from its shelves due to FDA regulations. Shen added that the FDA hearing “just added more confusion” to the federal policy on hemp and CBD products.
Instead of having ordered products from her suppliers, Shen is still waiting on getting a business account set up so she can make those payments.
40,000 companies affected
Philippa Burgess, co-founder and director of marketing for MMJ FinSol, said that the banking-for-CBD issue is “confusing,” noting that she has been told by representatives from national chain banks that they accept CBD and hemp clients, “but don’t advertise it,” but then corporate officials from the same institutions say CBD “is not part of their risk matrix.”
Burgess estimates that Evalon’s policy changes affected 40,000 CBD companies. Adding to the confusion, Burgess said, is that the federal Financial Crimes and Enforcement Network issued a memo allowing banks to serve state-approved canna-businesses – so it’s not federal policy keeping the banks away from serving the industry, so much as the banks themselves. (Banks mentioned by the those interviewed for this story were contacted and none returned requests for comment.)
“People start a CBD business and believe they can go to their local bank and they can’t,” Burgess said in an interview. “So, there are a number of banks across the country, but they don’t advertise, and they don’t want to be rushed. They tend to want to keep it lowkey, so they prefer partnerships like ours.”
Jonathan Miller, general counsel for Kentucky-based industry association Hemp Roundtable, said it’s a “difficult time” for the industry as it related to financial services, which he called “the biggest challenge in the industry right now.”
“The law, we believe, is clear that since the [Farm Bill] that hemp and CBD are no longer controlled substances,” he said in an interview. “There should be no concern whatsoever that there would be violations of federal law to engage in commerce. … Unfortunately, there is a lot of misinformation – it’s banks, it’s credit card companies, it’s merchant services that have been refusing to do business with these hemp and CBD companies.”
In Kentucky, which has neither medical nor recreational cannabis programs but its hemp industry receives strong support from the likes of Sen. Mitch McConnel and Agriculture Commissioner Ryan Quarles, Miller said the industry faces the same setbacks as some places throughout the country which might not be as pro-hemp.
Miller explained that in his role as counsel for Kentucky hemp companies, he gets “a call-a-day” by farmers and business owners who can’t access financial services. He said he calls the companies directly to encourage them to provide services to the sector.
“We’re trying on every front to handle this issue because it really is impinging on commerce in this, very legal, area,” he said.
The California Court of Appeals for the Third Appellate District has overturned the convictions of five men for possessing cannabis while in prison, according to a Courthouse News report. While the ruling effectively legalizes cannabis possession in prison by inmates in California, smoking or ingesting cannabis while incarcerated is still a felony and prisons are still allowed to ban it.
“According to the plain language of Health and Safety Code section 11362.1, enacted as part of Proposition 64, possession of less than an ounce of cannabis in prison is no longer a felony. Smoking or ingesting cannabis in prison remains a felony and prison regulations forbid possession.” – Justice Vance W. Raye, The People v. Goldy Raybon
Prosecutors in the case had attempted to argue that because consumption remains illegal that possession is also illegal; however, Raye contended that “argument flies in the face of the plain language of the statute and common sense.”
The defendants in the case were only charged with possession of cannabis and not accused of consuming or smuggling it into the prison. Decriminalization under Proposition 64 preempts conflicting statutes, the court ruled, including the 1949 law that bans “illicit substances” from prisons – and cannabis is no longer an illicit substance in the state.
The court called back to a 2006 case, People v. Harris, when the defendant was accused of smuggling in cannabis-infused wafers and olive oil when he surrendered to authorities for an unrelated crime. In that case, the court ruled that Harris was a qualified medical cannabis patient in the state and had a right to possess the products.
However, neither the Harris ruling nor the Raybon ruling change prison regulations regarding cannabis possession in prisons.
“Just because the electorate no longer characterizes possession of small amounts of cannabis as felonious conduct does not preclude prison authorities from banning possession to maintain order and safety in the prisons and other penal institutions,” Raye wrote.
Associate Justices Ronald B. Robie and M. Kathleen Butz concurred with the decision.
The Oregon Legislature has passed a bill allowing cannabis to be exported to bordering states with legal cannabis programs, Oregon Public Broadcasting reports. The measure passed the Senate 19-9 last month and the House yesterday by a 43-16 margin.
The bill includes one looming restriction – it requires federal government approval before cross-state sales can commence. Under the law, Oregon companies would be able to export their products to Washington state, California, and Nevada, which have all legalized cannabis for recreational use.
State Rep. Ken Helm (D), said that Oregon Democratic Sen. Ron Wyden has already drafted federal legislation for the state to get the permission required under the bill to begin exporting cannabis products to its neighbors.
“This is another instance in which Oregon can be a leader and be poised to take advantage of rational rules around the cannabis market,” Helm said in an OPB interview.
Republican state Rep. Carl Wilson called the measure a “strategic business approach.”
“It correctly assesses the industry’s strengths and foresees a time when export turns Oregon’s oversupply in a constrained market into a traded commodity in a national marketplace.” – Wilson, via OPB
Two years ago, the state passed a law forbidding cannabis exporting or importing. Nevada’s adult-use law prohibits importing of cannabis products and California’s law doesn’t “authorize or permit a licensee to transport or distribute, or cause to be transported or distributed, marijuana or marijuana products outside the state, unless authorized by federal law.”
A February report by the Oregon Liquor Control Commission found that the state has 6.5 years of cannabis oversupply based on current demand. Last month, the House passed legislation to implement a two-year moratorium on cannabis licensing due to the OLCC findings. That bill has yet to be considered by the Senate.
The export bill moves next to Gov. Kate Brown (D) for her signature.
Researchers in Australia are set to study the efficacy of CBD as a treatment for veterans suffering from post-traumatic stress disorder, the Australian Broadcasting Corporation reports. The year-long trials will be conducted in coordination with Cannabis Access Clinics and health and wellness firm BOD Australia.
The researchers hope to enroll 300 veterans for the trial. Lead researcher Dr. Sharron Davis said that traditional treatments do not always work for PTSD and the researchers must be able to show the Therapeutic Goods Administration that the study participants “have tried everything conventional medicine has to offer.”
“I would like to see CBD-only oil reclassified — it has no psychoactive effects whatsoever.” – Davis, to ABC
BOD Australia spokesperson Jo Patterson indicated participants could start with a dose for 5 milliliters and “might be on the product for up to five weeks,” noting it’s “an observational trial” and participants will “assess the benefits” of the CBD oil.
According to the report, the Australian Defence Force reports about 8.3 percent of its members have experienced PTSD in the past year and the rate of PTSD among males in the armed forces is almost double the general Australian population.
In the U.S., 26 of 33 states with medical cannabis programs include PTSD as a qualifying condition. The American Legion, a veterans organization, supports allowing veterans to access medical cannabis programs; however, Veterans Affairs does not allow veterans in its care to use medical cannabis. Two years ago, Congressional leaders blocked reforms that would have allowed veterans to enroll in medical cannabis programs.
In 2017, the Colorado Department of Public Health and Environment awarded a $2.2 million grant to the Multidisciplinary Association for Psychedelic Studies to study the efficacy of cannabis for PTSD. That study is being conducted by researchers at the University of Colorado, University of Pennsylvania, and the Scottsdale Research Institute in Phoenix, Arizona.
Alabama Gov. Kay Ivey (R) has signed SB 236, also known as the “CARE Act,” which stops short of legalizing medical cannabis but creates a fifteen-person commission of doctors, legislators, and other governor appointees to study medical cannabis legalization in the state.
The CARE Act Commission must present draft legislation for the 2020 session by December 1, 2019. In addition, the CARE Act extends Carly’s Law, the groundbreaking 2015 law that authorizes the University of Alabama at Birmingham to study high CBD oil and intractable seizure disorders.
Rep. Mike Ball (D-Birmingham) thinks most Alabamians won’t notice the change in law but believes it will eventually help Alabamians who need access to medical cannabis.
“I don’t think the public would notice it that other than people who have these cards and go to doctors who treat for that would be able to do that instead of some of the others drugs that they’re being given.” — Rep. Mike Ball (D-Birmingham), via WHNT.
Earlier this year, lawmakers shot down a proposal to expand the state’s extremely limited medical cannabis law.
If Alabama approves a medical cannabis law in 2020, they would become the 34th state, plus Washington D.C., to adopt a statewide medical cannabis system and would join only a handful of other states in the Deep South that have embraced such reforms.
Smoking marijuana in rolled form has always been a reliable method of getting high, especially in social settings, and the blunt offers a potent and generous toke. I still think fondly of splitting Garcia y Vega cigars, removing the guts, and then smothering honey over the paper before filling it back up with brick weed and drying it with a lighter. While the tobacco leaf is not for everyone, it certainly offers a distinct experience that many enjoy.
One of the classier and more modern forms of the blunt is the cannagar, or cannabis cigar, which are a slow-burning and long-lasting option. The folks at Purple Rose Supply have come up with a line of products to help consumers easily roll their own custom cigars at an affordable price. If you don’t have access to fresh marijuana leaves or do not like cigar papers/wraps, they offer pre-rolled “shells” made from hemp leaves and hemp pulp to make the process simple and easy.
What’s in the box?
We were sent the G2 small cannamold with an additional shell stored in a cigar tube. The kit is packaged in a cardboard case with foam and comes with the mold, a packing tool, bamboo skewers, a wooden mouthpiece, and an easy-to-understand instructions sheet all arriving in a purple tote bag.
They currently sell four molding kits in three different sizes. The kits start at $44 retail and the hemp shell was $20 for a size small.
The rolling process
I began by latching the mold together and inserting a skewer through the hole in the bottom. The latches on the mold and the mold itself felt well-constructed and look like it would last a long time. I ground up 4 grams of flower and slowly filled the mold shaft using the packing tool. In a few minutes, I had packed the mold to the top and set it aside to cure for a couple of days (the minimum is least 3 hours).
After the wait, I opened the mold and popped out a well-molded cigar core. After removing the skewer, I inserted the core of flower into the shell, attached the mouthpiece, and admired the nicely rolled cannagar that was ready to smoke.
Enjoying the final product
The cannagar burned evenly, packing a hot and heavy punch, and ended up lasting for quite a while.
I found the kit to work well and the mouthpiece effective for heat displacement. For those looking for a classy way to spruce up a gathering, or for those occasions where something special is needed, the Purple Rose Cannamold is worth checking out.
California cannabis company Harborside Inc., has gone public on the Canadian Securities Exchange following a reverse takeover involving FLRish and Lineage Grow Company Ltd, the company announced on Monday. Harborside operates a cultivation facility in Salinas and dispensaries in Oakland and San Jose, along with Terpene Station dispensaries in Portland and Eugene, Oregon.
Andrew Berman, CEO of Harborside, called the move “a very big milestone” for both his 12-year-old company and the cannabis industry.
“It’s extremely rewarding to combine this rich legacy with the opportunity for new growth capital from the public markets,” he said in a statement.
The reverse merger with Lineage was valued at about $150 million, according to a CNN report. Over the past 12 years, the company’s Bay Area dispensaries had over $300 million in sales. Last year, Harborside reported about $38 million, according to the filing.
Steve DeAngelo, who co-founded Harborside as a medical cannabis dispensary in 2006 and serves as its chairman emeritus, told CNN that the company going public “marks a very important milestone in the growth of the cannabis industry.”
“When you have an organization like Harborside that came from deep activist roots and was engaged in that activism in a very intense way, and now has been able to transition into a profit-making cannabis company that’s going to be valued at $300 million Canadian, is a tremendous validation.” – DeAngelo, via CNN
The company has agreements for two more dispensaries in San Leandro and Desert Hot Springs, along with agreements to purchase the 43,000-plus cultivation facility of Agris Farms in Yolo County, and a LUX dispensary in San Jose.
According to CSE CEO Richard Carleton, 170 cannabis firms are trading on the CSE and about 40 percent have material operations in the U.S. In 2018, U.S. cannabis companies raised $3.2 billion and have, so far, raised $1 billion this year.
