Cannabis could end up back on the California ballot if some marijuana advocates have their way. An increasingly vocal faction argues that in the five years since voters approved legalization of adult recreational use, access to legal supply for consumers has been limited, thanks to unchecked taxes and fractious local governments. A booming black market has overshadowed legal proprietors, who are struggling to make ends meet – all of which was not the voters’ vision when they passed Prop. 64, the advocates argue.
The California Cannabis Reform Project and Weed for Warriors organizations are working together to hammer out a ballot initiative that would, among other things, deprive local governments of the power to approve or deny licenses for cannabis business operators. They allege local governments have failed to wield that power effectively, in turn causing more harm than good, giving illegal operators a leg-up while making it harder for many law-abiding consumers in massive swaths of the state to obtain safe, legal cannabis.
As noted by analysis in the New York Times, roughly 8 in 10 of the state’s local governments have outlawed the sale of marijuana within their borders, effectively creating marijuana retail deserts. Local governments’ loss of control is effectively evidenced by the huge – and growing – illicit marijuana market.
Whether the ballot initiative has any hope of passing is questionable. As a Los Angeles attorney practicing cannabis law, I think it’s a fair assumption that local governments aren’t likely to cede any of the control they currently hold. A big part of the battle to pass Proposition 64 was gaining local government buy-in. Assurance of local control, while controversial, made it more digestible and was one of the only reasons some cities didn’t fight it harder.
However, five years in, it’s become clear that reform is necessary if we want to wrest control from the black market. Addressing issues of taxes and local control is going to be critical.
Organizations that represent cities so far haven’t commented on the effort, saying they don’t offer opinions on proposed ballot measures that have not officially qualified. Still, blanket statements were issued to the effect that local control of cannabis issues is something they still staunchly support.
Another element to the proposed ballot measure would be to restructure California cannabis taxes. The proposal would eliminate the cultivation tax, which is $9.65 per ounce of dry cannabis flower, $2.87 per ounce of dry cannabis leaves and $1.35 per ounce of dry weight for fresh cannabis plants. Further, it would reduce the existing excise tax, currently 15 percent of the average market price, to 5 percent. Further, it would bar local government entities from imposing any cannabis taxes. To compensate municipalities, it would grant local governments 1/5 of the total revenue of state excise taxes.
The effort of the cannabis activists is still in the early stages. Just getting the question in front of voters is estimated to cost $6 million on the low-side. The current planning phase involves discussions with lawmakers, lawyers and industry insiders and weighing whether such a measure would be best suited for presentation next year or in 2024.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.
Should California reform its marijuana laws? Why advocates want cannabis back on the ballot, April 20, 2021, By Andrew Sheeler, Sacramento Bee
More Blog Entries:
California Cannabis Companies Should Expect More Audits, Taxes, March 30, 2021, Los Angeles Cannabis Lawyer Blog
That’s actually not true. It doesn’t. Nor does it make any type of intoxication. Namely, that “high” effect is caused by a different cannabinoid called THC. CBD is filled with useful things and in this article, we will uncover what this oil can do for you.
Many Benefits Of Cannabis Oil
Those who are dealing with anxiety on a daily basis know how exhausting and scary it can be. It’s something that you can never get used to. The good news is, with CBD you can help manage this condition.
According to various researchers, this oil can potentially modify the way your brain’s receptors correspond to serotonin, which represents a chemical that is linked to our mental health. Additionally, these small receptors are actually proteins that are attached to our cells that receive a plethora of chemical messages and help the cells respond to various stimuli.
That’s why if nothing conventional helps, you should find a reliable supplier that is going to provide you with high-quality CBD oil. Now, Thomas Net Suppliers are always a great option because they provide their customers with only the best CBD Oil. No matter who you choose, just make sure that it’s someone reputable.
Furthermore, one study has shown that a 600mg dose of this oil has helped a lot of people cope with stress, as well as social anxiety. Moreover, another study that was performed on animals has shown that CBD oil can relieve anxiety by:
- Reducing stress
- Lowering various effects of anxiety, such as tachycardia
- Enhancing symptoms of PTSD (post-traumatic stress disorder)
- Helping you fall asleep if you’re dealing with insomnia
It Works Better With Other Cannabis Compounds
A study that was conducted a few years ago has shown the medical capability of one molecule of CBD and compared it with a whole plant that’s filled with CBD extract. The study has concluded that whole-plant had a much more therapeutic value in comparison to a single-molecule CBD extract.
Now, it doesn’t mean that a single-molecule CBD extract isn’t beneficial and cannot be given as a prescription, it has simply shown that this oil is much more effective when there are other therapeutic cannabinoids, as well as terpenes.
Scientists tend to call this “relationship” the entourage effect. For example, a couple of studies have showcased CBD’s capability to decrease the undesirable effects that THC has, such as cognitive impairment and paranoia.
What Are Other Benefits Of CBD Oil?
After many, many years of research regarding the effectiveness and safety of this oil for treating epilepsy, the FDA has finally decided to allow the use of Epidiolex, which is a purified form of this oil. This has happened three years ago.
Now, this medication is approved for these conditions and only for people that are older than three:
- Dravet syndrome
- Lennox-Gastaut syndrome
Now, there are some rare forms of these conditions that cannot be easily controlled, even with medications. The success that CBD oil has made when it comes to epilepsy has motivated numerous scientists to learn more about it and figure out how it prevents seizures without causing the sedating side effects that usually other medications cause. Unfortunately, synthetic drugs that target the endocannabinoid system as CBD oil does are not yet accessible.
Even though there has been some controversy when it comes to this topic and scientists are still not one hundred percent sure that CBD is a cure for cancer, recent reports have showcased that the ingredients found in cannabis essential oil actually have a preventive effect on this condition.
What’s even better is that it can cause a decrease in size, which allows the patient to fight cancer more effectively. It is widely known that cannabis oil, along with CBD oil can reduce the side effects and symptoms caused by this disease.
If you combine CBD and THC, they are going to alleviate the pain that cancer caused. According to research that was conducted by Hansen M., Medical University of Vienna, Austria, they are providing people with relief from various awful side effects of chemotherapy, such as vomiting, nausea, anxiety, and many other things.
Can Reduce Acne
This represents a skin condition that affects a lot of people. Many scientists think that it is caused by numerous factors, such as underlying inflammation, genetics, bacteria, overproduction of sebum, etc.
Fortunately, with the help of this oil, you can treat this condition because it is packed with several anti-inflammatory properties and has the ability to decrease sebum production. A recent study has shown that CBD oil is able to prevent sebaceous gland cells from creating excessive sebum, prevent the activation of “pro-acne” agents, and also to pursue anti-inflammatory actions.
Additionally, another study has had similar results when it comes to CBD, concluding that this oil is extremely efficient in treating acne, due to its outstanding anti-inflammatory qualities. What’s even better is that it’s completely safe to use.
Several studies have looked at the effect this oil has on Alzheimer’s patients and generally this illness. A few years ago, a study performed on rodents has showcased that CBD can help patients detain the ability to recognize their beloved ones.
Unfortunately, that’s something that people who are suffering from this disease frequently experience. Then a review written two years ago has found that this oil can slow down the progress of this condition. Moreover, some scientists think that a combination of THC and CBD is even more effective.
I recently relocated to Washington, D.C. to join our East Coast practice group and have been inundated with inquiries surrounding the legal framework of recreational cannabis (i.e., marijuana and hemp) in the nation’s capital. So, in light of this overwhelming interest, I thought I’d briefly summarize this issue for our readers.
In November 2014, D.C. residents overwhelmingly approved Initiative 71, a ballot measure that legalized the possession and cultivation of small amounts of marijuana by residents of 21 years of age or older.
However, a few weeks following the passage of the marijuana ballot initiative, Congressional Republicans attempted to nullify the law by including a rider in the Consolidated and Further Continuing Appropriations Act of 2015 that prohibited the District from using any funds to enact legislation taxing and regulating marijuana. Under federal law, Congress reviews all legislation passed by the Council (think of it as the equivalent of D.C.’s state legislature) and any referendum measure approved by voters before it becomes law. In addition, Congress retains authority over the District’s budget. Therefore, if Congress wishes to influence the affairs of the District, it generally does so through amendments to unrelated legislation such as spending bills.
Nevertheless, District officials, including the District’s Attorney General and Mayor Muriel Bowser, declared that the Congressional rider would not prevent the legalization of marijuana which was enacted and certified by the Board of Elections before Congress passed the spending bill.
Consequently, the District inherited of a “grey market” where local businesses began engaging in “gifting economy,” which consists of selling items unrelated to marijuana at marked-up prices and offering marijuana as a complementary gift with the transaction. This legally questionable business practice arose from a provision in Initiative 71 that states it is lawful for anyone 21 years of age or older to “transfer without payment (but not sell) up to one ounce of marijuana to another person 21 years of age or older….”
So, while marijuana-related arrests ceased to occur in the nation’s capital (a particularly good thing in light of a 2013 report by the American Civil Liberties Union that revealed D.C. had one of the highest arrest rates of any county in the country, with blacks 9 times more likely to be arrested than whites), the District became confronted with an unregulated, legally dubious market where the commercial sale of marijuana is illegal.
In an attempt to address this ongoing issue, District lawmakers recently introduced the Comprehensive Cannabis Legalization and Regulation Act of 2021, a sweeping bill which if enacted in its current version would establish a comprehensive regulatory framework for the production and sale of recreational marijuana but would also address social equity by repairing the damage done by past criminal enforcement, by investing in the communities most harmed by the drug war, and by creating equitable access to the new marketplace. No actions have been taken since the bill’s introduction on March 1.
The District has yet to enact hemp-related laws or regulations, which means it does not authorize nor regulate the production of hemp nor that of hemp-derived products, including the sale of cannabidiol (CBD). Therefore, these products are not legal despite the notable presence of “CBD shops” throughout the city.
In sum, the commercial sale of recreational cannabis products is expressly prohibited in the District. This means that the vast majority of the products sold and “gifted” in the city are unregulated, and thus, may be unsafe for human consumption. Moreover, while these activities seem vastly tolerated, they nonetheless put local businesses at risk of enforcement actions by local and federal agents. Something to think about before venturing into this market.
Clients have often as asked whether HIPAA applies to the cannabis industry. As with anything else in healthcare, the answer can be complex. HIPAA was enacted in 1996 to help protect a patient’s healthcare information. While HIPAA is expansive, to the extent state law is more restrictive or protective, then state law will control in those instances. 45 CFR § 160.201 et. seq. But the first question is whether HIPAA applies to the cannabis industry.
Are Cannabis Dispensaries Covered Entities?
For information to be protected under HIPAA, there are several aspects to analyze. Boiled down to its basics, HIPAA will apply when a “Covered Entity” has “Protected Health Information”. As with any other statutory regime, the first place to start with the analysis are the definitions. A “covered entity” includes a health plan (e.g., a third-party payor), a health care clearinghouse (e.g., a third-party system that interprets claims data between healthcare provider systems and third-party payers), and a health care provider. 45 CFR § 160.103. So, is a dispensary a “health care provider”? For adult use or recreational dispensaries, the answer is no. However, for medical marijuana dispensaries, a deeper dive into the HIPAA regulations is essential.
A health care provider is defined to include, (1) a provider of services, as defined in the Social Security Act, (2) a provider of medical or health care services, again, as defined in the Social Security Act, and (3) any other person or organization who furnishes, bills, or is paid for health care in the normal course of business. Id. Under this definition, clearly a hospital, physician, healthcare clinic and many other types of healthcare providers are covered entities.
But a dispensary is not of the entities specifically enumerated under the statute. Does this mean a medical marijuana dispensary is not a health care provider? No. To help illuminate the definition of a health care provider, it is also important to understand the definition of “health care”. As the HIPAA regulations state, “health care means care, services, or supplies related to the health of an individual.” Id. The regulations then provide specific examples (that are not intended to be all-inclusive) of health care. Overall, health care includes:
(1) Preventive, diagnostic, therapeutic, rehabilitative, maintenance, or palliative care, and counseling, service, assessment, or procedure with respect to the physical or mental condition, or functional status, of an individual or that affects the structure or function of the body; and
(2) Sale or dispensing of a drug, device, equipment, or other item in accordance with a prescription. Id.
Under either of the foregoing sections, an argument can be made that medical marijuana dispensaries are health care providers. Depending upon which state you live in, medical marijuana may be “prescribed” for “therapeutic” or “palliative” care. See, e.g., A.R.S. 36-2801(11) (In Arizona, “‘Medical use’ means the acquisition, possession, cultivation, manufacture, use, administration, delivery, transfer or transportation of marijuana or paraphernalia relating to the administration of marijuana to treat or alleviate a registered qualifying patient’s debilitating medical condition or symptoms associated with the patient’s debilitating medical condition.”). Moreover, when a “prescription” is required to attain medical marijuana, then certainly the second part of the above definition would apply (e.g., the “sale or dispensing of a[n]” “item in accordance with a prescription.”).
A cogent argument can be made that a medical marijuana dispensary is a covered entity under HIPAA. The ultimate determination is made on a case-by-case basis and state laws play an integral role in assessing these issues.
Protected Health Information
The second part of the analysis is whether a medical marijuana dispensary possesses “protected health information”. As with the above analysis, definitions are the starting point.
HIPAA defines “protected health information” to mean individually identifiable health information: that is: (1) transmitted by electronic media; (2) maintained in electronic media; or (3) transmitted or maintained in any other form or medium. Id. Thus, before analyzing the applicability of protected health information in the cannabis context, the definition of “individually identifiable health information” is essential. Individually identifiable health information includes –
Demographic information collected from an individual, and: (1) is created or received by a health care provider, health plan, employer, or health care clearinghouse; and (2) relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present, or future payment for the provision of health care to an individual; and (i) that identifies the individual; or (ii) with respect to which there is a reasonable basis to believe the information can be used to identify the individual. Id.
Certainly, a medical marijuana dispensary could very well maintain protected health information. For example, if the dispensary maintains information that includes the patient’s name, social security number and/or any other identifying information, as well as the patient’s diagnosis and purchase information, then it is not a stretch to see how HIPAA would apply.
What Does a Dispensary Need to Do if it is a Covered Entity?
While the foregoing is primarily an academic exercise, instituting HIPAA compliant protections is much more practical. The Office of Civil Rights (“OCR”), which is housed in the U.S. Department of Health and Human Services, is the regulatory authority under HIPAA. The OCR has the power to assess monetary penalties for HIPAA breaches, which can be quite significant. Moreover, a breach under HIPAA can lead to lawsuits by the affected patients under various legal theories, including invasion of privacy and other tort claims.
To avoid HIPAA breaches, some of the basic actions include implementing comprehensive policies and procedures and educating the dispensary’s staff on a regular basis. Moreover, a dispensary owner would be wise to procure cyber-liability insurance in the event of HIPAA breach. In future posts, we will detail more of the requirements under HIPAA.
HIPAA is a complex statute. As noted above, there is also an interplay with state law which makes the analysis even more complex. A medical marijuana dispensary owner would be wise to seek counsel on whether HIPAA applies, and if so, how to come into compliance with HIPAA (and possibly state privacy laws as well).
Analysis: Marijuana Use Data Fails to Support “Gateway Hypothesis”
- POSTED ON
Boise, Idaho: Claims that the initiation of marijuana use is independently linked to the later use of other controlled substances are not supported by longitudinal data, according to a study published in the Journal of Experimental Criminology.
A pair of researchers affiliated with Boise State University in Idaho analyzed the relationship between self-reported marijuana use in late-adolescence and the use of other illicit substances later in life in a nationally representative sample.
Authors reported: “[P]olitical discourse advocating marijuana prohibition commonly hinges on the assumption that marijuana causes hard drug use. The MGH [marijuana gateway hypothesis] is by far the most common justification for prohibiting the use of cannabis. However, the current study provides further evidence that common liability arguments are more in line with substance use patterns observed in the USA.”
They concluded: “In sum, the findings from the current study … provide further support of previous research questioning the causal claims of the MGH. While there is strong support for correlation and sequencing in marijuana and hard drug use, correlation and sequencing alone cannot provide sufficient evidence for causality. Factors other than marijuana use such as genetic predisposition, peer associations, or access to the illicit drug market could be the primary causes of hard drug use instead of marijuana use itself. As such, any public policy that prohibits the use of marijuana in an attempt to curb hard drug use is unlikely to succeed.”
Full text of the study, “Is marijuana really a gateway drug? A nationally representative test of the marijuana gateway hypothesis using a propensity score matching design,” appears in the Journal of Experimental Criminology. Additional information is available from the NORML fact sheet, “Marijuana and the ‘Gateway Theory’.”This busts up the age old myth about cannabis usage being the “Gateway Drug”. It’s always been my personal belief that alcohol and tobacco has always been the “gateway drugs”. That’s my two cents. If you have any money to support NORML they are a great organization.
The U.S. Patent and Trademark Office’s policy of rejecting applications to register trademarks that identify nonhemp cannabis products, as well as certain hemp CBD products, reflects an unduly doctrinaire approach that ultimately makes Americans less safe. As the cannabis industry continues to enter the business mainstream, the extension of trademark rights to cannabis companies’ products would provide them with additional incentives to develop reputations for quality and safety, setting them apart from actors on the margins of legal markets at the state level. In addition, it would empower cannabis companies to, in concert with law enforcement, pursue counterfeiters peddling unregulated products.
In March, it was reported that Florida law enforcement agencies were expressing concern about “THC-laced candy and snacks … making their way into the hands of children and teens.” THC refers to tetrahydrocannabinol, “the substance … primarily responsible for the effect of marijuana on a person’s mental state.” The level of THC in a cannabis plant determines if that particular plant is legally considered marijuana or hemp. Cannabis with a THC concentration of more than 0.3% on a dry-weight basis is considered marijuana, which is a scheduled drug according to the Controlled Substances Act. By contrast, following the enactment of the Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, cannabis with 0.3% THC or less is considered hemp, which is not a controlled substance per the CSA.
But while hemp and hemp products with 0.3% THC or less are no longer treated as controlled substances, certain hemp products containing cannabidiol are still unlawful under federal law. To be clear, CBD itself is not illegal. However, it is the view of the U.S. Food and Drug Administration that foods, dietary supplements and drugs containing CBD cannot be sold legally, in accordance with the Federal Food, Drug and Cosmetic Act.
The THC candies found in Florida were of particular concern to officials because “some of the marijuana edibles are hard to spot at first glance.” In a Facebook post, the Charlotte County Sheriff’s Office, or CCSO, warned that, “without looking closely, you would never know that these candies, that bear a striking resemblance to ordinary candy, [are] actually THC infused edibles.”
The following photograph, courtesy of the CCSO, clearly depicts packages that prominently display the trademarks of famous candy brands, such as Skittles and Nerds. As the CCSO notes, it is only upon close inspection that the true nature of the candies becomes evident. For example, a Cheetos bag shown in an image supplied by the Sarasota County School District is imprinted on the bottom left with a small square containing the letters “THC” and a content in milligrams that is illegible on the image provided. On the bottom right corner, there is a triangle framing a cannabis leaf and an exclamation point, with the letters “CA” below it.
Those familiar with cannabis terminology and imagery will be immediately alerted to the presence of the term THC and the familiar shape of the cannabis leaf. However, it is reasonable to assume that there are many people who are not be able to make the connection between these symbols and marijuana. As a result, there is a real risk that the edibles will in some cases be consumed by people who do not wish to ingest THC, or any cannabis at all.
It is precisely because of the risks presented by counterfeits such as the candies found in Florida that the laws of the U.S. — and those of virtually every country in the world — protect trademarks rights. Lawmakers want the public to have the assurance that the Skittles bag it purchases in a store in Sarasota or Bradenton, Florida, is made by or under the authority of the Wrigley Co. In order to offer that assurance, the law grants to brand owners such as Wrigley the exclusive right to use trademarks such as SKITTLES and prohibits unauthorized use of those trademarks.
The fact that the fake candies found in Florida contain a controlled substance is certainly newsworthy, but largely irrelevant in the context of trademark rights. Needless to say, a candymaker like Wrigley does not want a product containing THC inside a bag bearing its trademarks. At the same time, it does not want real candy of unknown provenance inside such a bag either. This is true for a number of reasons, not least the potential for lost profits. In addition, companies like Wrigley do not want the good reputations they have built over decades tarnished because of some criminal’s unsanitary or foul-tasting fakes.
For their part, government authorities worry about the risks to consumers presented by fake products. By definition, counterfeiters operate on the margins of the law; their business model is predicated upon anonymity and the accompanying lack of accountability. If a candymaker is willing to infringe a trademark in pursuit of profit, there is a good chance it is also willing to ignore food safety laws, just as we should not expect the makers of counterfeit toys to heed child safety rules.
Trademark rights play a key role in the efficient operation of consumer markets, incentivizing companies to innovate, by protecting their exclusive right to monetize their brands. These rights also provide additional rewards for maintaining high quality and safety standards.
The case of the Florida THC candies, however, serves as a reminder of the fact that many cannabis companies operating legally in an increasing number of states are being denied trademark protection, to the detriment of the public. The USPTO refuses to register trademarks for products considered marijuana — that is, cannabis over the 0.3% THC limit — as well as certain CBD products such as edibles, whose sale the FDA considers unlawful.
Challenges for Cannabis Companies
Like companies in other sectors of the economy, cannabis companies face the risk of having their products counterfeited. As with other instances of counterfeiting, this presents risks not just to cannabis companies themselves, but also to consumers.
Consider for example a company that manufactures CBD edibles legally under the laws of Washington state. This company is subject to stringent regulatory oversight in its home state, yet it is not entitled to federal trademark protection against an anonymous infringer selling edibles made in completely unregulated fashion.
Another risk involves the misidentification of products. For example, a counterfeiter might introduce into the market products that contain THC with fake labeling indicating that they are just hemp products. It might also misstate THC or CBD amounts.
The THC edibles found in Florida presented serious risks to potential consumers. Fortunately, the fact that the fakes infringed on the trademarks of household names such as Cheetos and Skittles probably helped trigger alarms. Perhaps a teacher who eats genuine Cheetos noticed something askew with the packaging on a student’s Cheetos bag. A parent may have been surprised by the soft consistency of the edibles, at odds with how actual Skittles should feel.
However, for the time being at least, few if any cannabis companies enjoy such powerful brand recognition, meaning that few people will be able to notice irregularities in packaging or product characteristics.
In addition, companies such as Wrigley, Ferrara Candy Co. and Frito-Lay Inc., owners of the “Skittles,” “Nerds” and “Cheetos” trademarks, respectively, usually run brand protection programs. As part of these programs, they conduct market monitoring to help detect traffic in their fakes and incorporate anti-counterfeiting technology in their genuine products.
They also cooperate with law enforcement, for example recording their intellectual property with customs agencies such as U.S. Customs and Border Protection to facilitate efforts to prevent the trade in counterfeit goods.
A Way Out?
Cannabis companies are largely deprived of tools to combat piracy. A company may discover counterfeiting activity, but it may not be of much use if there is no enforceable trademark. The logical solution to remedy this issue is to allow cannabis companies duly registered with state authorities to register their trademarks at the federal level for all their products, including those considered marijuana, as well as the CBD products not approved by the FDA.
The USPTO’s examination guide notes that “Use of a mark in commerce must be lawful under federal law to be the basis for federal registration” and points to the authority of Section 907 of the Trademark Manual of Examining Procedure. In turn, the manual points to various authorities, including sections 1 and 45 of the Trademark Act.
It is worth noting that the word “lawful” does not appear at all on Section 1, while Section 45 simply defines “commerce” as “all commerce which may lawfully be regulated by Congress.”
However, lawful use has become a requirement in practice, upheld by several Trademark Trial and Appeal Board rulings on the subject. According to the TTAB:
to hold otherwise would be to place the [USPTO] in the anomalous position of accepting as a basis for registration a shipment in commerce which is unlawful under a statute specifically controlling the flow of such goods in commerce.
Given USPTO and TTAB practice, the only realistic path extending trademark protection to cannabis companies may be through an amendment the Trademark Act or new federal legislation. Such an initiative would represent a step toward harmonizing federal law with the nation’s changing cannabis landscape, without requiring lawmakers to consider a change to the legal status of marijuana and CBD themselves.
Considering how extending full trademark protection to cannabis companies would be in the public interest, by keeping unregulated products out of consumers’ hands, it should not be a controversial move.
Editor’s Note: A version of this article first ran on Law360 on May 3, 2021.
Add CBD Oil Into Your Drinking Water
If you are looking to better your life, then there are awesome ways to incorporate different diet programs into your lifestyle. You are what you eat and if you are not careful with what you eat, you’ll end up with health complications that can be fatal, and not to forget increasing medical bills. CBD has increasingly become a popular remedy for most known health complications.
While there are ongoing clinical tests to validate CBD products of their potency, there’s sufficient evidence that proves CBD can alleviate pain and other distressing health complications that a person can encounter. CBD is found in many forms and this guide on wholesale water soluble CBD oil will help you make informed decisions on the type of CBD products you might require. Water-soluble CBD products come in different quantities and CBD products of different qualities. The search for the best CBD products will require that you conduct extensive research as well as ask friends for referrals.
CBD Supplements and Vitamins
Most if not all the time, even a balanced diet might not be enough to provide you with the necessary vitamins required for the healthy growth of tissues and body muscles. This is why you need to incorporate the right vitamins in your meals. You can add and benefit from adding CBD oil to your diet by consuming supplements and vitamins rich in the minerals and ingredients your body needs for survival.
There are a plethora of supplements in the market today that you can choose from. CBD supplements and vitamins can range from omega acids that come in the form of capsules, powder forms, and liquid supplements. There are also supplements mixed with CBD and other highly nutritious ingredients for maximum health benefits. CBD supplements are rich in oleic and linolenic acids that will help promote your overall health as well as help with your skin conditions.
Taking CBD Detox Tea
This article is the fifth in a series called, “So you want to start a canna biz?” created in partnership with Good Tree Capital. This article focuses on getting money to start your cannabis business.
Financing is the primary barrier to entry into the cannabis industry, so it is important to structure your approach to overcoming it as a challenge. It doesn’t matter if you’re a bodega on the corner, a chain restaurant, a cannabis cultivator, or one of the big four tech firms, there are really only three ways to finance any business’ growth:
- Reinvesting profits from running your business
- Taking out debt from a lender
- Selling an equity ownership stake in your business to an investor.
Previously, we briefly touched on each method of financing. Now, it’s time to explore more.
Profit, debt, or equity?
Before you continue reading, you should be clear on where your business stands and what you can afford to do.
- Has your business already made a profit? Companies make profits when the revenue earned from sales exceeds the cost to generate those sales.
- Or will you need to use debt? Debt typically comes in the form of credit cards or loans to the business and must be repaid.
- Your third option is equity. Equity funding does not need to be paid back. Businesses raise equity when they sell a percentage of ownership to an outside investor.
If your business is up and running, and you’re making a profit, then congratulations! You seem to have a good thing going. We’ll continue to focus on how new or existing cannabis businesses should think about raising debt or equity or both, and return to profitable businesses at the end of this article.
With the federal prohibition of cannabis, the supply of both debt and equity is severely restricted. Most banks aren’t even willing to provide cannabis licensees with bank accounts, let alone credit cards or loans to help them run their business.
The availability of equity funds is similarly restricted. Private equity investors, including venture capitalists and angel investors, are often limited by either stigma or situational, social governance policies that prohibit them from investing in cannabis.
When supply is low and demand is high, prices spike. Low risk cannabis businesses seeking loans will often pay north of 25% APR for loans that would cost comparably risky non-cannabis businesses a quarter of that amount.
How to get a canna biz loan
You can avoid predatory lending by first self-evaluating the strength of your candidacy for a loan or credit. Someone who lends you money and expects it back is looking for whether you are earning enough monthly sales to make monthly loan payments and if you have a history of consistently paying your obligations.
They will also want to see business or personal assets that can be seized to recoup the value of the loan if you fail to make your monthly payments.
The Small Business Administration provides a useful rubric for how to make the best possible case for a loan. While the SBA does not lend to cannabis businesses, the Financial Crimes Enforcement Network (FinCen) reported that 723 banks and credit unions (6% of total) across the nation provided banking services to cannabis businesses in 2019.
FinCen stopped publicly reporting which banks and credit unions filed with them, so if you are interested in learning which banks and credit unions in your State offer services to cannabis companies, then we suggest submitting a Freedom of Information Act request with FinCen to disclose the filers.
Other sources of capital for a cannabis business
Another worthwhile source of capital is an innovative model emerging out of Illinois. Upon legalizing cannabis for adult use, the State also created a $30 million Cannabis Business Development Fund that is to be used to make low-interest loans to social equity licensees in the State.
The intention was to ensure individuals from disproportionately impacted communities would have a source of capital to jumpstart and grow their businesses, putting them on more equal footing with deep-pocketed multi-state operators. Washington, Colorado, and a number of other states are considering similar programs.
The portrait you paint for a bank lender or government agency should be the same portrait you paint for more informal lenders, such as your mother or father, former boss, business partner, or your rich uncle.
Friends and family
We encourage you to look beyond institutional financiers and engage with people who believe in your business plan. Relying on family and friends to provide you with loans is advisable (particularly at an early stage) with the upside that they fully understand and appreciate the risk of lending your business money.
In fact, a common misconception in equity financing is that the only viable investors come from multi-million dollar venture capital firms. The reality is that most businesses’ first equity investors are usually made up of supportive family members and friends.
Though a huge funding injection from an investment group is great, it is equally as impactful to receive investments from peers and like-minded individuals who believe in your idea and want to support what you are building.
Determining equity stakes
While debt investors deploy capital for an immediate return, equity investors aren’t looking for a short-term payback. The goal of an equity investor is to support your company’s growth so that their investment increases in value as your business matures.
Having an equity stake in a company is essentially owning a piece of the business, and those stakeholders are usually in it for the long haul, anticipating that their investment bolsters the success of the business.
New business owners run the risk of both vastly overvaluing their company and vastly undervaluing their company. Overvaluing your company puts off sensible investors and ones who believe your company is too expensive. Undervaluing your company can lead to you losing majority ownership or sacrificing control of your company long-term.
Before selling anyone a piece of your company, it is critical to determine your company’s valuation. The only way to determine how much an investment is worth is to look at it in the context of the total value of the company.
Ways to determine the value of your company include:
If you successfully utilize debt and equity to finance your business, you can then unlock the third, aforementioned type of financing businesses use – profits.
The ultimate goal of all businesses is profitability, and after a couple years of stable operations, the profit your business generates can be reinvested back into the company.
Once growth and development are sustained by the cash the business generates from operations, then the business truly becomes viable and is positioned to scale and expand.
Public opinion on cannabis legalization and consumption has changed a lot since. Cannabis legalization is building more momentum in the US, and attitudes surrounding consumption have drastically evolved.
Cannabis Consumption on the Rise
Recently, a national study (2) conducted by YouGov, a public opinion and data company, in partnership with Sunnyside, a national retail dispensary brand of Cresco Labs, found that about one in four Americans consumed cannabis over the past year.
The report also found that 23% of current cannabis consumers have tried it for the first time in the past year. This suggests that the pandemic played a role in increasing the public’s interest in cannabis use, whether for leisure or medicinal purposes. The pandemic has also coincided with sweeping cannabis legalization bills across the United States. This has undoubtedly played a role in shaping public perception.
It’s quite a leap from 2018, when just over 15% of U.S. adults reported cannabis consumption (3).
What does this mean?
In January 2020, Governor Newsom announced that he intended to have the Bureau of Cannabis Control (BCC), California Department of Food and Agriculture’s CalCannabis Program (CDFA), and California Department of Public Health’s Manufactured Cannabis Safety Branch (CDPH), consolidated into a single cannabis agency: the Department of Cannabis Control (DCC) (as summarized in the Governor’s 2021 budget summary). That effort was stalled by the advent and continuing impact of COVID-19.
The 2021 budget summary generally covers what the trailer bill will do regarding California cannabis, and shoots for July of this year for the proposed consolidation into the DCC. Not surprisingly, all of the regulations now in play under the Medicinal and Adult-U
Cannabis Regulation and Safety Act will automatically be adopted by the DCC upon its creation unless and until repealed, replaced, amended, etc. It’s no secret that some of the current MAUCRSA regulations need serious revisions to ensure that licensees are successful and that the regulations are actually clear. So, when the DCC comes to life, while no one really knows what’s around the corner (although we recently wrote about how at least cannabis contracts will be affected by the consolidation), here are some of the regulatory fixes (rather than statutory) we think we might see:
- Transfer of Licenses. Right now, California doesn’t allow for state license transfers. Instead, the BCC, CDPH, and CDFA force cannabis licensees to engage in business purchases if a cannabis license is to change hands at all. These business purchases are tortured by regulatory ambiguities around the concept and definitions of “owners” and “financial interest holders” and original owners having to remain with the entity for the preservation of “continuity of operations”. And it seems like every time you interact with one of these agencies, you get a different response from every single analyst about what is and is not allowed in the definitive acquisition document. If the DCC is wise, it will take a page out of the books of Oregon and Washington and do away with the current change of ownership regulations, and it will allow for straight license transfers. The ability for third parties to just acquire state licenses would lighten the load for cannabis businesses and regulators alike, and it would put a stop to the arbitrary regulatory back and forth and oftentimes bad buyer and seller behavior we see around changes of ownership.
- Better Enforcement and Interpretation Consistency. Thankfully, we are bound to see consistent enforcement priorities and interpretations from a single agency. What’s annoyed licensees is that all three agencies right now seem to approach seemingly identical rules in a multitude of ways around enforcement and interpretation. Maybe more than an outright regulatory fix, the emphasis on this “might see” is that one regulator will definitely limit the number of wild legal and regulatory takes we’ve seen. Of course, different DCC analysts may also give different interpretations around various DCC regulations, but at least we’ll know that between cultivators, manufacturers, distributors, labs, and retailers that legal and regulatory licensing definitions will all be the same across the board.
- IP Licensing Clarity. With its final adoption of the current regulations, the BCC really muddied the waters to a certain extent regarding party disclosures around intellectual property licensing agreements (before that, the agency caused an industry freak-out around the topic). To tie things up, we have a lone “fact sheet” where the BCC tells us the following: “Licensees may enter into intellectual property licensing agreements with unlicensed entities. However, the intellectual property holder cannot exert control over the licensee’s commercial cannabis operations. If the intellectual property holder is exerting control over the licensee’s commercial cannabis operation, then the intellectual property holder must be disclosed as an owner on the license.” The fun part is that “control” is not defined, so there’s been myriad confusion around whether “owner” disclosure is necessary when IP licensing agreements come into play in California. And of course the IP licensor exercises some level of control relative to the licensee’s cannabis operations where the IP licensing agreement will dictate what the licensee can and cannot do with the licensed intellectual property. As a result, the DCC should really clean up the issue once and for all once it comes into power where California cannabis branding is big business and getting more serious all the time.
- Borderless Delivery Solution. Another California cannabis debacle is the borderless delivery rule that the BCC adopted as part of the final rules. It was a heavily followed lawsuit when the BCC defended its borderless delivery regulation in Fresno County Superior Court in 2020. See here. The end result of the fight was that, even though the BCC maintains a regulation that retailers can deliver cannabis into any city or county in California, cities and counties remain free to ban delivery anyway (which was already the case because California has such strong local control limits when it comes to cannabis). In turn, while the BCC won’t bust retailers for engaging in delivery in jurisdictions that ban it, those retailers can still get into major trouble in those cities and counties. I wouldn’t be shocked if the DCC tries to revisit this issue through rulemaking where retailers would certainly benefit by being able to deliver anywhere without legal consequence.
- Billboards. I was recently interviewed on KCRW about the dueling billboard bills in Sacramento. In 2020, a San Luis Obispo County judge ruled that Prop. 64 bans cannabis billboard ads on California’s interstate highways (here’s the BCC mandatory notice to licensees on the result in the case). Now, AB 273(which recently failed in session but could be reconsidered) would ban all cannabis billboards, and AB 1302 would allow them with certain restrictions around interstate highways and California borders. No matter how this one shakes out, will likely see the DCC react with corresponding regulations in the future, and that’s going to affect the marketing decisions of hundreds of licensees.
- Limitations on Type 3 Cultivation Licenses and Beyond. CDFA exercised its authority to limit cultivators to one Type 3 license per premises. To get around that, large scale cultivators just stack unlimited, smaller license types on multiple premises to aggregate literally acres of canopy. As a result, there’s a possibility that DCC just ditches the current one Type 3 limitation and gets with reality. Further, Type 5s will be available in 2023 and we have zero regulation around those license types, so the DCC may well just get into Type 5 limitations once it comes to power.
Definitely be sure to stay tuned as this massive consolidation comes to fruition.