Cannabis Business Reality – Conference Agenda Mismatch

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AUTHOR:  “Jordan Zoot.  “aBIZinaBOX Inc., CPA’s


Cannabis Business Reality – Conference Agenda Mismatch – For those of you who read our post regularly, it is no surprise that we have been “beating a drum” over problems within the cannabis industry in California that focus on licensing and the underground market. Unfortunately, they are the reality problems and may not seem much like “news”. We thought it would be a worthwhile break to take a moment to note developments on other fronts. [We have written extensively in connection with our speculation about changes in the law at the Federal level [See Federal Legalization Then What? ] and we have commented “ad nauseam” regarding our views on the problems that California created for itself with licensing.

We have made some observations relating to how some of these problems might be corrected – most recently yesterday in Cannabis Lawyer – Dangerous? And previously in Carrot and Stick!  Rather than restate today’s news we will quote from two CNBC articles describing broad-based developments which is a practice we usually avoid.

“U.S. lawmakers weighed reforming pot laws in what advocates called a “historic” hearing Wednesday, with numerous members of Congress saying they wanted to loosen federal laws, even legalize marijuana.

“Marijuana decriminalization may be one of the very few issues upon which bipartisan agreement can still be reached in this session,” said Rep. Tom McClintock, R-Calif., adding “it ought to be crystal clear to everyone that our laws have not accomplished their goals.”

Eleven states have legalized adult recreational use and a majority of Americans support legalization. A number of bills are on the table that would reform federal marijuana laws. The House Judiciary Subcommittee on Crime, Terrorism and Homeland Security sought input on how to reform federal laws in a hearing Wednesday titled “Marijuana Laws in America: Racial Justice and the Need for Reform.

“There is a growing consensus in this country that current marijuana laws are not appropriate and we must consider reform,” said Rep. Karen Bass, D-Calif. “Today’s hearing is the first step in that process.”

Despite the optimism, lawmakers did not appear to have a clear consensus on the best approach, such as whether to give states the right to legalize on their own, remove marijuana from schedule 1 of the Controlled Substances Act, legalize it or include promote social and racial equity in marijuana laws.

The STATES Act is among the most popular cannabis bills. It would amend the Controlled Substances Act and exempts state-approved marijuana activity from federal enforcement.

Proponents say the legislation would eliminate federal concerns in states where marijuana is legal. Yet some say the bill does not go far enough because it does not address any racial or social concerns.”

Source: US lawmakers look to legalize pot in ‘historic’ marijuana reform hearing

Cannabis Business Reality – Conference Agenda Mismatch

“There is a bright spot in cannabis revenue growth in Colorado. On Jan. 1, 2014, Colorado launched what many considered a controversial experiment: It became the first state in the country to legalize recreational cannabis. No one was sure how things would play out. Would new entrepreneurs enter the market? Would people stop buying from the black market? Would crime rates fall? Now, more than five years after the first pot shops opened their doors in Colorado, it’s clear the experiment has been a success.

On June 12 the state announced that it surpassed $1 billion in total cannabis-related revenue, the first state in the country to hit that milestone. Companies also have made more than $6.5 billion in sales over the last five years, with April and May of this year the highest-grossing months since legalization.

Per-person sales are also highest in Colorado, with people buying, on average, $280 worth of cannabis per year compared to $220 and $130 for Washington and Oregon, respectively, the second and third states to legalize weed, according to Scott Willis, head of research at Grizzle, a New York-based investment research company.

Much of the legal marijuana market revenue, which accounts for about 3% of the state’s $30 billion budget, goes toward education, health care, literacy services, and drug prevention programs.

In California, a state that should have swiftly raised millions in revenue, considering the size of its population, cannabis legalization has mostly been a dud. Cannabis consumers can’t purchase pot in 75% of the state’s city and counties, while high taxes are impeding legal growth and allowing the black market to expand.

California Gov. Gavin Newsom’s recent state budget plan slashed cannabis tax-revenue projections by $223 million. In the first half of 2018, revenue was $101 million below what was expected. According to reports, California charges a 45% tax on legal cannabis businesses when all taxes are taken into account, a finding that led to calls for a major tax rethink to better compete with the black market.

In Colorado, growers have to pay a 15% excise tax when their product is transferred from cultivation facility to retail store, while consumers have to pay a 15% sales tax on the purchase of cannabis. That’s mostly in line with other states, though Washington has a 37% sales tax.”

Source: Colorado grows annual cannabis sales to $1 billion as other states struggle to gain a market foothold


Cannabis Business Reality – Conference Agenda Mismatch

We note that the National Cannabis Industry Association [“NCIA”] is holding its annual Cannabis Business Summit and Expo in San Jose, California on July 22 – 24. We have read the list of speakers [it includes most of the “luminaries” that appear at just about every event on the “cannabis tradeshow circuit” and the descriptions of keynote speeches, seminars, and panels.

We were stunned at the lack of substantive sessions that address the Federal legalization issues [thankfully, the Cannabis Trade Federation has stepped in as the adults dealing with Federal policy and legislative action].

We were also stunned to see the program is DEVOID of significant substantive content addressing:

Problems with cannabis business licensing in California

Discussion of a coordinated approach to shrink California’s Black Market

Substantive discussion of the licensing debacle in Los Angeles

Substantive discussion relating to Cannabis Cooperative Associations [“CCAs”] – which would dovetail nicely with the session – “Understanding Vertical vs. Horizontal Integration in a Changing Legal Landscape

Finally, we were stunned to see a session entitled Advice from the Experts on How to Work with California Regulators“. Regulators need to interact with practitioners, and our thought is that there should be a couple of experienced practitioners on that panel.

We have always been hopeful that cannabis business conferences would evolve to better address the “real world” problems faced by legal cannabis businesses. Unfortunately, real change appears to move at a glacial pace. [See CCIA Policy Conference What’s Missing?]

Cannabis Business Reality – Conference Agenda Mismatch


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