Jan 2, 2018 | Marijuana Legalization
Prohibition was not one of America’s most successful experiments because people simply bought their way around it. Wealthy people stocked up prior to introduction in 1920, resulting in a massive hockey stick effect. President Wilson moved his stash to his private residence when his term of office expired. He had to because President Harding needed space to store his own.
The middle classes replaced drinking saloons with speakeasies nobody mentioned. Portable stills hit the streets in the first week. California grape farmers became rich, selling grape concentrate with a warning, “After dissolving the brick in a gallon of water, do not place the liquid in a jug away in the cupboard for twenty days, because then it would turn into wine”.
A new industry of criminals evolved to supply alcohol products at a price. Sheer practicality dictated these were concentrates like whiskey and brandy. Thus America changed from a nation of sociable wine and beer sippers, into a people who knocked back hard liquor on dark street corners, and behind closed curtains in their homes.
The medical profession did not take long to catch up. Within six months, some fifteen thousand doctors and fifty-seven thousand pharmacists held licenses to prescribe medicinal alcohol. Doctors made $40 million for whiskey prescriptions through to 1933. That was a heap of money in those days. The USS West Virginia battleship launched in 1921 and sunk at Pearl Harbor cost a mere $3.8 million for the hull and machinery. (more…)
Dec 28, 2017 | Marijuana Legalization
Many California cannabis non-profits are ruing the day they went the non-profit route so they could start supplying medical marijuana. The devil is in the detail of California codes for Nonprofit Corporation Law, for such an entity is for the benefit of its members, and a separate entity from its founders and managers. Thus:
- Even though you established the non-profit initially, you cannot sell it to a larger company because you never owned it in the first place
- Even if the non-profit made a surplus, you cannot take the money out. The assets belong to the Collective and distribution is only legal on dissolution.
If you did all the hard work, this can be extremely frustrating. Fortunately, there is a way out. You can replace the non-profit with a for-profit, instead of dissolving it and claiming the founding member’s part-share.
The Legal Hoops You Have to Go Through:
Everyone who wants to start a marijuana business in California has to make application to the Secretary of State Alex Padilla. If you are in an existing non-profit situation, you can join the merry throng on 1 January 2018. After that, you (more…)
Dec 6, 2017 | Marijuana Legalization
California has finally released the primary rules for the administration of adult-use cannabis, under the SB-94 Medicinal and Adult-Use Cannabis Regulation and Safety Act. This leaves scarcely a month for the state and industry to implement them. At least our hopes did not go up in a puff of smoke, pun intended. At the very best these are interim, with the California Bureau of Cannabis Control describing them as ‘proposed emergency regulation packages and summaries’.
Summary of Regulations by the Three State Agencies
The regulations are in three packages emanating from the California Department of Food and Agriculture, the California Department of Public Health, and the Bureau of Cannabis Control itself. We summarize the highlights briefly in the paragraphs following and provide links to the detail at the source.
California Department of Food and Agriculture
- Cultivation, and processing licensing applications / fees
- Track and trace systems and training requirements
- Waste management rules and renewable energy phase-in
- Allowable generator types and permitted air pollution
- Standards for inspections, investigations, and audits
- Maintenance of sales invoice records and receipts
- Powers of suspension and revocation for regulation breaches
- Dollar value of fines for minor, moderate, and serious offenses
- Procedures for administrative holds on raw cannabis and products
(more…)
Nov 16, 2017 | Marijuana Legalization
There is a certain rush in doing forbidden things. If we inclined that way as kids, we may well have enjoyed eaten apples we stole from the neighbor’s orchard, more than those available freely from the cooler. For many of us, marijuana started as something we tried as a teenage dare. And we truly enjoyed procuring it illicitly if we fancied ourselves as James Deans.
Writing in Forbes, William Langbein says we have a way to go with replacing traditional marijuana supply chains, which still rely on informal social structures to connect. For better or worse, California has chosen the route of separate licenses for farming, distributing, and selling. Moreover, as 1 January 2018 approaches, we still do not know exactly how these licenses will work.
We are also going live with an unconnected supply chain. No wonder William Langbein begins his piece as follows: “While many expect sales of marijuana for recreational use to take off in January, when California will allow existing dispensaries to sell to adults, growth should be gradual next year before accelerating over the next three years, according to investors and advisors”.
We are inclined to agree his vision that 2018 will be a year for ‘building the infrastructure and freeways’ to connect California farms to dispensaries, and dispensaries to recreational users. However, we will also have to come to an arrangement that grants these participants access to the financial sector, before we can talk of cannabis really being in business. (more…)
Nov 3, 2017 | Marijuana Legalization
Recreational farmers and retailers have been making good money in California, provided they kept a jump ahead of the law. Their customers were their only regulators. As long as they kept them happy with quality cannabis at a good price, they were on to a good thing. That was until California voted to regularize their business, or so it seemed.
Those choosing to cross to the legal side of the fence find themselves playing in a very new ballgame. Costs attached to operating a business to legal commercial standards are not inconsiderable, and they have to pay license fees too. The statutory norms they have to meet for quality and safety purposes have surprised many of us. Moreover, they face a truculent president who is hardly sympathetic to their cause.
A Fitch Ratings report puffed a darker cloud of smoke in August 2017. It detailed the various benefits states stand to gain by regulating nonmedical cannabis. Fitch expects these to include reduced arrests, prosecutions, and jail-time. “Public health costs may also be positively impacted, notably by a decline in opioid abuse,” Steve Walsh, the director says. (more…)
Nov 1, 2017 | Marijuana Legalization
When the founding fathers had a vision of government of the people, by the people, for the people, they may have taken inspiration from Abe Lincoln. He said, “The people – the people – are the rightful masters of both congresses, and courts” and hence the latter are there to serve. Problems for business do arise when they serve too diligently and over govern. This throws the relationship out of balance between commerce and the state.
This may be happening in California, where legislators are trying to dot every imaginable ‘i’, and cross every conceivable ‘t’, as they regulate Senate Bill 94. Joseph Schumpeter – who approximately invented economics – believed the role of business is to innovate, and profit is the reward for taking educated gambles. An interest, if you like, on money put at risk.
Rolling Stone relates the tale of a California couple who took a chance with a new medical product, succeeded, and are now losing their business to legislators. Their product is marijuana-infused ice cream. Alex Zafrin and Rekka Nicholson’s Coffee Pot, Vanilla Kush, and Go Fudge is going down a treat, and everything was looking good, but only for a while (more…)
