The Illinois Cannabis Regulation and Tax Act (“CRTA”), which was enacted in 2019, legalized recreational adult use cannabis in Illinois. The CRTA also created a Social Equity Program intended to offer disadvantaged people, communities of color, and those disproportionately impacted by the war on drugs an opportunity to benefit from the cannabis industry. Pursuant to the Social Equity Program, the Illinois Department of Agriculture (“IDOA”) awards points to applicants for cannabis licenses based on factors such as residing in an area disproportionately impacted by prior laws criminalizing cannabis and veteran status. The program was widely praised and seen by many as a potential blueprint for other states. In practice, however, administration of the Social Equity Program has proved fraught with difficulties. Various types of applicants that have been denied the valuable licenses have sued IDOA, claiming that the department wrongfully denied their licenses.
Help for California’s fledgling cannabis industry finally appears to be on the way. For years, the industry has shouldered heavy taxes – a 15% state-wide excise tax, sales and use taxes up to 10.75%, and local business licenses taxes up to 15% in some jurisdictions. And, to top it off, California imposed a cultivation tax on cannabis flowers of $161.28 per dry-weight pound. While growers could sustain this tax burden when business was good, wholesale prices plummeted in the fall of 2021 and left growers unable to turn a profit.…
Recreational cannabis is now legal in 19 states and Washington D.C., driving the growth of legal cannabis sales estimated at $33 billion this year—up 32% from 2021—and expected to reach $52 billion by 2026. This movement signals that financial investment in cannabis is not abating but accelerating notwithstanding the impact of the lingering COVID-19 pandemic. This growth in the cannabis industry, of course, also means that operators and their investment partners face commercial risk, including insolvency.…
Residents of California often complain about high taxes, but no one pays higher taxes than the cannabis industry. In addition to the Federal 280E penalties, the cannabis industry in California is subject to a 15% state-wide excise tax, sales and use taxes that can reach up to 10.75%, and local business licenses taxes which are as high as 15% in some jurisdictions. On top of these excise taxes, which combined can approach 40%, there is a state cultivation tax currently imposed on cannabis flowers at a rate of $161.28/dry-weight pound (and some local jurisdictions impose additional cultivation taxes). …
Continue Reading California Cannabis Farmers May Finally Get Some Relief
On May 4, 2022, the Food and Drug Administration (FDA) issued warning letters to five companies it asserts are illegally marketing products labeled as containing delta-8 tetrahydrocannabinol (Delta-8 THC) in ways that violate the Federal Food, Drug, and Cosmetic Act (FDCA). Simultaneously, FDA issued a new consumer update “5 Things to Know about Delta-8 Tetrahydrocannabinol – Delta-8 THC.” The consumer update and warning letters are a continuation and expansion of FDA’s efforts to warn the public about products that are not approved under the FDCA and to rein in the rapidly expanding market of products containing hemp-derived cannabinoids. This set of warning letters marks the first time FDA has publicly taken enforcement action against products containing Delta-8 THC, and it will likely not be the last.
Continue Reading Warning! FDA Issues Warning Letters for Products Containing Delta-8 THC
For many in the cannabis industry, April 1, 2022 is seen as a day of reckoning following the July 2021 passage of Assembly Bill 141 and Senate Bill 160 (collectively, the Cannabis Trailer Bill). In an attempt to transition to an annual licensure program, April 1st marked the beginning of the end for provisional cannabis licensure. It also ushered in significant changes to renewal process for previously granted provisional licenses. These modifications now require applicants to comply with the California Environmental Quality Act (Pub. Res. Code §§ 21000 et seq.) (CEQA), a complex statewide policy of environmental protection fraught with potential traps for those unversed in the law, before an operator is eligible to be awarded a cannabis state license. This requirement alone carries the potential to create a much higher barrier to entrance into the cannabis market.
Continue Reading No April Fools: Starting April 1st, Cannabis Operators Face CEQA Compliance Requirements for State Licenses
Federal cannabis reform is once again on the move in Congress. On Friday, April 1, 2022, the U.S. House of Representative passed the latest iteration of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. This is Congress’s oldest comprehensive measure, and it aims to decriminalize cannabis on the federal level by removing it from the list of controlled substances while providing certain social reforms to address the detrimental repercussions of the War on Drugs.
Continue Reading The House Does It Again: MORE Act Ready for Senate Action
On Thursday, March 24, 2022, the Senate unanimously passed the CMRE Act (Cannabidiol and Marihuana Research Expansion Act) and House leadership scheduled the MORE Act (Marijuana Opportunity and Expungement Act) for a floor vote this week.
Continue Reading Movement On CMRE Act and MORE Act On Capitol Hill
On March 10, 2022, New York Governor Kathy Hochul, the Cannabis Control Board and Office of Cannabis Management (“OCM”) introduced the Seeding Opportunity Initiative (“SOI”). This regulation would provide key opportunities for farmers, entrepreneurs and individuals that have been disproportionately impacted by the War on Drugs. Notably, the proposed regulation would give individuals with previous cannabis convictions and their family members, subject to certain limitations, the first opportunity to apply for a conditional adult-use cannabis licenses. …
Continue Reading New York Regulators to Jumpstart NY’s Cannabis Industry by Giving Priority to Small Businesses and Individuals with Prior Cannabis Convictions
Canada legalized recreational cannabis in 2018, but the legal cannabis market continues to struggle even three years later. Observers blame overregulation by both federal and provincial regimes, high taxation, and…
Continue Reading Restructure This! Episode 3: Canada: Cannabis Boom or Bust?
Hope soared with the possibility of federal cannabis reform in 2021. And for good reason – the induction of a new, more liberal administration, rapid state-level legalization, broad support by Americans, and growing bipartisan backing led many to believe that 2021 was going to be the year where federal decriminalization of cannabis would become a reality. But, as 2021 continued on, optimism dwindled as any advancement in federal cannabis reform was hobbled by the inability of Congress to agree on the appropriate level of reform and the proper mechanics for passage. Specifically, tension rose amongst the elected Democrats on whether to support incremental reform (like access to banks or removal of cannabis from the list of Schedule 1 drugs) or comprehensive legalization with provisions to address social inequities stemming from the legacy of the War on Drugs. And so 2021 came to an end, and the cannabis industry saw yet another year of failed meaningful change on the federal level.
Continue Reading Federal Cannabis Reform – Is 2022 the Year?