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Data: Illinois Sees Record Marijuana Sales Amid Pandemic

Medical marijuana

Marijuana sales in Illinois have totaled more than $300 million since the start of the year, with July having the most sales of any month, according to state figures.

July cannabis sales hit $61 million, which is up from $47.6 million in June and $44.3 million in May, according to the Illinois Department of Finance and Professional Regulation and New Frontier Data.

One reason for the increase in sales could be the customers’ ability to order online, which many dispensaries started to keep lines down, the Chicago Tribune reported.

“We got a lot better at being able to get people in and out because of the online order reservations,” said Jonah Rapino, spokesman for NuEra, which has dispensaries in Chicago, East Peoria and Urbana and recently changed its name from NuMed.

The amount of money that customers spend at dispensaries has also increased. The average transaction was $126 in the first three months of the year but increased to $150 in April, May and June, according to Washington, D.C.-based New Frontier.

Greg Butler, chief commercial officer at Chicago-based marijuana company Cresco Labs, said the pandemic could be credited to the increase in demand, too.

More product availability could also be a contributing factor to the high demand. During the beginning of the year, there were some supply issues. The Tribune previously reported that dispensaries said they needed more marijuana and employees.

Butler noted that many facilities that grow marijuana expanded operation, and those products started hitting the shelves over the summer. Cresco expanded at some of its facilities and increased production at its Joliet location.

“With supply picking up, it has allowed customers to purchase that extra product or two that might not have been available,” said Michael Mandera, general manager of the Herbal Care Center dispensary.

Katie Johnston-Smith, 33, who was feeling “a good, healthy amount of panic” at the beginning of the pandemic, has started using marijuana a few times a week compared to a couple times a month.

Experts say she is not the only one. Many people have chosen marijuana as a way to decrease anxiety brought on by the pandemic.

“It was pretty nice because it did help me mellow out,” Johnston-Smith said. “I was like, ‘Oh, this is way better than mellowing out with a glass of wine.‘”

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Marijuana ads are here and largely unregulated, as the industry acts to set own guidelines

Cigarette commercials have been banned from radio and television since 1970. Liquor ads were once prohibited from TV as well. Illinois law allows marijuana advertising on the airwaves — but the federal prohibition on pot effectively limits ads to within the states where it’s legal.

Faced with conflicting regulations for a newly legal and growing industry, members of the industry are coming up with their own guidelines. They hope to promote a positive image in the public eye, as lawmakers consider whether to let legal cannabis continue its expansion nationwide.

Cresco Labs, headquartered in Chicago and one of the biggest cannabis companies in the country, is issuing a detailed set of marketing standardsit shared with the Tribune on Tuesday. Fellow industry heavyweight Green Thumb Industries has its own general principles. And the National Association of Cannabis Businesses has standards as well.

People check in before entering the Sunnyside dispensary, by Cresco Labs, in Schaumburg on Aug. 6, 2020.
People check in before entering the Sunnyside dispensary, by Cresco Labs, in Schaumburg on Aug. 6, 2020. (José M. Osorio/Chicago Tribune)

But Cresco plans to promote its guidelines with regulators, advertisers and publishers. Its 35 principles prohibit advertising or events aimed at minors, unfounded claims, or depicting getting wasted or driving while high, and not using certain medical words or symbols like “RX,” among other things.

The guidelines largely agree with Illinois law that bans false messages, ads aimed at those under 21 or those that show overconsumption. Illinois law also bans the depiction of the consumption of cannabis, precludes ads within 1,000 feet of a school, park or library, or on public transportation, and bars any health claims.

With 11 states having legalized pot, and 33 allowing medical marijuana, each state has its own regulations. Industry officials said they’d like one set of rules to create a positive, professional image for a business that used to be defined by outlaws and stoners.

“It’ll be good for this industry, the customers and stakeholders,” said Cresco’s chief commercial officer, Greg Butler.

With Illinois seeing explosive growth in sales, in June Cresco showed it can turn a profit, as the industry consolidates. Butler expects it to become one of the top 10 consumer goods in the country within a decade.

Expect to see more ads, as the industry has more money to play with during the upcoming holiday season. To introduce its new Sunnyside dispensaries, Cresco launched an “Ask us anything” ad campaign answering basic consumer questions like, what is CBD, or how many edibles should one consume?

On the national level, the federal ban on use or possession of cannabis means that most networks won’t touch cannabis ads. That helps explain why CBS kept a pot spot from running during the Super Bowl last year.

As a result, most cannabis companies keep their ads highly targeted to within the state where it’s legal, using magazines, newspapers, radio or digital media.

At this crucial time in the industry’s development, officials say they want to be on their best behavior, to help turn the legal and business framework around.

Critics of marijuana legalization, though, remain opposed to the spreading presence of cannabis ads.

Kevin Sabet, president of Smart Approaches to Marijuana, cited a recent study showing that roughly one-third of youths ages 15-19 saw marijuana ads on social media and were five times more likely to report using it in the past year.

“Simply put, the marijuana industry should not be able to advertise its highly potent and addictive products,” Sabet said. “The data is clear here that advertising further normalizes the industry, which normalizes the use of the drug, which leads to harmful consequences for health and safety.”

Despite opposition, as advertising ramps up, big brands are likely to emerge, said Timothy Calkins, marketing professor at Northwestern University’s Kellogg School of Management.

“Cannabis has a long history full of colorful characters,” Calkins said, “They’re trying to transition to a very different spot that is responsible and productive. It’s not just about making sure it’s legal, it’s about making sure media companies are comfortable with the advertising, so they really need some standards.”

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10 Tips for a Winning Cannabis Dispensary License

Five licensing consultants, attorneys and operators who have secured licenses in competitive cannabis markets share tips on how to create a winning dispensary license application.

Winning a coveted dispensary license is your golden ticket into the competitive cannabis market. The license application process is more demanding than ever, and it can be tricky to navigate all the nuances—especially if you’ve never done it before. But there are a few secrets to creating an application that stands out. 

Cannabis Dispensary spoke with five licensing consultants, attorneys and operators who have secured licenses in competitive cannabis markets: 

Jonathan Havens, co-chair of the Cannabis Law Practice at Saul Ewing Arnstein & Lehr LLP, resident in the firm’s Baltimore and Washington, D.C., offices. 

Erin Alexander, associate general counsel for Cresco Labs, a Chicago-based cannabis grower, processor and retailer operating in seven states. 

Sara Gullickson, CEO of Item 9 Labs Corp., a publicly traded cannabis company specializing in the development of cannabis products and proprietary delivery platforms. Gullickson also owns the Strive Life of North Dakota dispensary, and Strive Wellness of Nevada LLC, a medical cannabis cultivation and processing facility with distribution rights. Gullickson previously served as the CEO and founder of Dispensary Permits, a nationally recognized cannabis consulting firm that won multiple cannabis licenses across more than a dozen competitive state markets. 

John Darwin, founder and president of ONE Cannabis Group, a vertically integrated cannabis operator and franchisor based in Denver. 

Armen Yemenidjian, co-founder and CEO of Integral Associates LLC, a retail and wholesale cannabis operator that has been awarded licenses in Nevada and California. Integral Associates operates Essence Cannabis Dispensary on the Las Vegas strip, as well as Desert Grown Farms and Cannabiotix NV, its cultivation and processing facilities. 

Here are their tips on how to create a winning dispensary license application. 

1. Understand your state’s application quirks. 

Sara Gullickson: “This industry, specifically the licensing process, is still very new. Each state has its idiosyncrasies, and the application process in Pennsylvania was much different than in Hawaii or Arizona. In some states, specifically California and Michigan, you have to get local jurisdiction support in addition to the state’s blessing. In those situations, the municipality’s application process is more rigorous than the state’s.” 

2. Secure real estate with the appropriate zoning. 

Erin Alexander: “The first step is looking at the regulations to figure out the setback requirements—where can you be, where can’t you be: 1,000 feet from a church, 500 feet from a school? Finding real estate is the most difficult and challenging part of the process; finding places that meet the setback requirements, but also meet your requirements to be able to operate the business. Have Plan A, Plan B and Plan C, because everything ends up being more complicated than you anticipated.” 

Jonathan Havens: “Make sure you can put your dispensary where you want to put it. In some states, the siting process is part of the application process, but sometimes you’ll get a pre-award from the state and then you need to go to the town, and that’s where people get tripped up. Having zoning approval from the local [municipality] is critical.” 

3. Establish security protocols. 

Havens: “Remember that the product you’re dealing with is federally illegal, so security is very important. Even though these states say you can sell it in a dispensary, they want to make sure you have a very tight control over what you’re selling. If you can’t control your product and it’s getting into people’s hands who are underage or don’t have a medical card, that’s the quickest way to lose your license. States are very focused on that, so you can’t overlook having a strong plan in your application to address security.” 

Dispensary Do’s & Don’ts 

DO: Pursue the industry because your skill-set complements this business. 

DON’T: Pursue the industry for profits only. 

DO: Over-plan and research: Dedicate a significant amount of time and energy to the project. 

DON’T: Under-plan: Thinking this will be a walk in the park will land your application in the loser’s pile. 

DO: Ensure your entity is all-inclusive: Diversity matters. 

DON’T: Only include wealthy white men. 

DO: Save for a rainy day: If you think your venture is going to be $500,000, multiply that by four and raise that much capital. 

DON’T: Try to fund the project solo: You will most likely come up short. Cannabis businesses are more expensive than you think! 

DO: Call an industry expert. 

DON’T: Think, ‘It’s just dispensing a plant.’ It’s much more complicated. You will save time, energy and heartache if you call in a pro. 

DO: Rethink real estate: Retrain your brain on what’s a good location—it’s where the city will have you, not in a high-traffic strip mall. 

DON’T: Undervalue how much time it will take you to secure a building/location: This is not a typical landlord-tenant relationship. 

— Sara Gullickson, CEO, Item 9 Labs Corp.

4. Build a strong team with experience. 

John Darwin: “Assemble a great team. Licenses are getting more and more competitive, so someone with a strong pharmaceutical background [for medical dispensaries] or a good government relations background is a great addition to your team. Make sure your team has operating experience. A lot of these licenses are merit-based, so being able to reference a track record of compliance and operational excellence in another state is huge. Also do background checks on all of your team members, because there are key items that can come up and derail the whole process.” 

Havens: “Having an accountant who has worked with clients in the cannabis space is critical. You don’t want to be their guinea pig while they learn the accounting and tax rules. Also have strong legal support, whether that’s an in-house attorney and/or an outside law firm with experience, because questions are going to come up that need quick answers, and you want to have them in your contact list when those questions come up.”

5. Get involved with the local community.

Alexander: “I think the best piece of advice is: Be connected to the community where you want to locate. That can be the secret sauce to winning an application. A lot of people know how to run a dispensary, but you have to spend the time attending city council meetings and engaging with local elected officials so they trust you and so they understand what you can bring to the community. Part of that is also engaging with civic and charitable organizations, finding out what the local priorities are, so you can be a good neighbor and a good steward of the community values.” 

Havens: “A lot of people overlook an aspect of the application that I’m always quick to tell clients to focus on, which is community engagement and education. You can understand the opposition if you take the time to get out and have educational events that show that you’re not just trying to make money, but you really do care about the community. If you have events that are open to the community, not just people who are purchasing your product, you might win people over and you might ward off potential opposition down the road.” 

Gullickson: “Research the specific town or jurisdiction and figure out: ‘Is it red or blue? What are the pain points in the community; are they environmental or are they opiate-related?’ Then pull in some community leaders who focus on those pain points, to make sure you’re hyper-focused on the community. We put together sophisticated community benefits programs that address how we’re going to give back. We build parks, we build sidewalks, we’ve funded little league teams and hosted clothing drives—whatever the area needs. When you contribute to your communities, they’re so much more welcoming.” 

6. Budget more capital than you think you’ll need. 

Alexander: “It can get expensive. You’re obviously going to need application fees and license fees, which can range from a $500 application fee to a $30,000 license fee that you might get refunded if you don’t win. But then you’ve got property hold fees. You’re going to be paying attorneys to review documents. You’re going to be paying planners and architects to design your site. You might be paying both a planner and a zoning attorney to help you through the zoning process. From soup to nuts, I think a fair budget for a good-quality application is probably half a million dollars—which is crazy, but that’s what it takes. There’s a lot of moving pieces to making this successful.” 

Darwin: “We advise clients to have the available liquid funds to cover capital expenses over the course of a year. You want to be making money by the end of that year, but if there’s a rainy day, you want to be well-capitalized to survive.” 

Armen Yemenidjian: “Understand it is a highly competitive market. Because there are so many competing applicants, it’s imperative to have a clear, concise plan with a budget and a path to victory. Applicants need to demonstrate they will be successful if awarded the license. You need to not only have the budget to pay for the application, but also show regulators you have the capital to [operate the business successfully].” 

7. Get a head start before applications are released. 

Gullickson: “When you’re proactive in putting a business plan together and engaging in the state’s programming before the rules and regulations are even finalized, you’re going to position yourself light-years ahead of somebody that just gets the idea to throw an application in when it’s published. My most recent successes are the clients that we’ve spent eight months or a year with, building their team and making sure they had a solid foundation on which to apply.” 

Havens: “The No. 1 thing is to not wait until the last minute. The application timeline is going to be shorter than you want, so look for business partners prior to the application coming out. Attend meetings of medical cannabis commissions to understand what’s coming down the pike and when that next round of licenses is going to be dropped. Get your plans in order. The more elements you have to populate your application before they’re even dropped publicly is going to give you a leg up.” 

8. Impose internal deadlines. 

Havens: “Submission day always goes quicker than you think. It would be nice if everyone on the team could operate with the assumption that this is really due the day before it’s due, because there are always unforeseen circumstances. 

“A lot of states require hand-delivery, so you can’t be finalizing things the day of. Have a single point person who’s the final arbiter of [deadlines, who determines,] ‘What time do we need to stop editing and head over to the state agency to make sure it gets in on time?’ 

“Some states have electronic submissions now, and to the extent they allow you to do a test submission, absolutely do that. If it’s due at 5:00, I wouldn’t start trying at 4:30 to upload a 700-page document. Start late morning at the latest, because there are always issues, and sometimes you can’t get the regulators on the phone to say, ‘What do I do now?’” 

“From soup to nuts, I think a fair budget for a good-quality application is probably half a million dollars—which is crazy, but that’s what it takes.” 

–Erin Alexander, associate general counsel, Cresco Labs

9. Turn a boring application into a creative story. 

Darwin: “Some companies have full teams of technical writers that have graded these types of applications before. That’s who you’re competing against, so it’s important to have a strong technical writing team.” 

Alexander: “Write it in such a way that it’s easy to follow. These end up being massive legal writing projects, so taking the time to put together a very well-written piece will help you stand out. [That requires] … good writers and good subject-matter experts. We have a couple attorneys that work on applications, and we have technical writers that have some operational expertise and can write about our operational practice [so it’s] readable to somebody who may or may not be familiar with how a dispensary operates.” 

Gullickson: “You can hire a technical writer to put your application together, but if you don’t have style and grace and an overarching theme throughout your application, it’s not going to stick out. Who wants to read 100 security plans? Nobody. So how can you create a theme or a story and be really creative in your presentation?” 

10. Partner with industry consultants who have done this before. 

Yemenidjian: “If you’ve never operated a dispensary before, you probably could have gotten away with writing your own application five or six years ago. Now, the process has become so advanced, applicants must have an understanding of technical writing and standard operating procedures to be successful—especially because there are more criteria now, such as community engagement, corporate responsibility and social citizenship, that are being taken into consideration.” 

Havens: “If you go at this alone and don’t involve consultants who know the cannabis business, it’s an uphill climb. I’m not saying it’s impossible, but one of the reasons you see a lot of national or multi-state operators is, obviously they want economies of scale and they want to broaden their footprint, but local interests need their help. It’s hard to populate an operational plan, a clinical plan and a security plan if you haven’t done it before.” 

Gullickson: “I don’t urge working with an expert because I want clients; I urge working with an expert because … you’re just not going to win if you don’t know all these idiosyncrasies, no matter how much you research on the internet. The devil’s in the details with the application, so you need that industry expertise; it’s mandatory. States don’t feel comfortable anymore giving licenses to somebody that doesn’t have the experience.”

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Cresco Labs Announces Approval for Tenth Illinois Dispensary in Naperville

The adult-use dispensary is located in one of the busiest shopping areas in Naperville, the third largest city in Illinois with approximately 150,000 residents.

CHICAGO – September 22, 2020 — PRESS RELEASE — Cresco Labs, one of the largest vertically integrated multistate cannabis operators in the United States, has announced the approval and the location of its tenth Illinois dispensary in Naperville. The adult-use dispensary is located in one of the busiest shopping areas in Naperville, the third largest city in Illinois with approximately 150,000 residents. 

“We have been consistent in choosing locations for our dispensaries in Illinois, focusing on high traffic areas in traditional retail enivronments. Sunnyside* Schaumburg, which is adjacent to Illinois’ busiest mall and our new Naperville dispensary, which shares a block with Costco, Walmart and Starbucks, are great examples of this strategy,” said Charlie Bachtell, Cresco Labs’ CEO and co-founder. “Our approach of meeting the consumer where they are and providing a normalized cannabis shopping experience is allowing our dispensaries in Illinois and all Sunnyside stores nationwide to outperform industry averages.” 

Upon final approval from the State of Illinois for the Naperville location, Cresco will operate the maximum allowed ten dispensaries in Illinois. Cresco’s dispensaries are located in some of Illinois’ biggest cities, busiest shopping areas and most strategic locations to introduce new customers to normalized and professionalized cannabis and take an outsized share of the Illinois market. Total Illinois cannabis retail sales were $95 million in August, while total sales through the first eight months of 2020 were $600 million in the state.

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Illinois gives recreational marijuana store applicants chance for a do-over

Illinois regulators are allowing some applicants for adult-use cannabis retail licenses an opportunity to correct their applications and refile before the state’s lottery for permits.

The state announced finalists for 75 retail licenses weeks ago, but only 21 total applicants scored perfectly on their applications, calling into question the state’s intended effort to advance social equity.

According to Crain’s Chicago Business, while some applicants contend they weren’t notified of problems with their applications and allowed to correct them, others were given that opportunity.

That situation has led to several lawsuits, one of which could be settled because of the state’s changes.

“We believe that these new steps will inject more equity and fairness in the first round of license awards and provide insight as we improve the process for future rounds,” Gov. JB Pritzker said, according to Chicago TV station WLS.

The governor’s office said those applicants who didn’t receive a perfect score, or 252 points, will be notified and given a score sheet detailing how they lost points.

Those applicants will then be able to respond with an amended application.

Illinois’ licensing rules initially stipulated that applicants would be made aware of deficiencies and given an opportunity to fix them before final scores were handed out.

But several applicants claimed they didn’t receive such notices and lacked a method to appeal.

No date has been set for the licensing lottery.

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Consumers’ cannabis buying patterns change markedly in wake of COVID-19 pandemic

Consumers’ purchasing patterns involving marijuana have changed noticeably over the past several months in response to the coronavirus crisis.

Marijuana shoppers are spending more money per visit to recreational retail outlets. But they are shopping less often, perhaps for safety, or scheduling, reasons.

Our heat map of weekly adult-use sales changes in four western states show sales recovering through the year, with retailers benefiting from favorable treatment by state governments that allowed them to stay open or provide curbside service.

Across the country, in fact, many states declared cannabis companies “essential” businesses.

But there have been roller-coaster weeks in adult-use sales in California, Colorado, Nevada and Washington state, according to data provided by Seattle-based analytics firm Headset.

The initial state lockdowns and shelter-in-place orders caused recreational sales to drop almost 50% in late March in the four states – at least until federal stimulus checks started hitting consumers’ bank accounts in April and sales rebounded.

In the past month, however, a downturn in weekly sales has started to emerge. But it is too early to understand the exact cause.

One possibility: The U.S. government’s temporary lifeline to tens of millions of unemployed workers – $600 a week in extra jobless benefits – expired at the end of July.

But up until now, cannabis sales have been relatively recession-resistant.

The National Bureau of Economic Research formally proclaimed the recession began in February, when the coronavirus crisis caused much of the U.S. economy to pause.

Recession or not, marijuana shopping habits have changed markedly since March because of the COVID-19 pandemic, as shown by this chart:

The average amount a consumer purchases at one time – or the average basket size – has increased in California, Colorado, Nevada and Washington state, while at the same time, the number of shopping trips, or baskets, per week have declined.

For example, Nevada’s average basket size jumped $22 after March 23, from $55 to $77.

California and Colorado experienced increases of $10 or more, while Washington state consumers boosted their average purchases by close to $8.

Meanwhile, the number of baskets purchased per week has started to improve since the record lows recorded in March.

Colorado recorded an estimated 362,000 baskets for the week of March 23, the lowest of the year.

That figure has since recovered to 603,000 baskets at the end of August, just shy of the 613,000 recorded at the first of the year.

California, Nevada and Washington state recorded similar buying patterns.

Other mainstream industries report comparable trends as consumers adjust to pandemic shopping.

A survey of grocery shoppers conducted by the Food Industry Association found that 78% of customers changed where they shop, with 40% shopping at fewer stores and 44% spending more money per visit.

While the markets aren’t exactly comparable, the question for cannabis retailers is: Will be is this a temporary, pandemic-induced trend, or have consumers changed their shopping patterns for good?

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California Cannabis Licensing Authorities Unveil New Unified License Search Tool

The new platform provides an easy way to search through the state’s thousands of cannabis business licenses.

SACRAMENTO, CALIF. – PRESS RELEASE – California’s three cannabis licensing authorities – BCC, CDFA and CDPH announced today the launch of a unified licensing search platform, the culmination of a collaboration between the California Department of Technology, the California Health and Human Services Agency Office of Innovation, the Governor’s Office of Business and Economic Development (GO-Biz), and the licensing authorities.

The unified license search tool allows the public to search for cannabis license information from all three licensing authorities by using one search tool. The need for a unified search was identified through conversations with, and surveys of, licensed businesses, local governments, and law enforcement conducted in late 2019 and early 2020. 

“This unified license data search tool will make it easier for the public to access cannabis license information without having to inquire with each licensing authority separately,” Bureau Chief Lori Ajax said. “This will also help consumers identify licensed cannabis retailers near them.”

Some features of the new license search include an interactive map and geolocation tools. There is also a survey where users can submit usability feedback to the licensing authorities as they continue to refine the search tool. The unified license search tool can be accessed at https://search.cannabis.ca.gov/.

The unified license search will be updated every 24 hours; however, the most recent data will still be available through each licensing authority’s existing search tool on its website.

In January 2020, Gov. Newsom announced plans to consolidate the three cannabis licensing authorities into a single Department of Cannabis Control, in an effort to improve access to licensing and simplify regulatory oversight of commercial cannabis activity. Today’s announcement is part of that overall plan.

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Colorado marijuana sales blow past $200 million in July

Colorado cannabis sales set a record yet again in July, eclipsing $200 million in a single month for the first time.

Dispensaries sold $183,106,003 in recreational marijuana and $43,268,565 in medical marijuana in July, for a combined $226,374,568 in revenue, according to data from the Colorado Department of Revenue. That’s up 13.8% from June, another record-setting month when the industry raked in nearly $199 million.

So far in 2020, consumers have purchased more than $1.2 billion worth of cannabis products and the state has collected $203 million in taxes.

Colorado’s cannabis industry is poised to shatter 2019’s record of $1.75 billion in annual sales, especially since August is typically the state’s highest-grossing month. Those figures are due out in early October.

Marijuana sales have soared to new heights since spring despite the coronavirus pandemic. Dispensaries were allowed to remain open during Colorado’s statewide stay-at-home order, which forced them to adapt to new buying habits such as online ordering. In August, a contactless weed vending machine debuted in Pueblo.

An early freeze and snow in September may have jeopardized millions of dollars worth of marijuana grown outdoors and slated for harvest in October. That may also affect flower and extract prices this fall.

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US House said to delay marijuana legalization vote until after election

A bill to remove marijuana from the Controlled Substances Act and thereby legalize the plant federally won’t be voted on by the U.S. House next week or before the Nov. 3 election.

“House Dems have punted a vote on a marijuana legalization bill to the lame duck (session),” tweeted Sarah Ferris, a congressional reporter for Politico.

She wrote that “many moderates were furious that the House would vote on weed before taking up a COVID bill, though other Dems called it a social justice imperative.”

According to Politico, Congress will return after the election for a lame duck session, and lawmakers and aides have said a vote will occur on the legislation then.

In a statement, House Majority Leader Steny Hoyer confirmed such a timetable, saying: “The MORE Act remains a critical component of House Democrats’ plan for addressing systemic racism and advancing criminal justice reform, and we are committed to bringing it to the Floor for a vote before the end of the year.

“Right now, the House is focused relentlessly on securing agreement to stave off a damaging government shutdown and continuing to do its job addressing the COVID-19 pandemic.”

The MORE Act is a comprehensive measure that would have massive business implications. It also seeks to address social justice issues.

The House Judiciary Committee approved the MORE Act in a historic vote last November. But passage by the full House would be a milestone for marijuana reform.

Industry insiders said House passage of the bill would set the stage for a similar measure to pass the Senate as soon as next year – if the Senate flips to Democrats in November.

As of Thursday, the MORE Act had 111 co-sponsors in the House, up from 87 since Hoyer’s email in late August, but still just one Republican, Matt Gaetz of Florida.

The measure calls for a 5% federal tax on marijuana products that would be directed to programs that would benefit individuals and communities most impacted by the war on drugs.

Republican leadership had criticized the move to vote on the legislation as soon as it was announced in late August.

Michele Perez Exner, communications director for House GOP leader Kevin McCarthy, especially was sharp in a tweet: “In the midst of a pandemic associated with a respiratory tract infection, this is what Dem leaders have decided to make their priority.”

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Marijuana vape firms say one year after vaping crisis, customers turning to legal suppliers over illicit market

A year after the vaping health crisis upended the cannabis industry, marijuana vape companies report that sales have rebounded as consumers grasp the danger of consuming illicit-market vaporizers and switch to legal suppliers.

Arnaud Dumas de Rauly, co-founder and CEO of New York-based vape manufacturer The Blinc Group, sees this as the biggest impact of the vaping health scare.

“It made consumers realize that you can’t just buy any cannabis vaping product,” he said. “You can’t go to the black market.”

The outbreak of what the Centers for Disease Control and Prevention dubbed e-cigarette or vaping product use-associated lung injury (EVALI) in the summer of 2019 slowed the growth of some companies and stifled sales toward the end of the year.

But vape products, like other cannabis goods, seem to also be weathering not only the health crisis but the current economic downturn.

“We’ve seen tremendous bounce back from the vape crisis,” said Sammy Dorf, chief growth officer and co-founder of Verano Holdings, a vertically integrated cannabis company in Chicago. “Business is extremely strong.”

The COVID-19 pandemic hasn’t slowed business much, either, according to the vape companies, despite fresh warnings that vaping and smoking can make a person more vulnerable to the virus.

“We haven’t seen a change in the purchasing pattern of our patients or customers due to the pandemic,” Dorf added.

How it played out

The vape health crisis unfolded rapidly, beginning in the summer of 2019 with mainstream media reports seizing on the news that people were dying from allegedly vaping mainly THC products.

Some states with regulated cannabis markets such as Washington temporarily banned additives in vapes, while others, including Massachusetts, banned the sale of vape products altogether.

It took a few months for more information about the illness to surface.

Scientists identified one substance, vitamin E acetate, which is added as a cutting agent to some vape oil, as a possible culprit in the lung illness.

Many industry officials claimed that vitamin E was more commonly found in illicit market products and pointed out that legal cannabis is regulated, tested and safer than unregulated street products.

Most recently, an academic study published in August confirmed that states lacking licensed, regulated cannabis saw the highest rates of EVALI, particularly those in the northern Midwest. (See chart above.)

The report, from the Society for the Study of Addiction, noted “these results suggest that EVALI cases did not arise from e-cigarette or cannabis use per se, but rather from locally distributed e-liquids or additives most prevalent in the affected areas.”

“We believe the bigger lesson here is that the data clearly indicate that there were fewer cases of lung illnesses and injury in states where legal, regulated cannabis products were available,” said Steve Fox, strategic adviser to the Cannabis Trade Federation.

“In fact, the lowest rates of incidence were in Colorado, Washington and Alaska – three of the first four legal states – with Oregon and Nevada close behind.”

‘Very scary’

According to Seattle data-analytics company Headset, sales of adult-use vape products in three of four states with recreational markets generally have recovered, though Nevada retailers saw sales still lower than pre-health scare levels after the state enacted stricter lockdown measures for marijuana retailers during the pandemic.However, market share for vape pens is lower year-over-year, according to the Marijuana Business Factbook, as flower tends to represent a more economical choice amid COVID-19 and greater economic concerns.

Several cannabis vape business executives interviewed for this story said sales have completely rebounded.

George Sadler, president of San Diego-based Platinum Vape, which sells products into several markets, said sales plateaued right after the initial scare but started trending upward in the early winter.

“We never really saw much of anything on the level of decline that we thought,” Sadler said.

Dumas de Rauly said his sales started to recover in December as consumer confidence in the legal market returned.

“We have doubled our revenue in terms of vaping hardware since the vaping crisis,” Dumas de Rauly said.

But he added that his business likely lost a year of growth because of the earlier drop in sales.

In Denver, Dan Gardenswartz, chief operating officer at Spherex, said his company’s sales never took a “meaningful hit,” but the end of 2019 was “a little bit of a roller coaster.”

“It was a very strange time,” he said. “The vape crisis was a very scary thing for people in the industry.”

Seth Wiggins, chief revenue officer for Clear Cannabis, also in Denver, saw a decline in sales for about 60-90 days before the trend began to reverse.

The health crisis “was very painful initially,” he added.

However, Wiggins said his company has posted record sales in recent months.

Illicit to licit

Wiggins attributes that lift in sales to customers who are shifting from illicit suppliers to legal providers.

“The compliant market allows for more regulations and safety,” he added. “It’s breaching the tipping point where the cost basis is not worth the risk” to buy off the street.

Morgan Fox, spokesman for the National Cannabis Industry Association, also identified that trend.

“Across the board, we’ve seen a lot of people moving away from the unregulated market largely because of public-health concerns,” he said.

Gardenswartz said he saw more people transition from the illicit to the legal market in California than in Colorado, which has imposed tighter controls on illegal dispensaries peddling products.

Sadler agreed. He believes there has been some decline in vape sales on the unlicensed market, and he noted that some of his consumers have made the shift from the illicit market to licensed businesses.

He cited Weedmaps’ decision to curtail advertising for unlicensed dispensaries as helping consumers find legal, tested vape products.

Consumers are more aware that they’re going to a licensed dispensary, and stores in California have even displayed QR codes on storefronts so customers know they’re buying from a legal shop.

“People are more diligent about asking the questions,” he said.