The Washington, D.C., City Council removed proposed penalties on “gift” businesses, but the change only highlights the uncertainty and debate clouding District cannabis.
Last week, the Washington, D.C., City Council voted to expand its medical cannabis program by extending the eligibility of patients whose cards expired after March 2020. Patients with cards expiring after this date can now purchase medical cannabis through January 2022.
The move comes in response to a significant slowdown in medical cannabis sales during the pandemic. Council Chairman Phil Mendelson, who proposed the bill, says that more than half of all medical cannabis patient registrations have expired since spring 2020, in part due to a slowdown in government operations because of COVID-19. The new bill also doubled the amount of cannabis District patients are allowed to purchase each month up to eight ounces.
Included in Mendelson’s original proposal was a section penalizing “gift” businesses that skirt the law by selling legitimate items and providing cannabis for free. Dozens of such outfits have sprung up since cannabis was legalized in the District in 2015—many lease retail storefronts and pay taxes like any normal business. The original bill would have allowed these operators to face criminal charges and fines of up to $30,000.
After significant backlash, the suggested penalties were removed the day before vote. But the original proposal represents yet another example of the uneasy peace in the District’s cannabis industry, an undesirable situation created by a combination of Congressional interference and an inadequate medical program.
The District’s Gift Industry
Cannabis has been legal in D.C. since the passing of Initiative 71 (I-71), which went into effect in February 2015. But every year since, Republicans have stopped the District from spending money to set up its own adult-use industry. Thanks to Congressional oversight over D.C. spending, an annual amendment to the federal budget known as the Harris Rider – named after Rep. Andy Harris (R-MD) who created it – has prevented the formation of an adult-use industry in the capital.
To meet the untapped demand, cannabis entrepreneurs have created gifting businesses that sell everything from stickers to artwork to sneakers. In addition to these normal items, customers can receive a gift of cannabis flower, edibles or vape cartridges with each purchase. In the early days of I-71, these businesses were more underground, often run out of private restaurants or residences. Today, many operate their own storefronts and are difficult to distinguish from licensed dispensaries.
Should Gift Businesses Be Stopped?
Mendelson and other supporters of a crackdown on the gifting market believe it’s not only a threat to already-suffering licensed medical businesses, but a catalyst for violent crime in the District. His original bill claims “the products sold by illegal storefronts and delivery services are not traced or tested, putting patients who cannot afford to possess medical cannabis from a licensed dispensary at risk of ingesting contaminated products. Additionally, cannabis pop-ups have been associated with incidents of violence, including armed robberies and shootings, that endanger residents of the District.”
Earlier this year, D.C. Police Chief Robert Contee linked the gray market with violence in the District, calling “unlawful distribution of marijuana in communities” a “bad recipe for disaster.”
But grassroots cannabis advocates in D.C. believe these quasi-legal businesses are an important part of the industry, helping more people access cannabis during a time when both local and federal governments have failed them.
“What I think they’re getting wrong is they’re looking at the gifting business as criminals, when actually they are the likely applicants for social equity and microbusiness licenses,” said Adam Eidinger, founder of the D.C. Marijuana Justice lobbying group that played an integral role in the passing of I-71 in 2014.
In a phone interview, Eidinger told Cannabis Business Times and Cannabis Dispensary that his group suggested the council levy civil charges instead of the criminal penalties initially included in the proposal. He pointed at the District’s limited medical program as the reason for the thriving gift market: Despite a population comparable to the city of Denver, plus a significant tourism sector, D.C. has onlyseven licensed medical dispensaries.
“They’re trying to somehow reward the medical cannabis industry in D.C., and there’s a glaring irony here – there were not enough licenses ever issued in the first place to meet the demand of District cannabis consumers,” said Eidinger. “That’s clearly the case when you have a top level of maybe 12,000 registered patients and probably 100,000 regular users in the D.C. area. Maybe 90% of the cannabis is coming from 90-plus brick and mortar gifting businesses scattered across D.C.”
Others in the cannabis industry believe the council wasn’t wrong for proposing action to fix the District’s broken market.
“While Congress is to blame for DC’s gray market, District leaders and regulators must do everything within their power to address the situation,” said Steven Hawkins, CEO of the U.S. Cannabis Council nonprofit advocacy group and Executive Director of the Marijuana Policy Project.
“The so-called gifting system is completely unregulated and untaxed. There are no standards, age restrictions or oversight,” added Hawkins via email. “The status quo is untenable.”
Will D.C. Be Allowed to Issue Adult-Use Licenses This Year?
With Democrats in control of Congress and the White House, there is more optimism than ever that 2021 will be the year the Harris Rider is finally left out of the federal budget, allowing the District to issue licenses for recreational cannabis businesses. Negotiations on the final budget are ongoing, but a preliminary House version from last month did not include the amendment.
In anticipation of the rider’s removal, the D.C. Council has scheduled another hearing on November 19 for public testimony on a pair of cannabis bills: one to further expand the medical program and another to establish plans for the cultivation, production and sale of cannabis to adults in the District. Both bills were also introduced by Chairman Mendelson.
And while Congress has tied the hands of D.C. lawmakers for the moment, local advocates say the outrage over the early version of last week’s bill is a warning sign for District officials: create a fair and equitable adult-use industry or face the consequences.
“What we have here is a politician—namely Phil Mendelson—and a mayor, Mayor Bowser, who are completely out of touch with what residents are screaming for, which is low-barrier-to-entry licensing,” said Eidinger.
Only time and Congressional negotiations will tell exactly when they’ll get a chance to establish such a system.
Adult-use cannabis sales are one step closer to becoming a reality in New Jersey.
After the New Jersey Cannabis Regulatory Commission (CRC) missed its deadline to start accepting business license applications in September, the commission has finally announced applications for growers, producers and testing laboratories will open Dec. 15. Adult-use license applications for retailers will open March 15, 2022, and applications will be accepted on a rolling basis, NJ.comreported.
According to JD Supra, CRC will prioritize reviewing, scoring and approving applications in the following order:
Social Equity Businesses Applicants
Diversely Owned Businesses Applicants
Impact Zone Businesses Applicants
License Applicants receiving bonus points for collective bargaining agreements, project labor agreements or residency
All other applicants
Additionally, “priority will be given to conditional license applications over annual license applications, and microbusiness applications will be prioritized over standard cannabis business applications in every category,” the article states.
As Cannabis Business Times previously reported, the CRC is not permitted to approve more than 37 cultivation licenses between February 2021 and February 2023—excluding microbusinesses and expanded alternative treatment centers. However, during that time, the CRC may accept and review additional licenses as long as the issued license number does not exceed 37.
The state’s adult-use cannabis law requires legal sales to begin by mid-February or six months after the CRC adopted its initial rules in August, but, according to NJ.com, it’s unlikely sales will start by then without new businesses.
Medical cannabis businesses and growers in the state will first be permitted to legally sell adult-use cannabis once they can prove they have enough product to meet patient demand and can pay the fees to expand to the adult-use market, according to the news outlet.
The Office of Cannabis Management launched a portal to track laws that will keep dispensaries and lounges out of some localities
ALBANY — In an effort to gather crucial local data necessary to plan the state’s licensing of adult-use cannabis businesses, New York’s Office of Cannabis Management (OCM) is compelling municipalities to submit their decisions to opt out of allowing cannabis retailers as soon as possible through an online portal launched Wednesday, Nov. 10.
The opt-out process has been a hot topic at town board meetings across the state, with a Goshen tirade even going viral on TikTok, after the state legalization bill passed last spring gave municipalities until Dec. 31, 2021, to push through local laws limiting the distribution of licenses for businesses like dispensaries and cannabis lounges in their jurisdictions.
In some municipalities, including the Hudson Valley’s Tuxedo and Cold Spring, voters were asked to weigh in directly on the potential for cannabis businesses in their area during last week’s general election.
“These decisions will be critical for those seeking a license to understand where opportunities are available and for the Board to understand the initial geographic picture of participation,” said Chris Alexander, the OCM’s executive director.
The OCM and its oversight board, the Cannabis Control Board, have not yet provided any details to prospective adult-use licensees on the nature of the application process or the number of licenses the state will grant. But knowing which municipalities will disallow such businesses will be crucial for the board to determine how to distribute the initial round of licenses under their purview.
“I encourage localities requesting to opt-out of hosting dispensary and on-site consumption licensees to file their requests promptly,” said Tremaine Wright, who chairs the board that will ultimately approve the state’s first adult-use cannabis businesses.
Municipalities are not allowed to prohibit other conduct made legal on the state level last spring, such as smoking weed in public. While they are required to pass any local opt-out laws by Dec. 31, governments can choose to opt back in at any time or to allow some types of businesses but not others.
Some local leaders in the Capital Region and the Hudson Valley have chosen to permit cannabis dispensaries but have banned on-site consumption businesses, or “lounges,” which are akin to bars for pot use.
The recent Hudson Valley referendums produced a similar result: residents in both Tuxedo and Cold Spring appear to have opted out of on-site consumption businesses, though voters from the latter opposed a separate proposal to ban dispensaries, offering a boost to those hoping to purchase pot and smoke at home. In Cold Spring, still-uncounted absentee ballots may impact this result.
Municipal governments that chose to opt out of having cannabis retailers in their jurisdictions were already required by law to directly request that the Cannabis Control Board refrain from allowing such businesses to obtain state licenses.
At the federal level, a trio of senators unveiled the Cannabis Administration and Opportunity Act (CAOA) this summer to deschedule, tax and regulate cannabis, and the Secure and Fair Enforcement (SAFE) Banking Act passed the U.S. House for the fifth time in September as part of a defense spending package.
At the state level, Arizona, Montana, New Jersey and South Dakota legalized adult-use in the 2020 election (although the South Dakota Legislature is now grappling with its own legalization proposal while the state’s Supreme Court deliberates whether the ballot measure is unconstitutional). In 2021, Connecticut, New Mexico, New York and Virginia all legalized adult-use cannabis legislatively.
Only 14 states remain without full medical or adult-use legalization. With all traditionally blue states out of the way, red states are now weighing their options, perhaps seeing the inevitability of change.
Here, Cannabis Business Times and Cannabis Dispensary share the states to watch in 2022 as ballot initiatives and legislation ramp up.
On March 24, The Health and Human Development Committee approvedHouse Bill 150, the Delaware Marijuana Control Act, a legislation to legalize, tax and regulate adult-use cannabis in the state.
The legislation would establish the regulatory framework for adult-use cannabis in Delaware, allow adults 21 years and older to purchase up to one ounce of cannabis for personal use, provide opportunities for small businesses to receive licenses, and give equal access to individuals living in areas disproportionately affected by prohibition, Cannabis Business Times reported.
The legislation was set for a House floor vote in early June but was delayed after a debate over a social equity fund included in the bill. Chief sponsor Rep. Ed Osienski said he plans to reintroduce a substitute of the bill in early January, in time for the 2022 legislative session.
The majority of Delawareans support adult-use legalization, as a 2018 University of Delaware poll showed 61% of voters favor legalization.
“Support for adult recreational marijuana has been growing for years in Delaware and across the country,” Osienski said in a press release. “We have seen other states successfully enact policies that established a safe and legal market for cannabis, and we have studied those laws to craft the best policy for Delaware. We believe we have a solid bill that has the support of the public, and we believe we have the political will to pass this bill into law.”
Voters are expected to revisit the bill during the 2022 legislative session.
In early October, Oklahomans for Responsible Cannabis Action filed initiatives to legalize adult-use cannabis and to dial in some regulatory oversight structure of the state’s medical cannabis market. Both initiatives target the November 2022 election.
The pair of petitions make for a promising run at cannabis reform in a deeply conservative state that has found a place on the vanguard of the regulated medical marketplace.
“Until we pass recreational [marijuana legalization] we will not be able to truly bring stability to our program,” Jed Green, head of Oklahomans for Responsible Cannabis Action, told The Oklahoman. “Legalization prevents diversion. Folks have been and are going to use marijuana. Have been for decades. It is in the best interest of our state to get ahead of the curve on this issue. We must put this issue to rest.”
As things stand now, Oklahoma is in a unique position with its medical cannabis market: The state legalized medical cannabis in 2018 and enacted a free-market approach to licensing. By and large, any state entering the legal cannabis space after, say, 2016, has pursued a more tightly regulated marketplace with limited licensing opportunities for growers, processors and retails. This raises interesting questions for what an adult-use market might look like in Oklahoma.
Baked into the medical cannabis regulatory overhaul initiative, which would replace the TK with the Oklahoma State Cannabis Commission, is a provision to bar the state from capping cannabis business licenses.
Mississippi crossed the finish line to fully legalize medical cannabis only to have the state’s Supreme Court overturn a 2020 voter-approved ballot initiative this May.
Going against two-thirds of Mississippians who voted in support of legalization, six of nine justices ruled the measure was unconstitutional based on a signature-gathering technicality stemming from the state’s outdated initiative process that put a five-district requirement mathematically at odds with the political structure of the state’s electorate following the 2000 Census.
The 2020 citizen-led ballot measure prevailed over Alternative 65A, a competing measure put forth by the Mississippi Legislature, which industry advocates called a cynical effort by lawmakers to misdirect voters. But now legalization is in the hands of those very lawmakers.
Republican Sen. Kevin Blackwell, chairman of the Senate Medicaid Committee, and Republican Rep. Lee Yancey, chairman of the House Drug Policy Committee, announced in late July they were working on bill proposals aimed at restoring the will of their constituents. In late September, legislative leaders reached a deal on a medical cannabis draft bill and said they planned to ask Republican Gov. Tate Reeves to call an executive session.
During an Oct. 8 interview, Lt. Gov. Delbert Horsemann told WLOX News that Blackwell led negotiations to address Reeve’s requisites for calling a special session and that a final version of the bill was on the governor’s desk. The governor’s announcement awaits.
– Tony Lange
The Maryland House of Delegates is expected to introduce legislation to legalize adult-use cannabis in the state early next year, putting it on the 2022 general election ballot.
“Adding the measure to the 2022 general election would bypass the state legislature and allow the law to go into effect through just the public’s vote,” Cannabis Business Times reported.
In July, Maryland House Speaker Adrienne A. Jones (D-Baltimore) announced her support of putting the question of legalization before voters.
“The disparate criminal justice impact leads me to believe that the voters should have a say in the future of legalization,” Jones said. “The House will pass legislation early next year to put this question before the voters, but we need to start looking at changes needed to State law now.”
Jones also appointed a 10-member group to work over the next year on establishing the regulatory framework for adult-use cannabis in Maryland if voters were to approve the measure.
A group of cannabis advocates in the Buckeye State has relaunched efforts to “regulate marijuana like alcohol” after the COVID-19 pandemic stalled the campaign’s push to place an adult-use legalization measure on Ohio’s 2020 ballot.
The Coalition to Regulate Marijuana Like Alcohol’s proposed law would legalize and regulate adult-use cannabis cultivation, manufacturing, testing and sales to adults 21 and older, as well as allow adults to grow up to six plants at home for personal use. The proposal would levy a 10% tax on adult-use cannabis sales, in addition to regular state and local taxes, to support social equity, host communities, substance abuse education and treatment, and a Division of Cannabis Control, which would oversee the industry.
The proposed law allows Ohio’s existing medical cannabis operators to expand their cultivation footprint and open additional dispensaries to serve the adult-use market. It also authorizes new adult-use cannabis licenses, including 40 Level III cultivation licenses and 50 retail licenses, with a preference to social equity applicants.
The Ohio Ballot Board then officially certified the initiative as a single issue, clearing the way for the Coalition to Regulate Marijuana Like Alcohol to collect the more than 130,000 signatures required to present the proposed legislation to the Ohio Legislature.
With pressure exerted from states like Montana and South Dakota—new entrants in the adult-use landscape—Wyoming advocates are pushing hard for medical cannabis legalization in 2022. The signature-gathering process is under way.
“We’re encouraging medical freedom and medical liberty,” Madonna Long, one of the initiative sponsors, told Fox 13. “Voters truly do understand what the initiative is, and they’re coming here on their own.”
A trio of efforts to legalize adult-use cannabis this session has created some spark in Pennsylvania that wasn’t necessarily there before neighboring New Jersey’s voters and New York’s Legislature decided to go green within the past year.
In the Pennsylvania House, Democratic Reps. Jake Wheatly and Dan Frankel formally filed their adult-use measure, the “Cannabis Regulatory Control Act,” which aims to legalized the possession of up to 1 ounce of cannabis or 5 grams of concentrate for personal use for adults 21 and older.
The legislation, House Bill 2050, puts social and criminal justice at the forefront of reform. In addition, Amber Littlejohn, executive director for the Minority Cannabis Business Association, said provisions in the measure help with access to capital, address barriers to entry and create pathways for small businesses to participate in the industry.
H.B. 2050 competes with a pair of efforts that have GOP backing in the Senate.
In February, Republican Sen. Dan Laughlin and Democratic Sen. Sharif Street introduced a bipartisan proposal with provisions for social and economic equity that include expunging non-violent cannabis convictions. As of mid-October, they have yet to officially file their proposal.
And Republican Sen. Mike Regan, a former U.S. Marshal with a 23-year background in law enforcement, announced Oct. 4 that he’s seeking co-sponsorship for adult-use legislation he plans to introduce. The chairman of the Law and Justice Committee, Regan said current state policy on cannabis has financially “benefitted and perpetuated” organized crime, gangs and cartels.
Voting in favor and Pennsylvania’s medical cannabis measure in 2016, when he was a member of the state House, Regan said he wants to build off the success of a program that had more than 582,000 patients and caregivers as of May 2021. Regan said his proposal will allow the legal purchase and possession of firearms regardless of one’s choice to use cannabis, and address DUI enforcement, among other provisions.
Pennsylvania’s Republican-controlled Legislature is in session through the end of the year.
Rhode Island (Adult-Use)
The Rhode Island General Assembly remains in recess since adjourning from its regular session July 1, but adult-use cannabis legalization is still on the table for a possible special session this fall.
On June 22, the Senate passed an adult-use bill, 29-9, that aims to allow those 21 and older to possess up to 1 ounce of cannabis or 5 grams of concentrate and grow up to six plants for personal use. It also would also expedite the expungement process for those with misdemeanor cannabis records.
The measure, Senate Bill 568, was sponsored by Sen. Joshua Miller and nine of his Democratic colleagues. Miller has been advocating for reform since he chaired a commission that examined prohibition and the effects of what he called a failed policy in 2010. When Miller finally had the opportunity to introduce his adult-use bill in June, it took the upper chamber all of 15 minutes to discuss the legislation before passage.
But that was a week before adjournment, when House Speaker Joe Shekarchi said the lower chamber was focused on passing a budget and would instead kick cannabis legalization down the road to a special session.
Senate President Dominick Ruggerio, one of the S.B. 568 sponsors, told WPRI-TV last month that legislative leaders were “very close” to making a deal to take up in special session.
Before adjournment, S.B. 568 competed with Democratic Rep. Scott Slater’s House bill and Democratic Gov. Dan McKee’s state budget proposal he unveiled in March.
Nebraskans for Medical Marijuana is again trying to get medical cannabis legalization in front of voters after the Nebraska Supreme Court struck down the group’s 2020 ballot measure on the grounds that it violated the single-subject rule outlined in the state’s constitution.
The first initiative would require the Nebraska Legislature to enact laws to protect doctors who recommend cannabis to their patients, as well as the patients who possess and use medical cannabis, from criminal penalty. The second measure would call on lawmakers to pass legislation to establish a regulatory framework that protects businesses that produce and sell medical cannabis.
The group’s proposed constitutional amendment would charge the state’s agriculture department with overseeing the recreational marketplace, allow residents to purchase up to four ounces of cannabis for personal use, grow up to 12 cannabis plants at home, and clear past cannabis-related convictions.
The group “has until July 22 to gather enough signatures to qualify its initiative for the 2022 ballot,” Cannabis Business Times reported.
Sensible Florida has filed a proposed constitutional amendment that would legalize adult-use cannabis in the Sunshine State after the Florida Supreme Court struck down an earlier version of the amendment in June.
The group’s original initiative, called “Regulate Marijuana in a Manner Similar to Alcohol to Establish Age, Licensing and Other Restrictions” was headed to the 2022 ballot before the Florida Supreme Court ruled that the words “for limited use” were misleading.
The new proposal would legalize cannabis use for adults 21 and older and would allow adults to grow up to 18 plants at home for personal use.
Sensible Florida must collect more than 891,000 valid signatures by Feb. 1, 2022, and receive Supreme Court approval to qualify the initiative for the 2022 ballot.
Voters may face competing adult-use legalization measures next year, as Fair Access Missouri and Legal Missouri 2022 are working on similar efforts.
“There’s widespread support among Missouri voters to regulate, tax and legalize marijuana,” Legal Missouri 2022 campaign manager John Payne said in a public statement earlier in the summer. “The status quo has allowed an unsafe, illegal market to thrive in Missouri, while preventing law enforcement from truly prioritizing the fight against violent crime.”
Payne’s group seeks a 6% sales tax on cannabis purchases in this potential new market, with plans to extend an option to local government to levy their own tax rate.
The situation may very well end up echoing the state’s 2018 medical cannabis legalization, which saw three competing measures laid before voters. Ultimately, only one of them passed, which avoided the legal snafu of a conflict at the polls.
North Carolina (Medical)
Although the North Carolina Senate Judiciary Committee has passed S.B. 711 twice this year, the medical cannabis legalization bill hasn’t made it much farther than that in the Statehouse.
“There’s far more moving parts to this thing than I thought there was when we began,” Sen. Paul Lowe (D-Forsyth), one of the bill’s sponsors, told WNCN in September. “We want to make sure we get it right.” With some open-ended concerns about specific regulatory language in the bill, lawmakers surmised that this one might be sitting on the table until the next legislative session convenes early next year.
It has been a bumpy road to this point in North Carolina, fraught with false starts and an electorate keenly supportive of medical cannabis (with 80% of voters calling for it as far back as 2017).
With the political and economic pressure coming down on medical cannabis holdouts like North Carolina, could 2022 be a watershed year? Stay tuned…
South Dakota (Adult-Use)
It’s been six months since the South Dakota Supreme Court heard arguments on the constitutionality of a voter-approved, adult-use cannabis amendment from the November 2020 election. As of Oct. 27, the state’s high court remains silent on rendering a final decision regarding the fate of Amendment A, which passed with a 54.2% majority.
Plaintiffs in the case argued that the measure violates the state’s one-subject rule and does not simply amend the state constitution but, rather, revises it.
Without the Supreme Court’s decision, Amendment A currently sits as unconstitutional, which Circuit Judge Christina Klinger ruled in February. Republican Gov. Kristi Noem, who opposed Amendment A, nominated Klinger to the state’s Sixth Circuit Court in early 2019. Noem facilitated taxpayer funded litigation seeking to strike down Amendment A earlier this year.
While the voter-approved initiative hangs in the balance, South Dakota lawmakers are pushing a compromise adult-use legalization effort through the state Legislature.
The Adult-Use Marijuana Study Subcommittee, which has been studying the issue since June, consists of nine House members and four senators, including 12 Republicans and one Democrat. The bicameral body voted Oct. 19 to recommend a bill that would allow adults 21 and older to purchase up to 1 ounce of cannabis, decriminalize up to 4 ounces and ban public consumption.
However, that proposed legislation goes against the majority vote in that it intends to prohibit outdoor commercial cultivation operations as well as home grows.
Separately, cannabis advocacy group South Dakotans for Better Marijuana Laws is gathering signatures for an initiative to put adult-use legalization back on the ballot for 2022. Unlike Amendment A, the proposed 2022 ballot initiative does not include business licensing, sales or regulations.
Should the Supreme Court uphold Amendment A, then the group would drop its 2022 initiative campaign.
Idaho cannabis advocates are working to place medical and decriminalization measures on the state’s 2022 ballot in what Russ Belville, spokesperson for The Idaho Way (formerly known as the Idaho Citizen Coalition for Cannabis), told Cannabis Business Times is “the most hostile state” toward policy reform.
Belville’s organization is currently collecting the nearly 65,000 signatures required to place the Personal Adult Marijuana Decriminalization Act of 2022 (PAMDA) on Idaho’s 2022 ballot. The initiative aims to end arrests for the personal possession of 3 ounces or less of cannabis in private by adults 21 and older.
Meanwhile, Kind Idaho is gathering signatures to get the Idaho Medical Marijuana Act for 2022 (IMMA) in front of voters next year. IMMA would legalize the possession of up to 4 ounces of cannabis for medical purposes, as well as the home cultivation of up to six plants for patients with a “hardship waiver.” The initiative would also create a system of dispensaries to sell medical cannabis to qualified patients.