CBD OIL

ALBANY, New York, Feb. 17, 2020 – PRESS RELEASE – Governor Andrew M. Cuomo today announced 30-day amendments to the Governor’s proposal to establish a comprehensive adult-use cannabis program in New York. Specifically, these amendments will detail how the $100 Million in social equity funding will be allocated, enable the use of delivery services, and refine which criminal charges will be enforced as it relates to the improper sale of cannabis to further reduce the impact on communities hit hardest by the war on drugs.

“As we work to reimagine, rebuild and reopen New York, we’re taking every opportunity to address and correct decades of institutional wrongs to build back better than ever before,” Cuomo said. “We know that you cannot overcome a problem without first admitting there is one. Our comprehensive approach to legalizing and regulating the adult-use cannabis market provides the opportunity to generate much-needed revenue, but it also enables us to directly support the communities most impacted by the war on drugs by creating equity and jobs at every level, in every community in our great state.”

Allocation of $100 Million Cannabis Social Equity Fund

Social and economic equity are the bedrock of Cuomo’s proposal to legalize cannabis for adult-use and as part of that, his proposal includes a $100 million dollar fund to help revitalize communities that have been most harmed by the war on drugs.

Through this fund, qualified community-based nonprofit organizations and local governments would apply for funding to support a number of different community revitalization efforts, including, but not limited to:

• Job placement and skills services,
• Adult education,
• Mental health treatment,
• Substance use disorder treatment,
• Housing,
• Financial literacy,
• Community banking,
• Nutrition services,
• Services to address adverse childhood experiences,
• Afterschool and child care services, system navigation services,
• Legal services to address barriers to reentry, and
• Linkages to medical care, women’s health services and other community-based supportive services

The grants from this program may also be used to further support the social and economic equity program.

Under the amended proposal, the Department of State would allocate the funding, through grants administered by Empire State Development Corporation, in collaboration with the departments of Labor and Health, as well as with the Division of Housing and Community Renewal, and the offices of Addiction Services and Supports and Children and Family Services. Final allocations and administration of funding would also be contingent upon approval from the Division of the Budget.

Enabling the Use of Delivery Services

The legalization of cannabis is expected to play an important role in helping rebuild New York’s economy following the damaging effects of the COVID-19 pandemic. In fact, legalization is projected to create more than 60,000 new jobs and spur $3.5 billion in economic activity while generating an estimated $350 million in tax revenue once fully implemented.

Cannabis legalization also has the potential to have a significant economic benefit on distressed areas in New York, providing employment opportunities for all levels of the workforce. As social and economic equity are the bedrock of Cuomo’s proposal, delivery services offer a low-cost entry point into the industry, particularly in communities that have been especially impacted by the war on drugs.

Recognizing this, Cuomo is amending his proposal to allow for the permitting of delivery services as a way to open up access to this new industry even further so more New Yorkers can participate as it grows. As part of this, local governments would have the opportunity to opt-out of delivery services occurring within their jurisdiction.

Criminality of Improper Sales

When establishing a new product market, as Cuomo’s proposal does, there will inevitably be attempts by bad actors to skirt rules and commit fraud for their own financial gain. This makes it critically important to ensure that penalties are carefully calibrated to ensure that all those who wish to participate in this new market are operating on the same level playing field.

Cannabis, however, adds another complicating factor to this dynamic – years of outdated policies stemming from the war on drugs have disproportionately impacted communities of color. Already, New York has taken steps to decriminalize cannabis and as this new market is realized, and it’s critical that criminal penalties are thoughtfully assigned, as to ensure that the progress which has already been made, is not inadvertently reversed.

As such, under Cuomo’s amended proposal, specific penalties will be reduced as follows:

• Criminal sale in the third degree (sale to under 21 years old) will be made a class A misdemeanor
• Criminal sale in the second degree (sale of over 16 ounces or 80 grams of concentrate) will be made a class E felony
• Criminal sale in the first degree (sale of over 64 ounces or 320 grams of concentrate) will be made a class D felony

Cuomo’s proposal builds on years of work to understand and decriminalize cannabis for adult use. In 2018, the Department of Health, under Cuomo’s direction, conducted a multi-agency study which concluded that the positive impacts of legalizing adult-use cannabis far outweighed the negatives. It also found that decades of cannabis prohibition have failed to achieve public health and safety goals and have led to unjust arrests and convictions, particularly in communities of color.

In 2019, Governor Cuomo signed legislation to decriminalize the penalties for unlawful possession of cannabis. The legislation also put forth a process to expunge records for certain cannabis convictions. Later that year, Cuomo spearheaded a multi-state summit to discuss paths towards the legalization of adult-use cannabis that would ensure public health and safety and coordinate programs regionally to minimize the cross-border movement of cannabis products.

Building on that important work, Cuomo’s proposal reflects national standards and emerging best practices to promote responsible use, limiting the sale of cannabis products to adults 21 and over and establishing stringent quality and safety controls, including strict regulation of the packaging, labeling, advertising and testing of all cannabis products. Cannabis regulation also offers the opportunity to invest in research and direct resources to communities that have been most impacted by cannabis prohibition.

In a press release sent out this week, A2LA announced they have accredited Cannalytics to ISO 17025:2017. With the finalized accreditation in December 2020, Cannalytics is the first cannabis testing laboratory in Puerto Rico to get accredited to the standard.

Jorge Diaz, owner and director of Cannalytics, says their two main objectives are business excellence and quality. “Being the first ISO/IEC 17025 accredited cannabis laboratory in Puerto Rico affirms our mission to provide continuous quality science to our clients while safeguarding the health of Puerto Rico’s medical cannabis patients,” says Diaz.

Cannalytics is a medical cannabis and hemp testing lab based in San Juan, Puerto Rico. They offer compliance and R&D analysis in their suite of testing services.

“We are glad to see the continued growth of our cannabis program in a new territory, which further promotes the value that accreditation adds in ensuring quality in this emerging industry,” says Anna Williams, A2LA Accreditation Supervisor.

ALBANY, New York, Feb. 17, 2020 – PRESS RELEASE – Governor Andrew M. Cuomo today announced 30-day amendments to the Governor’s proposal to establish a comprehensive adult-use cannabis program in New York. Specifically, these amendments will detail how the $100 Million in social equity funding will be allocated, enable the use of delivery services, and refine which criminal charges will be enforced as it relates to the improper sale of cannabis to further reduce the impact on communities hit hardest by the war on drugs.

“As we work to reimagine, rebuild and reopen New York, we’re taking every opportunity to address and correct decades of institutional wrongs to build back better than ever before,” Cuomo said. “We know that you cannot overcome a problem without first admitting there is one. Our comprehensive approach to legalizing and regulating the adult-use cannabis market provides the opportunity to generate much-needed revenue, but it also enables us to directly support the communities most impacted by the war on drugs by creating equity and jobs at every level, in every community in our great state.”

Allocation of $100 Million Cannabis Social Equity Fund

Social and economic equity are the bedrock of Cuomo’s proposal to legalize cannabis for adult-use and as part of that, his proposal includes a $100 million dollar fund to help revitalize communities that have been most harmed by the war on drugs.

Through this fund, qualified community-based nonprofit organizations and local governments would apply for funding to support a number of different community revitalization efforts, including, but not limited to:

• Job placement and skills services,
• Adult education,
• Mental health treatment,
• Substance use disorder treatment,
• Housing,
• Financial literacy,
• Community banking,
• Nutrition services,
• Services to address adverse childhood experiences,
• Afterschool and child care services, system navigation services,
• Legal services to address barriers to reentry, and
• Linkages to medical care, women’s health services and other community-based supportive services

The grants from this program may also be used to further support the social and economic equity program.

Under the amended proposal, the Department of State would allocate the funding, through grants administered by Empire State Development Corporation, in collaboration with the departments of Labor and Health, as well as with the Division of Housing and Community Renewal, and the offices of Addiction Services and Supports and Children and Family Services. Final allocations and administration of funding would also be contingent upon approval from the Division of the Budget.

Enabling the Use of Delivery Services

The legalization of cannabis is expected to play an important role in helping rebuild New York’s economy following the damaging effects of the COVID-19 pandemic. In fact, legalization is projected to create more than 60,000 new jobs and spur $3.5 billion in economic activity while generating an estimated $350 million in tax revenue once fully implemented.

Cannabis legalization also has the potential to have a significant economic benefit on distressed areas in New York, providing employment opportunities for all levels of the workforce. As social and economic equity are the bedrock of Cuomo’s proposal, delivery services offer a low-cost entry point into the industry, particularly in communities that have been especially impacted by the war on drugs.

Recognizing this, Cuomo is amending his proposal to allow for the permitting of delivery services as a way to open up access to this new industry even further so more New Yorkers can participate as it grows. As part of this, local governments would have the opportunity to opt-out of delivery services occurring within their jurisdiction.

Criminality of Improper Sales

When establishing a new product market, as Cuomo’s proposal does, there will inevitably be attempts by bad actors to skirt rules and commit fraud for their own financial gain. This makes it critically important to ensure that penalties are carefully calibrated to ensure that all those who wish to participate in this new market are operating on the same level playing field.

Cannabis, however, adds another complicating factor to this dynamic – years of outdated policies stemming from the war on drugs have disproportionately impacted communities of color. Already, New York has taken steps to decriminalize cannabis and as this new market is realized, and it’s critical that criminal penalties are thoughtfully assigned, as to ensure that the progress which has already been made, is not inadvertently reversed.

As such, under Cuomo’s amended proposal, specific penalties will be reduced as follows:

• Criminal sale in the third degree (sale to under 21 years old) will be made a class A misdemeanor
• Criminal sale in the second degree (sale of over 16 ounces or 80 grams of concentrate) will be made a class E felony
• Criminal sale in the first degree (sale of over 64 ounces or 320 grams of concentrate) will be made a class D felony

Cuomo’s proposal builds on years of work to understand and decriminalize cannabis for adult use. In 2018, the Department of Health, under Cuomo’s direction, conducted a multi-agency study which concluded that the positive impacts of legalizing adult-use cannabis far outweighed the negatives. It also found that decades of cannabis prohibition have failed to achieve public health and safety goals and have led to unjust arrests and convictions, particularly in communities of color.

In 2019, Governor Cuomo signed legislation to decriminalize the penalties for unlawful possession of cannabis. The legislation also put forth a process to expunge records for certain cannabis convictions. Later that year, Cuomo spearheaded a multi-state summit to discuss paths towards the legalization of adult-use cannabis that would ensure public health and safety and coordinate programs regionally to minimize the cross-border movement of cannabis products.

Building on that important work, Cuomo’s proposal reflects national standards and emerging best practices to promote responsible use, limiting the sale of cannabis products to adults 21 and over and establishing stringent quality and safety controls, including strict regulation of the packaging, labeling, advertising and testing of all cannabis products. Cannabis regulation also offers the opportunity to invest in research and direct resources to communities that have been most impacted by cannabis prohibition.

As the cannabis industry continues to experience growth in markets across the country, cannabis businesses are becoming an ever-increasing target of plaintiff’s lawyers in Telephone Consumer Protection Act (TCPA) lawsuits. Text messaging provides a potent channel of customer engagement, but at the same time is subject to strict regulations under the TCPA, with violators subject to steep statutory penalties of $500-$1,500 per message. While one-off cases won’t typically break the bank, that’s far from the case when many thousands of texts are bundled together in a class action. And this potential for big paydays means plaintiff’s lawyers have a financial incentive to file cases as class actions whenever they can.

Some well-known names in cannabis have been the target of TCPA class action. Cannabis delivery service Eaze has battled some fairly well-publicized TCPA class actions in the past couple of years. There has also been an assortment of dispensaries across several western states that have been the targets of similar lawsuits. Notably, these lawsuits share a common thread: they are based on marketing or promotional text messages sent to consumers.

In this landscape, firing off texts without the proper compliance safeguards is a game of roulette. At some point in time, one or more messages will invariably land in the wrong hands, sparking an expensive, high-stakes class action. In this competitive space, there are far more productive things any cannabis business can be doing than spending the time and resources on this type of lawsuit.

So how can your business avoid being caught in a TCPA trap? The following Q&A will walk you through some of the questions you should be asking if you are currently texting, or planning to text your customer base for marketing purposes. One quick note before starting: the TCPA has different rules for different types of messages (such as informational versus marketing messages). This Q&A will cover the distinction between these types of messages, but focuses on the rules around marketing messages since these are rules cannabis businesses get tripped up in most frequently when sued for TCPA violations.

Question: How do I know if the TCPA applies to me?

Answer: Are you texting your customers? If so, are you using some kind of platform that lets you send multiple texts at once? If you answered yes to both, then the TCPA most likely applies to you.

In short, the TCPA prohibits calling or sending texts to cell phones using an Automatic Telephone Dialing System (ATDS). Without getting into the many nuances of how courts have interpreted the legal definition of that term (and risk boring you to death), you can assume that unless you’re hitting send on each and every single text that goes to your customers, that you’re using an ATDS, and your texts are subject to the TCPA.

Q: So it looks like the TCPA applies to me. What now?

A: If you don’t have a compliance plan in place, now’s the time to implement one. To start, take stock of (a) how you’re sending texts; (b) who you’re texting; (c) where you obtained their phone number; and (d) whether you have their prior express written consent. That last part is key: under the TCPA, if you’re sending any text messages to your customers for “telemarketing” purposes, you’ll need what the TCPA calls “prior express written consent”.

Q: But I’m a cannabis business, not a telemarketer. Why should I worry about the TCPA again?

A: The TCPA’s rules requiring prior express written consent apply when the text is sent for “telemarketing” purposes, defined as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person.” Put simply, if you are sending texts to market or promote something you sell, then it’s likely the message will be considered “telemarketing” under the law. In contrast, if you’re sending a text for purely information purposes, such as sending a receipt for a transaction, or advising on the status of a delivery, then those message are still regulated by the TCPA, but subject to a more relaxed consent standard (a topic for another article).

Q: What do I need to do to get prior express written consent from my customers?

A: It’s important to know that prior express written consent is a technical, legally defined term that requires the caller be provided a written disclosure containing certain information and disclosures, which they “sign.” There are three key components to prior express written consent:

First, the consent agreement has to be in a signed writing. The law affords some flexibility here, allowing callers to obtain consent digitally through a number of mediums including web-based and electronic forms. If structured properly, consent may even be obtained through a text message flow.

Second, the consent agreement has to say certain things. It must authorize the caller to deliver advertisements or marketing messages using an ATDS, it must specify the phone number to which messages are being authorized, and it must say that the consumer doesn’t have to provide their consent as a condition to receiving goods or services.

Third, the disclosures must be “clear and conspicuous”. There’s no real rocket science here, but this is a very important part of the rule. It’s challenging to enforce an agreement that’s hard for a consumer to find or see, meaning the consent disclosures can’t be hidden away, in imperceptible font, or baked into another legal document (such as terms and conditions).

Q: I have a great customer contact database, but I don’t think I check all the boxes for prior express written consent. Can I still text them with specials and promotions?

A: No. At least not with your usual automated or mass-texting platform. But with some legwork, you can leverage your existing database and obtain consent. It’s not ideal, but it’s better than taking the risk of texting in this situation.

Let’s start with the fact that people like to get deals and specials on cannabis products, so there will likely be interest across your customer base for signing up. And with the flexibility afforded by the E-SIGN Act, businesses can try multiple avenues in obtaining prior express written consent from existing customers. This could include a call-to-action campaign, where consumers can initiate a text message consent flow by texting a keyword to a short code. The TCPA does not regulate e-mails, so businesses can consider an e-mail campaign that encourages their customers to follow a link that takes them to a web-based consent form. For businesses with storefronts, customers can be encouraged to sign up for texts on-site by filling out and submitting a form on a tablet device. Bottom line, there’s room for some creativity in designing campaigns to enrich your existing customer database with the necessary consent to send marketing texts.

Q: What happens when a consumer opts out of receiving texts?

A: You should stop all texts to their phone number unless and until they opt back in to receiving texts. Under the TCPA, a consumer has the right to revoke their consent, and any text message sent after an opt-out will violate the TCPA. This means it’s important to have clear opt-out instructions in every message you send (i.e. text stop to stop), and to ensure you have the proper systems in place to automatically suppress any further texts to the consumer’s phone number following an opt out.

Q: If I don’t follow these rules, what are the odds of getting sued for a violation?

A: Pretty high in my opinion. As mentioned, the TCPA is a very lucrative statute for Plaintiff’s lawyers. There are several thousand TCPA cases filed in federal courts each year, and lately cannabis businesses are becoming an increasing share of the defendants named in those suits. Additionally, the TCPA has a four-year statute of limitations, meaning exposure for non-compliant practices has a really long tail. It’s far easier to develop and execute a compliance plan up front, than to take on the risk that comes without one.

Q: Is there anything else I can be doing to protect my business?

Absolutely. Your TCPA compliance policy should be one layer of a holistic approach to legal compliance. Businesses have other tools at their disposal, such as arbitration provisions and class action waivers, that they can build into their consent-gathering process to further protect themselves in the event of a legal dispute.

Q: Any other tips to help keep my business out of the TCPA fracas?

A: Yes. Lots. More than I could fit into just this one article. But my goal here was to get you to think in the right direction when it comes to the TCPA, if you aren’t already. While I tried to make the basics of this as straightforward as possible, there are plenty of grey areas and nuance when it comes to compliance (especially when you inject the real world into the situation). This is where having lawyer experienced in this arena can come in really handy to vet your disclosures, review your compliance processes, and help you implement other risk mitigation strategies.

TCPA claims have become the cost of doing business when contacting consumers on their cell phones. But by being proactive, businesses have ample opportunity to mitigate their risk, and protect themselves in the event the legality of their text message campaigns is challenged.

Editor’s Note: There is no denying that the cannabis industry is rapidly growing and evolving, leaving many in the industry to have to continuously adapt to the ever-changing landscape.  I interviewed three professionals with a well-built background in cannabis, who share their experiences, lessons learned, insights and tips on working in the cannabis industry.

Tips from Crystal Oliver, executive director for the Washington Sungrowers Industry Association (WSIA) and co-founder and former owner of Washington’s Finest Cannabis. Oliver shares her personal experiences and lessons learned as a small business owner in the cannabis industry with Cannabis Business Times.

RELATED: 6 Cannabis Business Lessons We Learned Too Late

I wish I knew..

1. The value of hiring a professional lobbyist compared to the price you pay for bad policy.

The saying, “If you’re not at the table, you’re on the menu,” comes to mind when I reflect on the evolution of cannabis policy in Washington. Early on, other farmers and I focused on community organizing and advocating for ourselves. What we lacked in experience, we made up for in passion, but this did not always translate to policy wins. We often knew why a policy proposal would hurt our businesses but getting legislators and regulators to listen to us and modify their approach was incredibly challenging.

Washington’s independent cannabis farmers suffered through several legislative sessions, where bills passed damaged our business prospects before the WISA held its first Sun Cup competition/fundraiser in 2018 and hired contract lobbyist Bryan McConaughy. The difference in having a professional, experienced lobbyist made our ability to block bad bills from becoming law and favorably amend other bills cannot be overstated.

Had I fully understood how impactful being represented by a professional would be, I would have done whatever it took to fund a lobbyist immediately. I would have considered it a cost of doing business rather than a nice-to-have. As an emerging industry, the winners and losers are often decided in government agency meeting rooms and state capitals. You must be effectively represented in those spaces if you want to secure your future.

2. The challenges of living without access to affordable and traditional financing.

When I first started my farm, I knew I could not access small business startup funding from my bank. So, I chose to use my savings and income from my corporate day job. I later left my day job to focus on cannabis farming full-time, not realizing that relying solely on cannabis-related income would render me ineligible to secure any loan from a traditional funding source. It was a little shocking when I discovered that my credit union would not issue me a loan to purchase a new vehicle despite having good credit, low debt and sufficient income. As a result, I have had to save and pay cash for vehicles purchased since becoming a cannabis farmer. In hindsight, I should have worked harder to maintain a non-cannabis-related income stream.

3. The reluctance of policymakers to address inequities in the marketplace.

For example, allowing direct farm sales would better distribute the industry’s economic benefits throughout the supply chain by empowering small independent craft producers. Still, policymakers hesitate to distribute power away from those who already hold it. On more than one occasion, I have been advised that I need to get buy-in from those who benefit from the existing inequities in the marketplace to secure policy reform.

It is impossible to reach those who benefit most from an unfair system to agree to changes that would help others. In Washington, we have been fighting for direct farm sales for several years now https://www.cannabisbusinesstimes.com/article/washington-cannabis-growers-direct-sales-customers/> without much progress due to our legislators’ fear of disrupting the status quo. I naively believed that legislators would place greater value on fairness and thought we would secure farm-direct sales after a few years. I remain hopeful that direct farm emphasis on equity for BIPOC communities may lead to reassessments of our marketplaces’ overall structure, which centermost of the market power in the hands of a few well-capitalized interests.

Courtesy of Crystal Oliver

4. The difficulties of owning and operating a small business when your children are not permitted to step foot on the premises.

I was pregnant when I planted my first state-legal cannabis plant in 2014, and my daughter was born one month before our first state-legal harvest. When we decided to have a child shortly after applying for licensure, I envisioned tending my cannabis field with my baby in a sling or back carrier like the other organic farmers I knew. I understood that farming would be hard work and knew that working where I lived with my family in rural Washington would be a dream come true. Unfortunately, the rules surrounding marijuana cultivation in Washington prohibited individuals under 21 from setting foot on the licensed premises. My children were not allowed to enter the building or the fenced-in area of our property, where our cannabis business was located. Over the years, this created many challenges for our family. My husband and I had to alternate who was working so that one of us could supervise the children, causing long days for us both. Our children grew to resent our business because it took up so much of our time and separated us from them.

It was not until the COVID-19 pandemic shut down schools that we could convince the Washington Liquor and Cannabis Board (WSLCB) to grant leniency and allow children and grandchildren of licensees under 16 to be in the licensed premises, as they did not engage in any work. It has been a blessing for farmers to have their children allowed on site, but it is a painful reminder of the time we have missed out on over the last six-plus years. I regret not considering how impactful it would be not to bring my children to work with me as a small business owner.

Tips from David Holmes, founder and CEO of Clade9. Holmes entered the cannabis industry nearly 20 years ago, back when cannabis was just starting to become medically legal in a few states. His self-starter and self-educating attitude helped guide him; however, he tells Cannabis Business Times that there are a few things he wishes he would have done differently before entering the ever-changing cannabis industry.

I wish I knew…

1. The advantage of having an education in business.

I am a trained mathematician, as I have a master’s degree in math, but I never took traditional business courses. Others have mentored in business and learned things, but I kind of had to learn everything on my own. I wish I had more support; that would have been super powerful. Especially having been in cannabis in the late ’90s, I have never really had a huge advantage having both skill sets; learning how to grow cannabis and have business training. 

I had to learn over the years, and I have picked up a lot. The first time I had to formally negotiate a contract to cannabis entrepreneurs to negotiate a business deal was when I thought, “I wish I were trained formally in business.” I think everyone learns by doing it but having said that, having formal training or maybe just being in another business industry would have been very valuable.

Courtesy of David Holmes

2. The value of having a background in agriculture as a cultivator.   

Being a cultivator, I wish I would have gone to school. I am glad I got a degree in math, there is no question about it, but I also wish I would have studied agriculture, precisely controlled environment agriculture, as my focus is cultivation breeding. It took me many years to learn controlled environment agriculture in Canada, without any formal training, so I self-taught.

For example, I did not understand all the variables that I needed to look at to grow consistent crop quality, like thinking to myself, “Oh, shoot, next time I should look at humidity, I wasn’t looking at that the first time.” A lot of failures led to light bulbs going off, saying, “Hey, I need to know more about that because that’s what hurt me last time.” Doing that for over 15 to 20 years, you learn a lot, but if I had formal training, I would have thought of those things all together right away instead of learning over time.

3. The benefit of entering the industry with a different mindset.

I wish I would have known cannabis was going to be an industry because when I got into it, it really was not an industry. If I had known it would be where it is, I would have approached it a lot differently. It was medical in California, but it was a total gray area, and it stayed that way until 2017 or 2018. Most cannabis entrepreneurs in California have been in the industry for a lot longer than other states, especially on the east coast. In a lot of their minds, they are probably thinking, “I wish I would’ve known this was going to be this big of a deal nearly ten years ago.”

Tips from Loren Picard, CEO of High Desert Flower Inc. in Oregon. Picard started as a financial and corporate operational consultant in the cannabis industry nearly four years ago. Within a couple of months, he was asked to be his client firm’s CEO. He shares what he is learned throughout his last four years in the industry with Cannabis Business Times. 

RELATED: 6 More Lessons We Learned From Our Cannabis Business

I wish I knew…

1. How underprepared states were for cannabis legalization.

I have been around a little over four years in the industry, starting in late 2016, with other states having legalized before and since, and I did not have a long runway to get up to speed. It takes a year or so after each state legalizes to implement its enabling regulations. That seems to be plenty of time for states to learn from other states’ successes and failures and should lead to some semblance of consistency across state jurisdictions. Unfortunately, the result has been a patchwork of rules and regulations within and between the states resulting in most states woefully underprepared when their respective licensing processes began. We had an operation in California, which we sold, and then grew a vertically integrated operation in Oregon, and how the two states’ regulators looked at the cannabis world was completely different.

Courtesy of Loren Picard

2. The difference between the economics of capped and un-capped states.

Oregon started as an uncapped state, but in June 2018 they just stopped taking applications, and it suddenly became a capped state. In hindsight, I should have thought about the whole idea of licensing as a way a firm could build value before June 2018. You could have created a lot of value by getting control of one small location (leased or purchased) and applying for multiple licenses and just put the licenses into operation when it made sense; some may not have been put into operation at that location. You would then have the flexibility to move the licenses to an optimum location with or without bringing in partners.

Obviously, there are nuances to this strategy that need to be thought through to make it worthwhile, but it was a viable long-term strategy. That would be a strategy I would do today in an uncapped state if the license costs are reasonable. If they are a hundred thousand apiece, no, but if they are a couple of grand, it could be worth it. Even if a state never caps their license issuances, there are only so many good qualified real estate locations in any state for a cannabis business. Eventually, licenses will be capped by a lack of suitable sites.

3. How little economic taxing authorities understand.

The whole idea that you cannot put up to 50% combined tax rates, including at the local level, on top of cannabis retail prices and expect to make any movement on shrinking the [illicit] market, I think, was a mistake. I think there should have been a long ramp-up of minimal taxes to pay the regulatory and enforcement agency’s overhead on top of the already collected application and license issuance fees; then start ramping up over time as the black market shrank in size.