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NEW YORK’S

RETAIL POT PUSH

While New York has faced many hurdles in its ongoing attempt to implement an adult-use pot program, real estate is an often overlooked obstacle, particularly in New York City. With rules in place requiring retail storefronts to be 500 feet away from schools and 200 feet clear of houses of worship, finding an eligible space is proving to be close to impossible for prospective Cannabis business owners.

Making matters worse, the Office of Cannabis Management (OCM) has yet to announce all of the rules for retail pot shops.

Still, the limited number of eligible storefronts and the expectation that New York’s adult-use market will come close to the $6 billion mark by 2030, according to New Frontier Data, has motivated many Cannabis business hopefuls in NYC to grab real estate now – without knowing all the rules and without even having a retail license.

However, the state is attempting to make the licensing process easier for those who’ve been disproportionately impacted by pot prohibition. The OCM recently announced plans to award the first 100-200 retail licenses to people who have been convicted of a Cannabis crime or relatives of people with a pot-related conviction prior to marijuana becoming legal March 2021.

The license priority is part of the state’s social equity program, which aims to level the playing field within the Cannabis industry. It’s also an innovative way to give those who have suffered due to the failed war on weed the first crack at the adult-use market. The OCM has yet to announce how many total retail licenses will be awarded.

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Despite delays and a lengthy regulatory process that seemed certain to push New York’s retail sales launch into 2023, Gov. Kathy Hochul appears to have come up with a viable plan that will allow sales of adult-use pot to begin this year. The recently approved Seeding Opportunity Initiative permits the state’s hemp farmers to apply for Cannabis cultivation licenses. Those farmers, working with qualified equity applicants – people with a marijuana-related conviction and experience running a small business – could bring retail weed to New York in a matter of months.

The new initiative opens the application window in summer 2022, with the first licenses awarded by early fall. This timeline would allow for the state’s first adult-use sales by the end of the year.

According to Gov. Hochul, “New York State is making history, launching a first-of-its-kind approach to the Cannabis industry that takes a major step forward in righting the wrongs of the past.”

GANJA GIFTINGIN CONNECTICUT

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s states in the Northeast attempt to implement new adult-use programs, they’ve also had to deal with the issue of gifting. Primarily due to the lengthy wait for the start of retail pot sales, impatient suppliers and A consumers have consistently made use of gifting, where Cannabis is given away with an innocuous purchase or donation.

Like New York and New Jersey before it, Connecticut is now dealing with gifting. But unlike those states, gifting in Connecticut has taken the form of large organized events, or bazaars. A new bill would outlaw such events, in an effort to preserve the state’s taxed and regulated market, which should debut this year.

“This language was meant to get at these gifting bazaars that are marketplaces. People go in with the intention of really buying and selling Cannabis, but they do it under the auspices of a donation and they get some Cannabis in return,” Rep. Mike D’Agostino said.

The proposal was met with protests from advocates, some of whom believe the bill would re-criminalize marijuana. However, lawmakers maintain that they simply want to stop large organized gifting events.

According to D’Agostino, “We made absolutely clear this does not apply to what goes on in the privacy of your home. If it’s a family member giving to another family member, nobody’s policing that.”

The outcry from advocates did make an impact with the legislature as the punishment for gifting was changed in the proposal. Committee members reduced gifting from a criminal penalty that carried a $10,000 fine and possible jail time to a civil penalty with a $2,500 fine and no jail time.

As the bill heads to the House for a vote, Cannabis advocate Erin Doolittle felt there was no point in the legislature pursuing the matter. “It’s like trying to put toothpaste back in the tube. It’s here. It’s happening, and to think people are going to fully stop is a little naive. They’ll just go back underground,”she said.

MAINE ADA GUILTY IN POT PROBE

former assistant district attorney has pleaded guilty to tampering with documents in a case involving an alleged illegal marijuana operation.A

Kayla Alves was an ADA in Franklin County before being fired last October when she and a dozen other people (including former sheriff’s deputies, a former prosecutor and local officials) were charged in connection to the Cannabis operation, which prosecutors believe illegally sold $13 million of marijuana meant for medical patients.

Alves was caught tipping off her neighbor, former Franklin County sheriff’s deputy Bradley Scovil, that the feds were investigating him. Scovil stands accused of being paid – and receiving a new car – for passing along law enforcement info to the operation’s ringleader.

Alves texted the heads up to Scovil in July 2020 and then deleted the messages. Her attorney insists she played no other role in the conspiracy and wasn’t aware of what Scovil was up to.

“She realized quickly that she should not have even passed this along and deleted her text messages that said that,” Alves’ attorney Walter McKee explained.

While the tampering charge carries a sentence of up to 20 years in prison, prosecutors will recommend that Alves serve no more than six months. She also faces up to three years of supervised release and a $250,000 fine. McKee expects that she will not serve any jail time and will instead recommend probation. Lucas Sirois, of Farmington, is accused of being the head of the massive marijuana operation, which allegedly funneled medical Cannabis grown in Maine to the black market. Prosecutors believe he made millions illegally selling marijuana to non-patients in Maine and elsewhere. Sirois recently made headlines after asking a judge to allow him to use medical Cannabis while out on bail awaiting trial. Sirois has a doctor’s recommendation for Cannabis due to back pain and irritable bowel syndrome and has used marijuana medicinally for the last 10 years.

If the judge approves his request, Sirois would be the first defendant facing federal drug charges to use medical pot while on bail in Maine, according to the Bangor Daily News.

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RHODE ISLAND’S ROCKY ROAD

At long last, Rhode Island has revealed its eagerly awaited legalization initiative. The state has been stuck in neutral on the issue of Cannabis legalization for months as lawmakers have been consideringthree separate adult-use proposals – from the House, the Senate and the governor’s office.

While consistently characterizing the legislature as “close” to introducing a compromise bill, lawmakers continued negotiations. The primary sticking point they were attempting to resolve was over the question of who should oversee the state’s Cannabis industry – either a currently existing agency or a new regulatory body.

That issue remained unresolved until the introduction of the new bill in which lawmakers settled on a hybrid approach. The proposal calls for a Cannabis Office to operate under the state’s Department of Business Regulation, as well as a newly created Cannabis Control Commission. The bill also would establish an advisory board to help oversee the industry. While news of this compromise was spreading and people all over the Northeast rejoiced, Gov. McKee tossed a big old onion in the ointment. The governor, who has always favored putting the Department of Business Regulation in charge of the industry, expressed concern about a Cannabis Control Commission. Specifically, McKee is worried about how commission members will be appointed.

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The power to appoint “all members of any commission” that exercises executive functions is reserved exclusively for the governor in Rhode Island’s Constitution. The new bill would limit McKee’s power to appoint as he would have to choose people recommended by the state’s Senate president and the Speaker of the House. He would also need Senate approval to dismiss someone appointed to the commission.

Assuming the governor’s concerns are adequately addressed, the bill would legalize possession of up to an ounce of pot beginning October 1, 2022. Sales would start at that point as well, with hybrid medical Cannabis shops the first to sell adult-use pot. The bill would also allow home cultivation of up to six plants.

The day that New Jersey Cannabis business owner hopefuls have been waiting for has finally arrived. No, the state has not yet launched retail pot sales. But it has, finally, started taking license applications for recreational Cannabis retail shops.

The license window opened in New Jersey on March 15, and by 4:00 p.m. the state had already received nearly 200 applications.

Officials first began taking business license applications on December 15, however, those applications were for cultivators, manufacturers and testing laboratories. The new window marks the first time the Garden State has accepted retail license applications.

New Jersey is well behind schedule in implementing its recreational Cannabis program, which voters approved on Election Day in November 2020. The state missed its February 22 deadline to begin retail sales, and it has now been over a year since Gov. Phil Murphy signed the legalization bill into law.

Nonetheless, accepting retail business applications is obviously an important step for the Cannabis Regulatory Commission (CRC), which oversees the industry in New Jersey.

Applications from businesses owned by people who have been convicted of a Cannabis crime, or are from economically disadvantaged areas, as well as diversely-owned businesses – those owned by minorities, women or disabled veterans – will receive priority from the CRC during the review process as part of the state’s social equity rules.

While the application process has begun, officials don’t expect these businesses to begin selling Cannabis anytime soon. With a 90-day review process and 120 days allotted to meet jurisdictional requirements, plus the time it takes to staff a business and obtain a proper supply of product, the first legal sales from newly licensed businesses are likely still seven or eight months away. And it’s possible that they won’t begin until 2023.

Fortunately, officials are close to finishing their review of existing medical

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marijuana providers who have applied to sell recreational Cannabis. These businesses are expected to be the first to sell adult-use marijuana in New Jersey. And a launch date could potentially come in mere weeks.

Once retail sales begin in earnest, experts anticipate that the Garden State will exceed $2 billion a year in recreational pot sales. New Jersey would quickly take on Massachusetts as the region’s top adult-use sales state, particularly if it beats neighboring New York to market. Not bad considering a whopping 70 percent of New Jersey towns chose to opt out of the Cannabis industry.

POTANDTAXES

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Lawmakers in New York are attempting to allow marijuana businesses to take tax deductions at the state level. Recently filed budget proposals in the Senate and Assembly would allow the deductions for these businesses despite it being banned at the federal level.

Cannabis businesses in all states with adult-use laws face an unfair burden when it comes to taxes. Because marijuana is illegal federally – incredibly, it’s still a Schedule I narcotic according to the Controlled Substances Act – statelegal pot businesses cannot deduct expenses from their federal taxes. Nor can they receive tax credits. However, these businesses are still expected to pay their taxes.

For the most part, states use the same policy regarding tax deductions as the feds, meaning that Cannabis companies can pay tax rates of as much as 80 percent, according to the National Cannabis Industry Association.

New York legislators hope to offer relief to business owners in the state’s new Cannabis industry with proposals to allow deductions expected to pass in both chambers.

“The goal here is to decouple the state from the federal government on the deduction of business expenses to allow Cannabis companies to deduct on their state taxes (since they can’t do so on their federal taxes),” State Senator Liz Krueger explained to Cannabis Wire. “All other businesses can deduct business expenses, and not being able to is a burden on the Cannabis industry. We can’t fix the federal issue, but we can fix the state issue, which was the impetus for this language.”

Since a slow start in which the adult-use pot program languished under former Gov. Andrew Cuomo’s leadership, New York has made strides in its attempt to implement retail sales. New Gov. Kathy Hochul has appointed members of regulatory boards who have crafted the program’s rules. With a new initiative that will allow hemp farmers to grow Cannabis and equity applicants to open storefronts, New York could launch adult-use sales before the end of the year, closing the gap between the Empire State and neighboring New Jersey.

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