LOCAL NEWS

POT PASSES ALCOHOL IN MASSACHUSETTS

Cannabis advocates have long insisted that pot is safer than alcohol. Now, in Massachusetts, it’s also more lucrative. According to data from the Bay State, tax revenue generated by Cannabis sales has officially surpassed that of alcohol for the first time.

Halfway through the current fiscal year, Massachusetts reported collecting $74.2 million in marijuana excise taxes – far more than the $51.3 million in excise tax revenue generated by alcohol sales in the same time period.

Interestingly, alcohol tax revenue is actually slightly up over the last five years. Marijuana sales just happen to be booming.

Recreational Cannabis has been extremely popular – and profitable – since the state launched its retail sales program in November 2018. In September 2021, the Cannabis Control Commission, the regulatory board that oversees the state’s marijauna industry, announced that Massachusetts had reached $2 billion in adult-use sales. According to the Commission, the state has now sold $2.54 billion worth of pot products, as the Cannabis industry continues to grow. In Massachusetts, adult-use marijuana is hit with an excise tax of 10.75 percent. This is the tax that has produced $74.2 million in revenue at the midway point of the current fiscal year. However, Massachusetts also tacks on a state sales tax (6.25 percent) and jurisdictions hosting retail shops can add an additional “local” tax of up to 3 percent.

Photo by Rodnae Productions

The state collected a total of $208 million in marijuana tax revenue last year.

While many businesses have been forced to close their doors or significantly scale back in the wake of the coronavirus pandemic, Cannabis continues to bring in substantial revenue to the cash-strapped state.

And, it’s not just Massachusetts that’s reaping the benefits of this financial boon. A recent report from the Marijuana Policy Project found that states with legal retail sales programs have collected over $10 billion in Cannabis taxes since 2014.

NO GIFTING GANJA IN NEW YORK

fficials in New York are cracking down on crafty Cannabis businesses in an attempt to halt illegal marijuana “gifting.” Gifting is an increasingly popular stopgap in states that have legalized Cannabis, O but have not yet launched retail sales. Essentially, companies offer “free” pot products with the purchase of ordinary food or t-shirts at exorbitant prices. In doing so, the company claims it is, technically, making a legal sale and simply giving away the marijuana.

New York’s adult-use pot law, passed nearly a year ago, does not specifically address marijuana gifting. However, some business owners using this method for Cannabis commerce point out that the law allows for “transferring, without compensation.” Many believe gifting fits this criteria and, therefore, they are not breaking the law.

Nonetheless, the Office of Cannabis Management (OCM) – which oversees the state’s pot industry – disagrees. The agency has issued at least 24 letters to businesses ordering them to put an immediate end to ganja gifting or face possible arrest and fines. And, crucially, the OCM made it clear that offenders would be imperiling their chances of receiving a retail license from the state.

According to OCM Executive Director Chris Alexander, “New York state is building a legal, regulated Cannabis market that will ensure products are tested and safe for consumers … Illegal operations undermine our ability to do that.”

Of course, the best way to put an end to illegal – or gray area – Cannabis distribution is to implement a retail sales program. Unfortunately, the process has been excruciatingly slow in New York, as the formation of regulatory boards was delayed and now the task of crafting the rules for the industry is expected to take even longer. Officials don’t anticipate opening adult-use sales in the Empire State until sometime in 2023.

With surging demand for legal pot and a great deal of money to be made, it appears unlikely that businesses will practice patience. However, the threat of losing a highly coveted retail license could have an impact.

Photo by Sharon McCutcheon

A similar scenario played out in New Jersey last summer, when the attorney general sent cease and desist letters to Cannabis companies caught running marijuana gifting operations. The Garden State has also been slow to launch retail sales, causing some businesses to improvise. Like New York’s transferwithout-compensation provision, New Jersey’s adult-use law allows marijuana to be gifted to those 21 and older. But also like New York, New Jersey cracked down on thinly-veiled pot gifting ventures.

The Island of New Hampshire

Abill that would create a state-run Cannabis industry was passed by the New Hampshire House of Representatives. Such a legalization model would be the first of its kind in the country.

The bill, which passed the House by a 235-119 vote, somehow appears to be unpopular with Cannabis advocates and prohibitionists alike. Its sponsor, Rep. Daryl Abbas (R), described it as compromise legislation, explaining that it “creates a policy like no other state that works for and serves the people of New Hampshire.”

Should the legislation pass, it would allow adults 21 and older to possess up to four ounces of Cannabis. However, home cultivation would still be illegal. The New Hampshire Liquor Commission would oversee the industry and marijuana could be purchased at dispensaries run by the state. But about that…

Industry experts point out that a state-run model would put New Hampshire at odds with the federal government, as state employees would have to sell Cannabis – which is still federally illegal. Marijuana Policy Project Director of State Policies Karen O’Keefe describes the proposed legislation as including a “poison pill.” According to O’Keefe, “New Hampshire needs a legalization law that actually works – not one that is federally preempted because it relies on state employees selling Cannabis in violation of federal law.” New Hampshire has become an outlier in the Photo by GreenForce Staffing Northeast, as other states in the region including Maine, Massachusetts, Vermont, New York, New Jersey and Connecticut have all legalized marijuana (and Rhode Island appears close to passing its own law).

However, the House of Representatives can’t be blamed for the state’s island status, as the chamber has voted to legalize Cannabis at least four times. Unfortunately, meaningful marijuana reform is a nonstarter in the Granite State, as progress is repeatedly stalled by the GOP-controlled Senate. Even if a legalization bill managed to pass both chambers, Gov. Chris Sununu (R), a hardline prohibitionist, would veto the legislation.

New Hampshire’s only hope for reform would be to pass a legalization bill with a supermajority (60 percent vote), which would make the legislation veto-proof. Until then, or until voters elect a more progressive leader, New Hampshire will remain an island.

SALES SETBACK IN NEW JERSEY

New Jersey appears likely to miss its late February deadline to begin retail Cannabis sales. The state had set February 22, 2022 as the launch date for recreational marijuana – six months after the Cannabis Regulatory Commission (CRC) had created rules for the new industry. But, like neighboring state New York, New Jersey will delay the implementation of its retail sales program indefinitely.

Gov. Phil Murphy, who signed the legalization bill into law in February 2021, told reporters he was not concerned about the delay, saying, “I’d rather get it right than get it fast.” According to Murphy, “They’re doing a really good job. They want to do a job that’s different and better than any other state that’s ever done it, in particular as it relates to addressing inequities, which has been a central theme of mine.”

Governor Murphy has publicly touted the benefits of legalization in recent speeches, including his State of the State address, saying that the legal Cannabis industry will improve the economy and job market.

Regarding the retail weed delay, Murphy said, “We all want it sooner than later but let’s make sure it’s right … It’s going to be an industry that’s going to be around 50, 100, 200 years from now. Let’s get it right.”

Unfortunately, missing the state’s retail deadline comes with consequences, as many New Jersey Cannabis business owners are forced to deal with staffing and supply issues. While some took on additional employees in advance of the anticipated retail launch date, most companies stocked up on marijuana, ready to meet the demand of the recreational market. Of course, employees need to be paid and Cannabis, like any produce, has a finite shelf life. “I hate to say this, but we may have to start destroying product, and we may have to start potentially letting people go because part of the anticipation is you ramp up your staffing, as well,” James Leventis of Verano New Jersey admitted. “You’re hired for a job with the idea that this market will develop,” Leventis continued. “I’m very concerned we will continue to see these delays. It’s looking very stark right now.” The CRC cites a lack of municipal approval for retail shops, as well as insufficient supply for the delay – retailers are expected to stock enough Cannabis to supply current medical patients as well as new, adultuse consumers. However, many marijuana business owners and consumers alike point the finger back at the CRC. Even Senate President Nicholas Scutari (D) has said he’s “disappointed” in the Commission’s failure to meet the retail deadline. “I wish the CRC would move faster … But I know it’s a complicated process,” Scutari said.

A HEMP OVERHAUL

Aproposed bill from a Maine lawmaker is taking aim at reforming the national hemp industry. Maine Rep. Chellie Pingree (D) introduced the Hemp Advancement Act in Congress – a bill that would make several key changes which Pingree believes will create a more flexible, profitable industry.

Under the current federal law, hemp cannot contain more than 0.3 percent THC in order to officially be classified as a hemp plant. Under the proposed legislation, that threshold would be raised to 1 percent THC, a far more liberal limit. Additionally, hemp crops being processed would not be subject to THC limits or testing. This is important because when hemp is being processed, the amount of THC present can fluctuate. Under Pingree’s legislation, only the final hemp product would be tested to make sure it does not exceed 1 percent THC.

Another key reform the hemp bill proposes is doing away with the current requirement that hemp crops are tested at Drug Enforcement Administration (DEA) registered labs. This particular requirement is a hardship for many hemp farmers, as there is a very limited number of such qualified labs across the country.

“There are insufficient testing facilities. Right here in Maine, we don’t have one at all – and there’s two that cover all of New England,” Pingree explained. “To eliminate this DEA requirement would take away one more obstacle that farmers are currently facing. … Again, it takes it out of this realm of, you know, ‘this is [about] dealing drugs.’ This is an agricultural crop. Let’s assess it for appropriate reasons, but we don’t have to make it so sinister that everything has to be done by the DEA.” Pingree added that she believes nonDEA-approved labs are “perfectly capable” of testing hemp.

The bill would also change the current rule that forbids anyone with a drug-related felony on their record in the last 10 years from participating in the hemp industry. This has long been viewed as a provision that

Photo by Kindel Media

disproportionately impacts people of color and prevents them from entering a legal – and lucrative – business.

The burgeoning hemp industry could mean billions for North American farmers. These common sense reforms could help make the industry easier to navigate, while also making it more inclusive.

MAKING AN IMPACT

Photo by Karolina Grabowska

The city of Amesbury, Mass. has decided to waive the impact fees it had previously collected from Cannabis businesses operating in its jurisdiction.

Unique to Massachusetts, impact fees are a tax that towns charge Cannabis companies to offset issues involving anything from increased policing to parking issues associated with marijuana business.

State law requires pot companies to sign host community agreements (HCAs) with the town in which they wish to operate. Impact fees are a part of the HCAs, which are viewed by many as pay-to-play bribes. Some have even called the state’s HCAs and impact fees legal extortion.

Jurisdictions are legally allowed to charge Cannabis companies up to 3 percent of their annual revenue to offset any impact the business has on the community. However, research shows that municipalities often charge more than the 3 percent allowed by law and often fail to provide any documentation justifying the fees.

Impact fees and HCAs came under fire late last year in the wake of a lawsuit against the city of Haverhill, which was charging recreational retailer Stem an annual impact fee of $1.3 million for its three Cannabis businesses. Haverhill officials claim they levied the yearly $1,312,268.65 charge to offset Stem’s economic impact on the city. The lawsuit also revealed that $866,930 of that annual fee went directly to the Haverhill Police Department. The city also charged Stem a one-time fee of $156,798.

Amesbury Mayor Kassandra Gove decided to waive impact fees for Cannabis businesses in the city, explaining that there just haven’t been many disruptions lately. One of the city’s pot businesses, CNA Store, decided to take the money that would have gone to paying the impact fee and donate it to charity. CNA Store CEO Rob DiFazio explained, “We’re not a negative impact to our city, we’re a positive impact – so we turned around and paid it forward to Veterans Northeast Outreach Center in Haverhill, they house homeless Veterans.”

Amesbury is not alone in forgoing impact fees. Northampton stopped collecting the fee from Cannabis companies in January 2021.

POT COMPROMISE IN RI

Rhode Island lawmakers continue to insist they are on the verge of passing legalization legislation. However, as negotiations over the bill continue, one of the primary sticking points remains.

Legislators have been working on a compromise bill after receiving pot proposals from the Senate, House and Governor’s office. But the question of who should oversee a legal Cannabis industry in the state – either a currently existing agency or a new regulatory body – remains unresolved.

Some lawmakers feel the best way forward would be to put the industry in the hands of an existing department, like Business Regulation, while also creating a new commission to help oversee Cannabis. Unfortunately, that approach might alienate Gov. Dan McKee, who placed the Department of Business Regulation in charge of the industry in his legalization proposal.

The question remains: If lawmakers decide to compromise and create a commission to help oversee the industry, would the governor veto the bill? For his part, Rep. Scott Slater doesn’t expect a veto “if we put [forward] a bill that most people are behind.”

While Rhode Island has been stuck in the muck on its compromise legislation for months as other states in the region have passed legalization laws and begun building their respective industries, legislators are not panicking. “We may not be the first state to legalize marijuana, but our goal is to do it in a way that is best for all of Rhode Islanders,” House Speaker Joseph Sherkarchi noted.

Sherkarchi believes the legislature will have a draft of the bill ready “soon” and that draft will “serve as a framework to begin a robust public hearing process.” You gotta love bureaucracy.

Still, Rhode Island somehow stands a decent chance of beating New York to market, as the Empire State remains more than a year away from launching legal sales.

Photo by Yash Lucid