California edition / June 06, 2020
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1 AFTER DISPENSARY THEFTS, STATE SHIELDS BIZ DATA

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Looting is rarely pure; when you're disenfranchised, it's difficult to separate what's necessity in life from what your heart needs. But what went on in many of the approximately 43 dispensaries targeted since the racial-equality protests began was something else, apparently:  Organized robbery missions
SFist/Leafly

  • Many Bay Area dispensaries were looted. "Professional-looking" thieves, fully outfitted in clean suits, were caught on camera in one San Francisco dispensary Saturday night. Across town, California Street Cannabis Company had $10,000 taken. Multiple SPARC locations were hit.
  • In Los Angeles, people carried out full red shopping bags from two MedMen locations, and took product from the Melrose Cookies store, as seen on social media footage.
  • Mom & pop dispensary Magnolia Oakland "lost everything" on Saturday night.
    WeedWeek
  • At least one  producer and one distributor reported thefts.
  • Among the early dispensary theft fallout is two regulatory agencies hiding their online databases. Both the Bureau of Cannabis Control and the California Department of Food and Agriculture disabled their usually searchable licensing databases, to shield information such as dispensary addresses.
    MJ Biz Daily

Here's more WeedWeek coverage of the protests and the opportunistic crime wave which accompanied them:

Quick Hits

  1. On Wednesday, Democratic House leadership introduced an impaired-driver education bill that all legal-weed states would have to implement. The bill would be tucked into a forthcoming infrastructure package.
    Marijuana Moment
  2. Aside from cataloging their own racism—deep cuts included—one can support black bud businesses and feel less appropriately horrible.
    Green Entrepreneur
  3. What you hear is not a test: That theory about marijuana being recession-proof will be proved or disproved right about... now.
    MG Retailer
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2 BERNER AND THE COST OF JUSTICE

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LOS ANGELES, CALIFORNIA - JULY 09: Berner attends Players' Night Out 2019 hosted by The Players' Tribune featuring the NBPA's Players' Voice awards at The Dream Hotel on July 09, 2019 in Los Angeles, California. (Photo by Leon Bennett/Getty Images for The Players' Tribune)

"A statement needed to be made." Anyone who laid eyes on the chaotic looting of Cookies on Melrose, and then listened to chain co-founder Berner's thoughtful response, knows there are costs to pay on the road to a just society. 
Instagram/Marijuana Moment

  • "As a human living in the world we're living in today, I cannot expect anything less until justice is served," said the rapper/entrepreneur. "See, we can rebuild our store, but you can not bring someone back to life. 
  • Instagram shows the Los Angeles dispensary being broken into, with — primarily black — people hopping a protective fence as looters stream in and out of the store. Cops drive by, but no looters are seen being busted. 
  • A commenter remarked: “Someone had good insurance, lol, otherwise I’m sure this would sound different.” To which Berner replied, “Nah man, the world is a fucked up place. ... This is from the heart homie.”

3 SACRAMENTO TO NARROW ILLICIT GAP WITH COPS

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Cali's smart set says the best remedy to legal weed's illicit product problem will be integrating the traditional market. Heck, integrating those folks would also bring a significant number of people of color from the weed-dealing margins.

B
ecause imagination isn't a dominant feature of state government, California's Bureau of Cannabis Control is instead committing to more cops
Sacramento Bee

  • In a new state budget request, the BCC has requested that legislators permit the creation of a new police force. This 87-member force would absorb 58 positions from a different department and hire 29 more, creating a new branch of law-enforcement.
  • The BCC wants to convert 29 open investigator positions into sworn peace officers. The bureau would also take on 47 peace officers and 11 non-sworn personnel presently overseen by the Department of Consumer Affairs’ Cannabis Enforcement Unit, which would shut down. 
  • According to BDSA, legal weed made $3.1B last year in California. The illegal market took in about $8.3B

4 OPPORTUNITIES OPEN AS LOCAL GOVERNMENTS THAW

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As mentioned in the last newsletter, cashed-starved municipalities from Tracy to Anaheim have had their come-to-Jesus moments with legal weed. But what exactly are the cities and counties doing with these licensing opportunities—and when?  
Canna Law Blog

  • Prohibitionist Anaheim may put legalization to voters. At their June 9 City Council session, Anaheim is “set to consider approval of the first and second steps in a three-step process toward legalizing, taxing and regulating commercial cannabis distribution, manufacturing, cultivation, retail sales, deliveries and testing laboratories.”
  • Sacramento plans to add 10 storefront retail permits. No plans have been set. Meanwhile, Fresno has authorized 14 retail storefronts, with a projected total reaching as high as 21.
  • Santa Barbara County has approved up to six storefront retail licenses, but COVID-19 has put the process on hold.

Quick Hit

  1. Being designated essential doesn’t afford cannabis companies bankruptcy protection, as the U.S. Department of Justice continues to argue against the industry's inclusion.
    MJ Biz Journal

5 DOES WEED REFORM FOLLOW FIXING THE COPS?

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“There are many ways that policing will have to change," Marijuana Policy Project Executive Director Steve Hawkins told WeedWeek's Hilary Corrigan. Hawkins doesn't believe that legalization in itself will save oppressed People of Color, but thinks policing can be re-centered  to rid it of drug-war poison. 
WeedWeek

  • "Only through legalization do we dramatically end arrests for cannabis-related offenses,” Hawkins said in an email. An April report from the ACLU  reiterated an arrest-rate disparity. Black Americans are three times more likely than whites to get busted for pot, despite using similarly.

6 NEWSOM DOWNGRADES REVENUE PROJECTIONS

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In addressing diminished revenues as a result of the COVID-19 pandemic—aka Crisis Classic—Gov. Gavin Newsom said California has adjusted projections based on the idea that government-regulated cannabis' downturn distress will be worse than alcohol's and tobacco's.
Los Angeles Times

  • “While similar products like alcohol and tobacco tend to be recession-resistant, the forecast assumes that cannabis businesses will be more negatively impacted by the COVID-19 pandemic,” according to the budget. “Cannabis businesses have less access to banking services that could provide liquidity, have a younger consumer base likely to be disproportionately affected by the COVID-19 recession, and still must contend with competition from the black market.”
  • Newsom revised his excise tax projections to $479M for this year and $590M for the fiscal year beginning on the first of July to $443M this year and a decline to $435M next year.
  • For comparison purposes, bookmark these numbers.

7 READ THESE HARBORSIDE TAX BILL DEFENSES

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Courtesy of Getty Images

On May 26, amicus briefs from the National Cannabis Industry Association and the Marijuana Industry Group—in collaboration with the Cannabis Trade Federation action group—were filed in the Ninth Circuit U.S. Court in support of the Oakland dispensary Harborside's tax appeal. 

The letters offer the sort of persuasion it will take to get Section 280E of the U.S. Tax Code declared unconstitutional. Harborside is appealing a U.S. Tax Court decision from 2018.  
Forbes

WeedWeek reporter Hilary Corrigan examined the case:

  • Harborside is contesting its bill for the tax years 2007-2012. The company argues that personnel and quality-control costs; curing, storing and guarding inventory; and trimming, manicuring and packaging should all be deductible. 
  • The NCIA argues, 280E, which dates from the early 1980s, "intended to punish criminal drug operators by stripping their ability to claim deductions on their tax returns. So, while ordinary businesses can deduct expenses such as rent, wages, taxes, and license payments, under § 280E lawful state marijuana dispensaries are taxed by the IRS on revenue before accounting for those expenses. This provision has the effect of subjecting State-sanctioned marijuana businesses—like Appellant Harborside Health Center (“Harborside”)—to unprecedentedly high effective tax rates of up to 75%."

8 AN INSURANCE BROKER LOOKS AT HER 5 YEARS IN WEED

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Which means—in that tremendously overused industry joke—Stephanie Bozzuto has been selling policies to cannabis companies for the equivalent of 35 years. (Cue canned industry laughter.)

A member of the California Cannabis Industry Association's Insurance and Cultivation Committee, the Cannabis Connect Insurance co-founder says legal weed is no business for a broker to casually explore.

Insurance Journal

  • A third-generation insurance professional insists, "If you are a generalist, this is not an industry for you. If you want to focus, take the time and become an expert in this new industry then this is the space for you. Roll up your sleeves and expect [to spend] the next three to four years of your career focusing on building a reputation for yourself within the cannabis community and insurance industry."

9 ARE CBD CONTRACTS EVEN ENFORCEABLE?

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Times for hemp are turbulent enough that it's not always an awesome idea to include the standard warranty "each party shall comply with all state, federal, and local laws and regulations"—which you might, in a parallel universe, think would be pretty safe.

Two hemp cases have emphasized the importance of completely understanding state law—before a contract is executed—as never before.
Project CBD

  • “Each party agrees that it will never assert as a defense in any litigation or dispute resolution forum the position that this agreement is unenforceable, void or voidable because the subject of this contract involves, in any way, cannabis, marijuana, CBD or industrial hemp.” Keep that language in your back pocket.

Quick Hit

  1. Florida vs. California pot culture riffing is the weed equivalent of race jokes that go, "[INSERT RACIAL GROUP] are like this, while [INSERT COMEDIAN'S PEOPLE] are like that." Unfulfilling, because the plant, like humans, doesn't take to being summed up. Anyway, you might dream up funny Golden vs. Sunshine yuks after reading these four distinctions
    Green Entrepreneur

10 THE UNBEARABLE MEDIOCRITY OF POT TV

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Like the infamous first pancake theory of parent-speak, the first-generations of pot-focused TV series have been uneven. Weeds ushered in the first-wave of suburban canna curious. High Maintainance made cable TV safe for fractured and arty cannabis narrative, while Disjointed... well, Disjointed isn't on Netflix anymore.

What is up with weed stories not absolutely destroying on TV? Are the creatives leaving it all in the writers' room?
Westword

  • "There are other entertaining cannabis shows on television," the author writes, "but most of the smart ones use cannabis as a conduit, not the main course." Think Atlanta and Broad City). Weed TV hope lives in the super-stony animated series The Midnight Gospel and—for some reason—non-narrative cooking shows such as Cooked With Cannabis.

Quick Hit

  1. Early birds can catch today's Uplift Diversity Symposium, a virtual conference created to help entrepreneurs and professionals "transfer their current skills and knowledge into the  cannabis industry."
    Uplift Maryland