Category Archives: politics

Oregon Sets Massive Precedent — Refuses to Enforce THC Blood Limit for Driving

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Photo Credit: Sonoma County Sheriff’s Office
The state is leading the way by insisting that science and evidence prevail when it comes to marijuana and DUID.

There’s a lot to be said for states that have legalized recreational and/or medical cannabis, but even Colorado and Washington have one problem – arbitrary blood-THC limits which imply a driver is impaired.

These numbers, such as Washington’s 5ng/ml, have no scientific basis for assessing the level of impairment. Despite this, six states with legal weed have per se limits for tetrahydrocannabinol; being over that number automatically makes you guilty of driving under the influence of drugs (DUID).

Oregon, however, is bucking the trend. In its DUI Legislative Report, the state’s Liquor Control Commission said it is recommending against a per se THC limit. By relying on the actual state of science, this welcome exercise in rationality should set an example for other states setting up their own regulatory framework.

Oregon’s Liquor Control Commission was tasked in 2015 with “regulating the recreational marijuana market in Oregon, with studying the question of THC-related intoxicated driving.”

According to the report:

Due to restrictions on cannabis research and limited data, it is difficult to make definitive statements about the risk of THC-intoxicated driving. The body of evidence that does exist indicates that while attitudes towards driving after marijuana use are considerably more relaxed than in the case of alcohol, the risk of crashes while driving under the influence of THC is lower than drunk driving. Little evidence exists to compel a significant change in status quo policy or institute a per se intoxication standard for THC.

widely-reported study by the American Automobile Association in 2016 found no scientific basis for blood-THC limits and called on the six states using such laws to abandon them. Chemical tests for THC have not been shown to correlate to things like brake and gas pedal coordination, distance perception and general attention.

The only thing we know about blood-THC and driving is that it is not comparable to the tests for alcohol impairment. There is no THC breathalyzer test, and urine tests cannot detect it. Some blood tests can distinguish between THC and its longer-lasting metabolites, but these levels can vary widely depending on how often the person uses cannabis. Test results will also vary based on whether one smoked or ate the cannabis.

One person can feel impaired at 5ng/ml while another can function with no detectable impairment. In fact, many people charged with DUID based on arbitrary blood-THC limits have convinced juries they were not impaired when they were pulled over.

Even so, driving studies show driving while on cannabis is far less dangerous than driving on alcohol, including one finding virtually no driving impairment from cannabis. Other studies have found that speed is typically reduced while driving on cannabis, and people deliberately compensate for any impairment, although multitasking was somewhat affected.

In no way does this mean anyone can just toke up and get behind the wheel. Cannabis is psychoactive, and people unaccustomed to cannabis – especially teenagers – should certainly refrain from driving.

The Oregon Commission’s report also supports the premise that cannabis users are more responsible drivers than alcohol use.

The rate of drivers tested by Drug Recognition Experts who are positive for THC intoxication rose between 2013 and 2014, but did not increase following legalization. Fatal accidents data is highly variable year-to-year, making trend analysis difficult. But in Oregon in 2015 there were only three more traffic fatalities involving a driver testing positive for THC compared to 2004. Moreover, the rate of THC-related fatal accidents is also considerably lower than such accidents involving alcohol intoxication. Finally, while overall traffic fatalities and alcohol-related fatalities spiked in 2015, THC-related fatalities did not.

As a spokesman for AAA noted when their study was published, the increased risk from driving on cannabis is about the same as driving with a “noisy child in the back of the car,” and only half as dangerous as talking on a hands-free cellphone (legal in all states).While thankfully avoiding an arbitrary blood-THC limit recommendation, the Oregon Commission still felt compelled to offer advice on cannabis and driving. It recommended increasing the use of “Drug Recognition Experts” who administer lengthy sobriety tests specific to cannabis, as well as implementing a voluntary oral swab test to collect data.

Possible New Pot Laws for Oregon in 2017

asklawyer-istock-lushik-openrangestockISTOCK / LUSHIK / OPENRANGESTOCK

What New Legislation is on Oregon’s Docket?

What new pot laws might the state foist upon us?

BUCKLE UP, FRIEND. There could be several. The Oregon state legislature convenes next Wednesday, February 1, and its website contains a slough of pot law proposals (28 draft bills, by my count). Many of these will be revised, consolidated, or simply cast aside, but the legislature’s general thinking is now on display. Below are some highlights.

Veterans—SB 130 would waive medical marijuana card fees for veterans who have a “total disability rating of at least 50 percent” resulting from service, and who were discharged or released “under other than dishonorable conditions.” That’s a starting point, but it would be classier and less complicated to waive card fees for all the vets. Here’s hoping.

Administration—SB 300 would relieve the Oregon Health Authority (OHA) of its cannabis oversight and transfer that responsibility to an “Oregon Cannabis Commission.” Other bills, HB 2198 and 2200, would change the name of the Oregon Liquor Control Commission (OLCC) to the “Oregon Liquor and Cannabis Commission,” and euthanize OHA. However it plays out, we will likely see weed administration further consolidated in Oregon, and likely under OLCC. That’s a good thing.

Hemp—HB 2372 would establish an Oregon Industrial Hemp Commission, and HB 2371 would create a program at Oregon State University to label and certify agricultural hemp seed. The industrial hemp program in Oregon is finally gaining traction; these would be good steps.

Research—HB 2197 would direct the OLCC to work with a nongovernmental entity that conducts or funds research on weed and cannabis-derived products. Public dissemination of all research findings would be required. This would be terrific: Because of federal law, the double blind testing normally conducted on medical products—which is the gold standard for FDA approvals—has been mostly inaccessible for pot. Let’s hope this one passes.

Energy Efficiency—HB 2205 would direct the Oregon Department of Agriculture to work with vendors to create efficiency standards for pot production. Once these standards were developed, a certification protocol would ensue. Seems like another good idea.

Property Tax Exemption—HB 2151 would grant a state property tax exemption for new equipment for processors of cannabinoid edibles (as well as for makers of booze). This would make a big difference for some pot processors statewide, when you consider the steep cost of some of this equipment.

Pot Lounges! Pot Events!—SB 307 would exempt cannabis lounges from the onerous provisions of the Oregon Indoor Clean Air Act, so that we could have cannabis cafés, like Colorado does. The bill would also allow OLCC to grant temporary licenses to pot events.

Crime and Punishment—SB 570 would create two new crimes, related to “administering a marijuana item to the body of a person who is under 18 years of age,” intentionally or knowingly. The maximum penalties are intimidating: 20 years’ imprisonment, $375,000 fine, or both. Do not give pot to kids.

Is Home Cultivation Finally Coming to Washington State?

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A new bill in the Washington state Legislature would add a long-awaited provision to the state’s cannabis law to allow adults 21 and over to grow their own supply of cannabis at home.

The new legislation, HB 1092 introduced last week by Rep. Sherry Appleton (D-Poulsbo), would allow adults to grow cannabis plants at home for personal use—a move that would align Washington with the rest of adult-use states.

As it stands, Washington is the only state that allows retail sales of adult-use cannabis but still bars home cultivation. Currently only registered medical patients with a state-issued permit can legally grow at home.

If the bill is enacted, adults 21 and over would be able to grow up to six plants on their private property. Yields would be limited to no more than 24 ounces, or a pound and a half of useable cannabis. Homes with more than one adult resident could legally house up to 12 plants, for up to 48 ounces, or three pounds.

A big question that remains is how consumers would go about getting cannabis seeds in the first place. The purchase and sale of seeds is still illegal under state and federal law, despite the fact Washington has legalized cannabis itself. Under the current proposed bill, there is no mention of where consumers would be able to purchase cannabis seeds were the bill to become law.

Daniel Shortt, a Seattle-based cannabis lawyer at the firm Harris Bricken, told the Seattle Post-Intelligencer that he believes the new bill will have to answer how home growers can acquire seeds.

“The way the entire marijuana market is set up, producers and processors can sell to retailers, who can sell to the public. Would that mean that now, to get these seeds, potential home growers are getting seeds from the retail store?” said Shortt. “If those seeds are being sold, that’s really the only place where the government could actually get revenue from taxes.”

In 2016 alone, Washington lawmakers introduced 44 bills that deal with cannabis in some fashion. The list includes bills that relax residency requirements for licensed marijuana business owners as well as legislation around medical marijuana patients and their employers.

The recently introduced House Bill 1060 has garnered bipartisan support. The measure would allow medicinal marijuana to be administered on school grounds to children who need cannabis to function normally, such as those who suffer from daily seizures.

A full list of cannabis bills that have been introduced in the state is available online.

Oregon reports big jump in marijuana business applications, licenses

In another sign that cannabis could be bigger business than previously forecast, the Oregon Liquor Control Commission says it received 1,907 recreational marijuana license applications in 2016 — far outstripping a projected 800 to 1,200, the agency said.

Seven hundred sixty-two of those applications were approved as of the end of last week, a big jump from 500 licenses in early December. In that time, the number of licensed retailers went from 99 to 260.

Processors, who have struggled with strict testing and labeling requirements, have been slower to get licensed, but the number in that category was up significantly as well, from 18 to 51.

“Our staff has worked nonstop and with determination to get this industry licensed,” OLCC Executive Director Steve Marks said in a statement. “Working after hours, working weekends, traveling long distances, this team has been flexible in getting this industry licensed, without compromising the trust placed in us to protect the public.”

Oregonians voted for legalization in November 2014, and the state began transitioning toward a regulated recreational market in October 2015 with “early start” rules, which allowed dispensaries to extend sales to adults who didn’t have medical cards.

That got recreational sales off to a fast start: In December, the Department of Revenue reported that tax payments totaled $54.5 million from Jan. 1 through Nov 30., $13.8 million more than the Legislative Revenue Office had projected.

But early sales ended with the arrival of 2017; all businesses operating in the recreational space now must be licensed by the OLCC.

The big increase in recreational retailers has coincided with a decline in dispensaries.

As of last week, since Oct. 1, 121 dispensaries had either surrendered their registration or withdrawn their application to go retail, and the number of dispensaries had shrunk from a peak of 425 to 307.

Senate Republican Leader Ted Ferrioli, co-vice chair of the legislature’s Joint Committee on Marijuana Legalization, told the Business Journal’s Elizabeth Hayes that he expected the number to ultimately dwindle to around 30.

In its statistics update, the OLCC also reported that it had approved 9,041 Marijuana Worker Permits out of 10,700 applications received.

Pete Danko

Some Oregon Marijuana Dispensaries Devastated by Recreational Sales Deadline

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By Keith Mansur     Oregon Cannabis Connection

There is definitely no wait at Stash Cannabis Company in Beaverton, Oregon, the past couple of days. Since the deadline for Oregon’s medical marijuana dispensaries passed on December 31, stores that have been waiting for their licenses from Oregon Liquor Control Commission (OLCC) are seeing a lot fewer customers.

It’s so bad that they had only two sales on January 4, for $125.00, and barely over $100 the previous day. The typical sales at Stash Cannabis Company, before they were forced to go back to medical-only sales, was about $4000 a day.

The problem has been devastating for dispensaries that are stuck in limbo between receiving their OLCC licenses and the deadline to end early sales that passed on December 31. These dispensaries, which had been allowed to sell to the recreational market since October 2015, are now out in the cold.“At that pace we will be at $3000 for the whole month,” explained Chris Mathews, owner of Stash Cannabis Company. “We’re turning away 75 or 80 people a day, at least.”

Mathews paid for his application on December 13, after waiting since August on a letter from his landlord showing he had legal occupancy of the building—an application requirement even though he had an operating medical dispensary under the Oregon Health Authority (OHA) system licensed by the city of Beaverton as a medical marijuana dispensary. He has still not gotten an appointment for an inspection walk-through, the last step before licensing. In fact, he may have fallen further back in line, according to his most recent conversation with OLCC.

Mathews emailed OLCC for the status of his application on December 21. They responded, telling him he was 10th in line. Anxious about the looming deadline, he emailed again December 27, and found he was still 10thin line. Finally, he checked on January 4 and found he was now further back in line,  suspiciously moved to 15th!

“It’s frustrating,” Mathews told Oregon Cannabis Connection (OCC). “I have met all the requirements, I took the Metrc training, and I’m just waiting for an inspection.”

He has been given no timeline, either. “They told me to call back next week and they will tell me where I am at then.

Washington and black market benefit

Martin Nickerson simply closed his McMinnville, Oregon, dispensary doors at Ocean Grown Cannabis Company. He knew it was a pointless endeavor to try and operate when the vast majority of his customer base was forced to shop elsewhere—which he knows means Washington state. Originally from Washington, Nickerson understands the market there and has even been told by his customers that’s where they are willing to go.

“We’ve shut down until we get our OLCC license,” Nickerson told OCC.
The county was holding up his Land Use Statement, or LUCS, which is a required part of the application. They received the LUCS January 4, the day we spoke with him. The OLCC now has a completed application and he is awaiting inspection.“The dispensary was being hit so hard on loss of product. We were watching customers go right to the black market or they are going right across the border to Washington,” Nickerson explained. “If you go across the border to Washington … they’ve got 50 different kinds of concentrates from $18.00 to $24.00 a gram. I have had customers tell me if it’s that much cheaper and there’s that much selection and accessibility to product, it’s worth the drive.”

“I want to see them helping us and not hurting us. If we could just work together and talk,” Nickerson said. “I appreciate the work they put in and all the time and effort that has gone into legalizing marijuana in Oregon, but they should be asking the cannabis community ‘what should we do here?’, you know?”

“We are trying to beat the black market and I am right here with the state to help them every step of the way but, boy, I hope they start to listen a little bit,” explained Nickerson.

Tax losses are huge already

The 420 Club in the City of Roseburg, Oregon, was the first licensed marijuana dispensary located in Douglas County, a county that still bans cannabis businesses due to a commission-imposed ban ordinance. The attempted repeal attempt failed in November 2016. Roseburg, however, has allowed dispensaries since 420 Club opened on November 6, 2014, and recreational sales eventually were allowed, too. One of the selling points for recreational cannabis to the city of Roseburg and an main argument for lifting the ban in the county was the tax benefits.

Four dispensaries were operating in Roseburg and 420 Club alone was contributing $18,000 in tax to the Oregon Department of Revenue every month, but that changed in October with the shortage of concentrates and edibles, and in some cases flower, for a few weeks.

“For the last two months we have collected $10,000 per month in taxes, but in the previous year we were collecting about $18,000 a month,” explained Hoyt. “As soon as the state started messing with the testing [on October 1, 2016], our sales dropped 40%.”

“However, now we aren’t collecting any taxes because of not being issued our license yet,” he told us. “We’re obviously not collecting anything for the state in taxes.”

They started their application process at the beginning of December and have faced delays similar to what other dispensaries have encountered. They submitted their application somewhat late because they had very low inventory and nothing available due to the testing backlog and timing of that with harvest. The same timing happened all across the state as dispensaries struggled to stock their shelves before the switch to OLCC retail sales.

“They did all the testing changes at harvest time, and that’s something you just don’t do because everybody and their brother has herb to be tested,” Hoyt pointed out. “That was just the wrong time to do what they did.”

It’s a widespread problem

“This was a completely avoidable disaster,” explained Casey Houlihan of the Oregon Retailers of Cannabis Association. “Several agencies dropped the ball and are now pointing fingers at one another, while our industry grinds to a halt. Scores of shops are scaling back employee hours, forced to turn away would-be customers because they are stuck waiting for a rubber stamp.”

The association has been working to help  cannabis businesses in Oregon negotiate policy issues. Their membership includes about 120 businesses and 65 dispensaries. They have provided guidance and input to legislators and administrators over the past few years in an attempt to prevent onerous rules and stifling regulations from being placed on the industry. They continue to address problems and suggest solutions to rulemakers and legislators.

“This was not the legislature’s intent when they passed ‘early sales’ [SB 460] in 2015,” Houlihan said. “The Oregon Retailers of Cannabis Association is doing everything we can to develop and organize for a solution to the current crisis, and we are working with policymakers to help make that happen.”

The number of licensed cannabis OLCC retailers (dispensaries) in Oregon as of December 30, 2016, was 216, according to the OLCC website information atwww.oregon.gov/olcc/marijuana. Of those only 178 have active licenses. 314 medical marijuana dispensaries remain on the OHA list, which is can be found athttp://public.health.oregon.gov/DiseasesConditions/. on their website. Rob Patridge, OLCC Chairman, told OCC that as of January 4, 257 applications have been approved.

Is there a solution?

The deadline was put in place by statute, so  legislative action would be required to change it. But the problem is immediate and serious, so waiting for the legislature to take care of this is no solution at all. Unfortunately, it appears that is a major roadblock.
“OLCC remains committed to expediting late filing applications and has been taking steps throughout the year to facilitate a quick transition, including working directly with applicants to complete their applications. Applicants can speed up the process by inventorying their products and completing their Inventory Transfer Requests. The December 31 deadline cannot be changed without legislative action since it is in statute. The deadline has been in place for 17 months, starting on July 27, 2015, when SB 450 became effective. The OLCC has been accepting applications for a year and retailers that applied and were ready have been approved through the OLCC’s expedited process. As of yesterday, 257 retail licenses have been approved and staff expects more to be approved shortly as applications are completed.”Patridge explained:

We also reached out to Rep. Ann Lininger, who co-chairs the Joint Committee on Marijuana, but received no response.

The reasons for delays are numerous and many have been forced by local regulations, inattentive landlords, rules changes and myriad reasons other than procrastination. If they have already paid the application fee and are already a licensed dispensary under the OHA, is there no way to allow them to continue to operate?

Let’s hope a solution can be revealed sooner rather than later.

© 2016 Oregon Cannabis Connection.

Portland is Behind on Issuing Cannabis Business Licenses

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With only a few weeks to go until the Oregon Health Authority officially turns the new commercial cannabis industry over to the Oregon Liquor Control Commission there is not much time left for businesses to obtain all their needed licenses. In the city of Portland there have been delays in the permit process for several cannabis businesses – who were worried that they would be shut down come January 1st when those licenses become required. Luckily, the Portland City Council has taken action to ensure that businesses awaiting licenses will not have action taken against them at start of the new year.

“There was some concern in the media about lots of businesses being found out of compliance and shut down January 1,” Commissioner Amanda Fritz said. “As long as there are good faith efforts that they’re in the process that is not going to happen. We appreciate most businesses are working their way through the process”

In hopes of speeding up the process some, the council also agreed that retail dispensaries will be able to obtain their licenses from the Office of Neighborhood Involvement – even if they are still in the process of obtaining all the permits they need. As long as they get the permits and have been successful in working through the complicated process, then they will be eligible to get their license ahead of schedule. This will not however, be an option for growers or processors – likely due to the fact that there are much more in depth inspections required for such businesses.

“We want to be very clear that the city and the Cannabis Policy Program will not be taking enforcement measures against any legally operating marijuana business that is currently waiting in line for its recreational license to be issued,” Fritz said at the top of the Council meeting.

Along with the measure that aims to help push along the licensing of retail cannabusinesses, the city council also approved a measure that will allow for a new license – for marijuana couriers. Such a license wouldn’t allow businesses to have a retail storefront – but it would allow them to have a headquarters, receive orders between 8am and 8pm, and make deliveries of cannabis up until 9pm. This is a first of its kind license – headquarters would have to remain 1,000 feet away from schools like any other cannabis business, but they would be able to deliver to homes that are closer.

It’s exciting to see the city coming to the end of a long initial process that has created what will likely be a thriving industry – and bringing new opportunities, such as the new licenses for marijuana couriers. Both of these measures will be voted on a second time next week before they are officially passed, but both seem to be extremely well supported and it is unlikely there will be any issue.

Four Years After Legal Weed, Seattle’s Black Market Still Thrives

web1_copy_160914-sea-cvrwebMeet the dealers, buyers, and patients ducking the 502 shops.

  •  Wed Sep 21st, 2016 1:30amWhen I first met Steven, it was in the wee hours at a downtown hotel. The small afterparty he was hosting was in celebration of a successful deal—a very successful one: He’d just connected an out-of-state buyer with 25 pounds of pot—for $35,000 or so—meaning he’d be seeing a significant finder’s fee, perhaps 10 percent. The next day he’d be waking at the crack of noon (or, if we’re honest, 2 p.m.) to head to Oregon in search of more product for his mystery buyer, but for the time being he and his boys were cracking Stellas and cavorting in the hot tub, reveling in the moment.Steven is what can best be described as a broker, someone who connects illicit growers with higher-level dealers looking to buy in quantity. “I’m like a concierge,” he told me. “I take [buyers] out to dinner, make sure they have a good time.” After food and some drinks, he hooks them up with local suppliers, lets them make their exchange, and waits for his fee.

    In Washington, getting rid of people like Steven and his clients was one of the major promises of I-502, the ballot measure that made the state the second in the nation to legalize marijuana. But nearly four years after the initiative passed, street dealers and interstate traffickers are still at it, leaving lawmakers and legal-cannabis-industry players alike scratching their heads (and blowing smoke out their ears).

    It’s difficult to determine just how much of the cannabis industry the black market commands. Some groups have tried, including BOTEC Analysis, the state’s go-to research contractor. In a 2015 report, entitled “Estimating the Size of the Medical Cannabis Market in Washington State,” BOTEC put the black market’s share of the total pot pie at about 30 percent, or $1.33 billion. To arrive at this figure, BOTEC started with an existing RAND Corporation study of the state’s overall cannabis market, then subtracted the state’s recreational and medical markets. The remainder, they concluded, was what was left to the illicit market.

    BOTEC itself noted in its report that the true figure could be far higher or lower than its estimate, given the very nature of the black market. That said, few researchers attempting to gauge the black market in Washington have bothered talking to dealers and buyers themselves. To be fair, it’s not as though there’s a stall at Pike Place Market. But it ain’t exactly hidden either. While I wasn’t able to get El Chapo on the phone, I have managed to chat with some of our city’s friendly local black marketeers. Here are their stories.

    STEVEN

    Steven’s business is built around a simple fact about legal cannabis grown in Washington and Oregon: Once it’s shipped to states where pot is still illegal, it fetches an exorbitant price—like $3,500 per pound, says Steven, compared to around $1,400 here in Washington.

    Indeed, he says, many of the black-market growers he deals with are actually involved in the 502 industry but, motivated by those jaw-dropping return rates, maintain “side houses” as an extra means of revenue. “A lot of 502 people have a secret house they grow at,” he says. “My guy, he got some contract with [a 502 retail shop]. I think he gets like $250,000 a year or something.” Still, he sells on the side, substantially padding his income.

That said, in considering the intractability of the black market, one cannot overlook local demand. Our state’s legal cannabis businesses would not be nearly as up-in-arms over the black market if it were only serving smokers in other states. But it’s not. “It’s still definitely cheaper,” Steven says. “I would say the price is still $20 an eighth street level if you have a good dealer. If you were going to Uncle Ike’s, it’s still going to be $30 on the low side, and I think the quality isn’t going to be that much different. They’re definitely going to have way more selection, but I think most people are like, ‘For the price, I’d rather just buy from a drug dealer.’ ”

He also notes that, price considerations aside, ease of access is also a big deal. “If you’ve got to drive 15 minutes to 20 minutes through traffic to go to a store, as opposed to your local neighborhood guy, you’re probably still gonna go to that guy,” he says. “More than anything, the competition from the black market would be these gray-area delivery services. It might only be $5 more, but it’s like ‘All right, I can get this shit now.’ That’s a huge part of why the black market will still exist: the convenience factor. It’s the on-demand generation.”

BART AND JARED

On that note, meet Bart, a local grower and dealer who uses his small basement grow to support his artistic ambitions. He grows about a pound of high-quality indoor pot a month, and sells it in small quantities to a close circle of trusted longtime buyers. Legalization, he says, hasn’t changed much for him, including prices.

“Prices were kind of going down before legalization,” he says. “Ounces were around $200, and now they’re around the $150 range, depending on quality. I charge $160 because I think I deserve it. But that price was pretty much established before legalization. It wasn’t like [legalization] changed it or brought it down.” Reminded that Uncle Ike’s sells ounces for $99, he points out that you can’t unlink the price from the product itself, suggesting that those $99 ounces are nowhere near his product in quality. “If the price meets the quality in the shops,” he notes, “it’ll be hard to compete with that.”

For now, he has no trouble getting rid of his monthly pound. He even occasionally takes on new clients, though he doesn’t need to to sell out his supply. “If I had my ultimate grow, hypothetically, I’m sure I could start doing, like, pounds a week easy,” he says. “I would just have to be more proactive about it, y’know? Like I kind of stopped doing deliveries. I would have to go back into delivering. I’d probably start talking to other wholesale dealers.” Bart’s experience with delivery neatly illustrates Steven’s point about the power of access. “When I’m not delivering,” Bart says,” I probably lose like 40 percent of my customers.”

Indeed, Jared, a former black-market grower turned regular old black-market customer, says delivery was a big part of why he’s continued to buy from the black market. Price is a factor—the “homie hook-up” prices Jared quotes are, quite frankly, insane: $70 an ounce and $30 for a gram of concentrate—but he’s quick to point out that convenience is a major factor. “My first choice is always gonna be my dude,” he says, “because I know it’s gonna be a little cheaper and he will deliver to me. I could be at work, at my door post [he does club security], and he’ll deliver it to me.” He notes that one of the few reasons he’s had to visit a recreational store was when his dealer was over an hour out and he needed weed in a hurry.

MARIA

Along with price and convenience, another factor pushing people into the black market is Washington’s recent medical-marijuana law, the Cannabis Patient Protection Act (SB 5052).
SB 5052 folded the state’s loosely regulated medical-marijuana system into the recreational one, mandating that the state’s medical dispensaries obtain I-502 licenses or close. Based on that BOTEC report, the state decided to license 222 new retail outlets, theoretically offering those licenses to established players from the medical-marijuana industry to ensure that they continue to meet the needs of their patients.

However, many contend that those 222 licenses represent a small fraction of the total medical-marijuana market, and that many recipients weren’t as interested in serving patients as in taking their money. In July, as the new system went into place, patients cried bloody murder, saying that their trusted suppliers had been ripped away and suggesting that the move would eliminate affordable medicine, forcing sick people to get their green on the black market—and by extension incentivizing those suppliers who didn’t obtain recreational licenses to go back underground.

Suppliers like Maria. She operated a dispensary in western Washington prior to the implementation of SB 5052. After her attempts to get a license failed, Maria gave up on pot, at least publicly. However, I recently attended an “Ice Cream Social” at her former storefront, now converted to something of a hangout for her patients.

As a bunch of friendly suburbanites—some of whom brought their kids—passed around infused brownies a la mode, Maria stepped frequently into her office for what she called “the other party”: providing the rest of her inventory to patients desperately seeking cheap medicine. One older gentleman, arriving early, made small talk with Maria, then got right to the point. He didn’t need any ice cream.

“So when should I come back?” he asked. Another, upon arriving, cupped a hand over his mouth and asked, “Where’s the product?” Though the scene was aggressively tame, this was technically a black-market deal. One patient picked up what in a retail store would have been $380 worth of flowers, kief, and edibles. Maria hooked him up for $180.
Trent said he bought all his weed on the black market since the new law passed. “What are we to do?” he asked. “It’s inhumane for anyone to deny us anything that medically benefits us.” He’d tried the rec store, he said, but they didn’t have the right strains and the prices were way too high. Maria, however, still had some of the particular high-THC indica that worked to calm his PTSD without putting him to sleep.

And that, more than money, was what drove Maria to host her polite little party. “There’s nothing out there for patients, there’s nothing on the shelves [at the recreational stores],” she complains. “There’s a lot of risk right now, but I’m willing to take that risk because patients need their medicine.”

THE ECONOMIST

So if eradicating the black market—at least locally—is a desired outcome of legal cannabis, how does one untangle this ball of Christmas lights? According to Beau Whitney, who runs the cannabis-industry consulting firm Whitney Economics, the answer is reducing regulation. Doing so, he contends, will allow cannabis businesses the necessary flexibility to fill the slots the black market is currently filling.

Essentially, if the legal industry meets the needs of the black market’s varied clientele—the ones who want good, cheap weed; the cancer patients seeking affordable medicine; the guy too lazy to get off his couch and go to the store—there’s no need for a black market. Of all those needs, says Whitney, price is key. “If you bring the price of retail cannabis more in line with the street price, it’ll make a huge dent into the black-market activities,” he says. Whitney has a stake in an Oregon cannabis producer and retailer, and says that at one point they offered a loss-leader special to win over new customers.

“We heard from black marketeers that they were pissed off at our pricing because we were competing directly with them,” he says. “Word on the street was that we had made a big dent. Because of the price sensitivity, we saw a surge in demand at our dispensary.”

Whitney notes that a larger black market means more cannabis arrests and a statistically larger impact on communities of color, as they tend to be arrested for cannabis crimes at a disproportionate rate (though said crimes are committed with the same frequency by white people). “This is not something that can just be ignored by the legislature, this is a public-safety issue,” he says. “There’s all sorts of social costs that are incurred as a result. Increased law-enforcement costs, increased incarceration. It’s typically skewed more towards minorities. There’s a huge social cost to this; it’s hard to quantify, but it’s significant.”

THE COP

That said, in Seattle there hasn’t exactly been a harsh crackdown on the black market. You can still buy a dime bag in the Jack in the Box parking lot on The Ave, and no one has kicked down Bart’s basement door just yet. Sgt. Sean Whitcomb, the Seattle Police Department’s spokesperson, says that is likely because the department’s primary focus is elsewhere. “There’s three areas where we’re not going to compromise [on pot]: selling to kids, for one; big-profit growing, for two; and driving under the influence,” he says. “If you’re engaged in that activity, don’t think that just because the laws have changed that we’re going to prioritize those any less. We’re very motivated to ensure that those laws aren’t broken.”

However, your average street dealer, provided he or she supplies only grown-ups, has little to fear. To wit, Whitcomb was walking to a bus stop one night when he himself was propositioned with pot. “I said ‘No, thanks,’ ” he tells me. “He was like, ‘No, man, listen, it’s a great price.’ I said, ‘Listen, I’m a police officer, and you’re not allowed to be selling marijuana, that’s a fact.’ He says to me, ‘Well, it’s legal here, man!’ ”

Statistics show an overall reduction in cannabis arrests in legal states, though the racial disparities among those arrests are still stark. However, that doesn’t mean there’s not still risk for black marketeers. For one, homegrows are still an action item in certain circumstances, according to Whitcomb. For example, a break-in at a children’s bookstore in North Seattle led police through a hole in the wall to a large indoor marijuana grow.

“The one that we’re truly interested in is the large-scale illegal-grow operations,” says Whitcomb. “Those are still prevalent in Seattle, and we do come across those with a degree of frequency.”

THE LAWMAKERS

In the last legislative session, State Rep. Christopher Hurst (D-Enumclaw) proposed a bill to lower the excise tax for cannabis to 25 percent. An economic model he assembled in support of his bill estimated that the state would stand to gain a whopping $1.085 billion by lowering the tax. Hurst wasn’t proposing that the state issue new retail licenses, but his plan did call on the state to override any cannabusiness bans and moratoriums implemented by local municipalities, ensuring that no area of the state would provide a legal-cannabis dead zone for black marketeers to flourish in. (Steven did indeed mention that though the black market has no trouble competing here in Seattle, many black-market actors have migrated to areas with no legal pot businesses to profit off the captive audience.)

As Whitney, the economist, noted, lowering taxes during a budget deficit is always a hard sell, and indeed Hurst’s bill ultimately failed. While Hurst’s own analysis suggested lowering taxes would increase state revenue, an independent state analysis suggested otherwise. Hurst’s info sheet for the bill included a plea for fellow legislators to think past the fiscal note, which showed a $43 million loss in tax revenue, but the bill failed.

Defeat aside, though, Whitney says Hurst was on to something. “Once you bring in more people, reduce the taxes, and reduce the regulatory burdens, then you can drive down costs and do massive production,” he concludes. “Then you can drive out the black market because their onesie, twosie production can’t compete on price.”

Steven puts it more directly. There will always be a black market, he says, “until it’s like a pack of cigarettes and you can just walk into the corner store and get it. That’s when drug dealers will finally be gone.”

Oregon Cannabis Industry Facing Regulatory Uncertainty

oregonroadsign

New Challengs Face Oregon Cannabis Industry.

By Cynthia Salarizadeh

The Oregon Cannabis Industry is facing both double regulations, and regulatory Uncertainty. While seed-to-sale regulations are becoming the accepted norm in all states which have decriminalized cannabis, the situation in Oregon presents new challenges for industry dispensaries and growers.

That’s because Oregon is regulated by two separate agencies that have control over seed-to-sale and the traceability and packaging of cannabis: the Oregon Liquor Control Commission (OLCC) that oversees recreational sales and the Oregon Health Authority (OHA) that overseas medicinal products.

The reason for the two oversight agencies has to do with timing: recreation was approved first October 2015 when the Oregon Liquor Control Commission approved a set of extensive regulations designed to create a viable, profitable and accountable recreational marijuana industry. The first licensed recreational dispensaries are expected to open in December 2016, while, medicinal products were approved by the Oregon Medical Marijuana Act in November 1998.

To accommodate both medical and recreational dispensaries, Oregon regulators had to make some innovative changes that allowed licensed medical marijuana stores to continue to sell recreational marijuana products, but only until Dec. 31, 2015. Then, on Jan. 1, 2017, medical stores will no longer be able to conduct recreational sales since the new recreational dispensaries will be open for business.

As part of these new regulations, the OLCC created a comprehensive tracking system that covers the entire cycle of cannabis planting, cultivation, processing and ultimate sale to individuals as part of its seed-to-sale tracking system. This covered every aspect of the industry from laboratories, processors, wholesalers, and retailers. The system became effective in January 2016 to coincide with the acceptance of the first state licenses for licensed dispensaries to sell to cannabis recreation users.

Under Oregon law, medical grow sites started their registration process on March 1, 2016. This process mandated that licensed dispensaries produce monthly reports to the OHA on what is cultivated, possessed and distributed to patients and dispensaries.

In practice, this means that effective in June 2016, dispensaries had to adhere to the Administrative rules (found at Oregon Administrative Rules 333-008-0000), which include the following:

On a monthly basis, and no later than by the 10th day of every month, “a person designated to produce marijuana by a patient must submit the following information to the Authority”:

  • The number of mature marijuana plants and immature marijuana plants, the amount of marijuana leaves and flowers being dried, and the amount of usable marijuana, in the person’s possession;
  • The number of mature marijuana plants and immature marijuana plants, and the amount of usable marijuana transferred to each patient for whom the person produces marijuana, or that patient’s designated primary caregiver during the previous month;
  • The amount of usable marijuana transferred to each marijuana processing site during the previous month;
  • The number of immature marijuana plants, and the amount of usable marijuana transferred to each medical marijuana dispensary during the previous month.

All of this information must then be submitted electronically and “a person designated to produce marijuana by a patient must keep a record of the information for two years after the date on which the person submits the information to the Authority.

Integrated Software Makes Compliance Easier

Depending on the type of dispensary operation (medical or recreation), Oregon cannabis operations are working in a constantly changing regulatory environment.

For example, according to CJ Stechschultes of Growing ReLeaf medical dispensary in Beaverton, Oregon, even though the OLCC has no jurisdiction over its operations, the company has applied for its OLCC license. While Stechschultes said the business is “currently up-to-date with the latest required rules which, luckily, overlap with OHA’s,” seed-to-sale regs are not affecting them for another three months. “However, we are currently taking the necessary steps to be prepared for this in the future by getting familiar with the Cannabis Tracking System (CTS) Metric. Furthermore, we have been working with BioTrackTHC as our POS system, which is known for its tracking abilities.” Stechschultes said “this is a volatile time concerning rules and regulations.”

Another Oregon dispensary, which chose not to use its name, said the regulatory bodies in Oregon that either currently or plan to govern marijuana on a state level (both the OLCC and the OHA) “cannot keep up with their own deadlines and regulations. Specifically with the OHA, they are grossly overworked and understaffed and are not empowered in the proper way to enforce the regulations in a productive or efficient manner. This is a point we have been frustrated with in the past due to competitors knowingly operating outside of these regs and not having any kind of retribution, while we follow all regs and suffer retribution from our customers because of it.”

The Benefit of Good Tracking Software

Companies such as Biotrack THC, based in Ft. Lauderdale, Fla., have developed the software that lets state governments monitor the entire process of legal cannabis production and sales, including its testing, transportation, destruction and sales.

This means states can follow a dispensary’s inventory and the taxable sales in real time and makes for more accurate revenue collections, while making legal cannabis growers and dispensaries accountable for their inventories.

According to Alen Nguyen of MainStem, the Biotrack software helps the OLCC by providing an inventory control system that tracks cannabis cultivation and movement and the cultivation site and accounts for all legal products, while keeping black market products outside of the regulated system. This oversight also applies to packaging. All Oregon cannabis products, including everything manufactured by MainsStem, come in a child resistant package, he said.

This benefits the public since it assures safety standards are met and allows authorities to track any bad product back to its original source. “All Growers really need to take traceability into account within their growing process,” Nguyen said.

Using a very similar system that the company developed first to track pharmaceuticals, the Biotrack software system allows the state of Oregon, for instance, to track each gram of legal cannabis throughout the plant’s entire grow, processing and sales cycle. According to Moe Afaneh, COO of Biotrack THC, the company has successfully integrated its tracking software with recreational and medicinal dispensaries and is working with its several hundred customers in Oregon to make the seamless transition to the two separate regulatory systems.

Oregon’s rigorous standard requires detailed recordkeeping, but new software is helping Oregon dispensaries adhere to these rules. Biotrack software keeps track of everything from inventory management to point-of-sale transactions to individuals to meet both quality assurance and compliance standards.

According to Dan McMahon, Vice President of Government Solutions for Biotrack THC, regulations in Oregon change rapidly, so dispensaries and growers are always being scrutinized. For instance, unlike other perishable commodities, cannabis loses weight and weight as it sits on the shelf. This means dispensaries have to follow the first-in-first-out (FIFO) inventory system because the product is “perishable to the nth degree,” McMahon said. Declining weights also have to be accounted for in the compliance process, he added.

In addition to weight, every batch of the product also has to be tested for pesticides and all products face tough labelling standards.

About the author:

Cynthia Salarizadeh is the Founder and CEO of Salar Communications Group. Her area of expertise centers on public relations and strategic communications. She entered the cannabis industry to solely focus on improving the perception of cannabis for better market conditions through strategic campaigns that sit at the center of the battle for legalization and economic prosperity. Salarizadeh holds a Bachelor’s degree in International Relations with a minor in Modern Middle Eastern Studies and a focus on Strategic Communications from the University of Pennsylvania. She also holds a certificate in Political Journalism with the Fund for American Studies from a program at Georgetown University.

Buyer Beware: Oregon’s First Marijuana Investor Fraud Scandal

Aug 1, 2016 at 4:20 PM

I can’t count the number of times I’ve warned potential investors that the cannabis industry is rife with fraud and bad behavior. With legalized cannabis still a relatively new industry and with states constantly changing their cannabis regulations, fraudsters can have a field day.


Cue the bizarre (though unsurprising) case of Portland-based dispensary,
Cannacea, and allegations of cannabis investor fraud swirling around it.I can’t count the number of times I’vewarned potential investors that the cannabis industry is rife with fraud and bad behavior. With legalized cannabis still a relatively new industry and with states constantly changing their cannabis regulations, fraudsters can have a field day.

Last week, as reported by The Oregonian, “[t]he Oregon Department of Consumer and Business Services [“Department”] ordered Tisha Siler, CEO of a Northeast Portland pot dispensary called Cannacea, to pay $40,000 in fines for multiple violations of state securities law, including selling securities without a license.” You can read the Department’s order against Cannacea and Siler here.

According to the order, in November 2014, Green Rush Consulting, a California cannabis consulting company which “worked with a felon previously convicted in a financial scam,” helped Cannacea and Siler come up with a private placement memorandum for potential investors of Cannacea. The Department found this PPM contained multiple misrepresentations, probably the most egregious of which was that “Oregon regulators contacted and specifically invited Siler to ‘open cannabis dispensaries in Oregon,’ and that ‘Oregon regulators stated they would ‘pre-approve’ or ‘green light’ up to six of Respondents’ medical cannabis dispensary applications, ‘ensuring [Siler] would sail smoothly through the application process.’ This ‘pre-approval’ or ‘green light’ was emphasized repeatedly throughout the PPM. In truth and in fact, no such statements were made by any Oregon regulator.” Out of all of the suspect PPMs the cannabis business lawyers in my firm have seen (which are many), this takes the cake as the most outrageous since no regulatory authority would ever make such a promise to anyone.

The facts get even more interesting:  In connection with the creation of the PPM, Siler provided Green Rush with a letter, dated October 16, 2014, that was purportedly from the Oregon Health Authority Medical Marijuana Dispensary Program (the “MMDP Letter”). The MMDP Letter represented that Cannacea had received a ‘green light’ from MMDP for six dispensary locations. In truth and in fact, the MMDP Letter was a fraudulent document. Specifically, the MMDP Letter: was created on letterhead that is not used by MMDP; contained fabricated statements, and; contained a forged signature of a regulator that did not even work in the MMDP. Upon information and belief, the MMDP Letter was created by Siler, or by another at her direction.

The result from all of this is that Cannacea and Siler cannot do any business in Oregon, and both Cannacea and Siler are jointly and severally responsible for $40,000 worth of civil penalties assessed against them by the Department. And while Green Rush Consulting is allowed to continue its consulting service in the state, Green Rush Consulting is “prohibited from engaging in any business activity related to securities in Oregon without permission from the Department of Consumer and Business Services.”

The foregoing is a cautionary tale for investors, marijuana businesses, and state regulators. Far too often, state regulators are too bogged down with satisfying current federal enforcement priorities to deal with the actual business of marijuana. So, I applaud the State of Oregon for setting an example for other states by actually taking relatively swift action here. As the industry matures in all states that seek to legalize, fraudster companies and at least some “cannabis consultants” will no doubt continue to take advantage of unwitting investors. In turn, state securities regulators should be setting their own guidelines for how to better prevent this kind of fraud. In the meantime, be careful out there and exercise caution when you receive a multimillion-dollar cannabis private placement.

 

Cannabuzz: The Rise of Canna Bullies

pot1-weedleafNot Everyone in the Cannabis World Is Chill

“That’s the thing about people who smoke weed,” said a friend to me recently. “They are some of the most laid-back, easygoing people I’ve ever met.”

We were talking about how people who have just consumed cannabis behave compared to those who have consumed alcohol. And within the context of that particular comparison, I absolutely agreed.

But recently, I’ve found the exact opposite to be true. And after conversations with others in the cannabis industry, I’m beginning to rethink my position. Because there is some truly fucked-up behavior going on, and it’s not helping anyone.

It wasn’t always like this—and by “always,” I mean prior to July 1, 2015, when Measure 91 went into effect. Sure, up until then, there were the normal squabbles and ego fits you might expect, but they remained pretty low-key. (“Bro, I grow weed waaaay danker than that trash, bro.”) (“Bro, that pound was light by eight grams. Eight grams, bro.”) (“I think his weed has bug feces all over it.”)

I started to notice a strong uptick in trash talk once dispensaries started selling to adult recreational buyers. No great shock—where there is money to be made, people don’t always behave at their best.

But then I started seeing some truly vitriolic postings on social media. People began attacking groups and individuals, in strings of increasingly hate-filled diatribes. The blocking of other profiles started to rise.

A wholesaler I know was asked by a potential client if the trim they carried had been blasted with butane prior to sale, explaining he’d heard from three individuals in Southern Oregon that was the case. The individuals in question had a beef with one of the wholesalers, and had taken to spreading false rumors about their products.

And some other people I’ve spoken to had experiences so hateful and disturbing that they asked I not share what they endured.

I’ve been immune, thankfully, until two weekends ago. I was responsible for booking speakers for the main stage at a local hemp conference—”main stage” being a terribly grand way to overstate the 14-inch-high platform pushed into a corner of an Expo Center hall, so near the concessions window that I could hear every order called out. I booked seven speakers for that main stage, with additional speakers booked into the various breakout rooms upstairs.

A “History of Hemp” expert I’d booked contacted me, ranting at some length that she had been mistakenly “relegated” to one of the breakout rooms, and that shedemanded to be placed onto the main stage. I explained we wouldn’t be able to accommodate her request, as the speakers had all been booked a month ago, but the breakout rooms at past hemp conventions had been standing-room-only events, and I was sure she would be speaking to a packed crowd.

The day before the convention started, I received a text. “I will absolutely be speaking on the main stage,” she informed me. “I will do this even if I have to remove whoever is on the stage at 12:30 in order for me to get on the stage. There is no changing my time, and I trump Josh. Josh, that’s how it is, and all you need to do now is retreat and say ‘Yes ma’am’ or not, but it’s over. I’m on the main stage, do not fuck any further with me.”

The emails that followed were even more profane and unhinged, and again, this was all about a 30-minute talk about hemp. We accommodated her request out of pity, only to have her hit the stage 15 minutes late to speak to a grand total of four people.

I get that the canna industry is taking a toll, with long hours, obscenely high fees, and ill-informed decisions being made by regulators with no real love for the plant. These are stressful days. And while I don’t believe we will all be kumbaya cuddle buddies, we have to do better. Threatening each other and trying to destroy each other’s businesses doesn’t serve anyone’s best interests. In case you’ve forgotten, weed is the ultimate chill-out tool. If we’re finding we can’t all get along, then let’s all get a bong and take a time out.