2020 Elections, Cannabis, and Increased Demand for Cannabis Real Estate

Regardless of their political party, the majority of Americans support cannabis legalization. According to a 2019 Pew Research Center survey, 55% of Republicans and 78% of Democrats agreed that marijuana “should be made legal.” Overall, 67% of Americans want to see cannabis legalized. Only 32% think that cannabis “should not be made legal.”

The American public’s evolving position on cannabis legalization could have significant ramifications for 2020 state electrons and the demand for cannabis real estate.

The Effect of Cannabis Legalization on Real Estate

When Americans consider the effects of cannabis legalization, they rarely think about whether updating laws will raise or lower real estate values. Cannabis entrepreneurs, however, need to take changes in cannabis real estate seriously. Deciding when to purchase land and buildings could partially determine whether companies succeed or fail.

Colorado, one of the first states to legalize recreational cannabis, offers an excellent case study that could predict how changing laws affect real estate prices.

One study finds that Colorado’s decision to legalize marijuana helped increase home values by 6%, which comes to about $15,600 per property. Legalization may contribute to higher values because it creates a new industry and jobs, attracts job seekers, and encourages investors to spend money on property.

Interestingly, areas that legalize medical marijuana do not see such a significant jump in property values as those that legalize recreational cannabis.

How Legalization May Influence Cannabis Real Estate Investors

Considering that property values increase after legalization, it makes sense for cannabis real estate investors to purchase land and buildings before states change their laws. A storefront that costs $250,000 before legalization could easily reach $265,000 after legalization.

Unfortunately, researchers haven’t spent as much time studying the impact of cannabis legalization on farmland. One could assume, though, that farm prices will go up as more investors purchase land for growing cannabis.

2020 State Elections That May Lead to Cannabis Legalization

Cannabis investors should pay close attention to 2020 state elections that will affect cannabis legalization. The closer a state comes to recreational legalization, the more expensive property will probably become.

Every investor will need to gauge the landscape to determine the right time to buy land and pour money into the equipment, infrastructure, and employees. Paying attention to 2020 state elections may play a crucial role in when entrepreneurs decide to invest.

States That May Pass Medical Cannabis Laws in 2020

So far, medical marijuana hasn’t had much of an influence on real estate prices. States that pass medical cannabis laws, though, have taken a first step toward full legalization. Once they find that medical use benefits people more than harms them, it becomes easier to make recreational cannabis easier.

Idaho

Regions with recreational cannabis surround Idaho. The state’s government has resisted pressure to conform to its neighbors’ laws.

The 2020 election, however, may include a ballot initiative that would let Idaho residents decide whether they want to legalize medical marijuana.

Kansas

As of March 2020, Kansas has some of the country’s strictest marijuana laws. Governor Laura Kelly, who took office in 2019, supports medical cannabis, though. Kansas’s Senate and House have Republican leaders who do not support the governor on her position. This creates a tense situation that could influence how people choose to vote in 2020.

Kansas has been put in an odd position, geographically. It shares borders with Colorado, which has fully legalized cannabis; Missouri, which has medical cannabis and decriminalized recreational use; Oklahoma, where patients can access medical marijuana but authorities can prosecute recreational users; and Nebraska, which has decriminalized personal cannabis use even though it does not have medical marijuana.

Mississippi

Mississippi’s cannabis advocates are encouraging residents to support a ballot initiative that would let them, the voters, decide whether the state adopts medical marijuana. Note that winning would not legalize medical marijuana. It would just give residents the right to vote for or against legalization. Still, it’s a big step forward for the state.

States That May Pass Recreational Cannabis Laws in 2020

Some states that allow medical marijuana could begin the transition to recreational cannabis after the 2020 elections. Depending on the state, recreational cannabis laws will depend on voter initiatives and who wins elections.

Arizona

Arizona failed to pass a ballot initiative by just 3% in 2016. Assuming that supporters can get at least 237,645 signatures, a new initiative will appear on the 2020 ballot.

Interestingly, some cannabis groups oppose the initiative, so the ballot may have two options for voters to consider.

New Mexico

New Mexico always seems on the cusp of legalizing recreational cannabis. Governor Michelle Lujan Grisham already had a task force to create a blueprint for legalization. The House passed a law that would let adults consume cannabis legally.

New Mexico’s Senate, however, remains skeptical. Without the Senate’s support, New Mexico will not pass new cannabis laws in 2020. That means that the 2020 Senate races could determine the fate of legalization in New Mexico. If the skeptics lose their positions, the state could start passing updated laws.

New Jersey

New Jersey fell short of passing recreational cannabis laws in 2019. In 2020, voters will get a chance to have their say.

One poll shows that 62% of New Jersey residents support legalization. Only 32% oppose it. The 2019 version of the survey showed 59% support. The slight increase could give the state enough votes to enact recreational cannabis laws. Legalization will likely depend on whether people turn up to vote.

New York

Most politicians in New York seem to agree that the state needs to pass recreational cannabis laws. New York, however, failed to reach this goal in 2019. The issue isn’t so much whether the state supports recreational legalization, but how to write laws that would promote social justice during the legalization process.

If Governor Andrew Cuomo gets his way, New York will set aside 50% of cannabis tax revenue to invest in communities that have been disproportionately harmed by prohibition.

Connecticut

New York’s passing recreational cannabis could stimulate Connecticut to follow its neighbor’s lead. Currently, it seems unlikely that Governor Ned Lamont will stick his neck out to support legalization. If New York chooses legalization, though, it will become less risky for Lamont to do the same. It’s a long-shot, but it’s possible.

Conclusion

Most states have some form of legal marijuana. The influence of cannabis on real estate prices doesn’t become significant, though, until states pass recreational marijuana laws. Once that happens, the industry starts to attract more investors, which can drive up the price of buildings, farmland, equipment, and employees.

Every investment requires some level of risk. Whether buying cannabis real estate now will lead to future profits largely depends on predicting how voters will respond to the country’s evolving beliefs.

March 17, 2020 / by / in
Directors and Officers Liability Insurance in the Cannabis & Hemp Industries

The legal cannabis and hemp industries have enormous room for growth. One report from New Frontier Data shows that legal cannabis sales will come close to $30 billion by 2025.

Despite the potential growth of legal cannabis and hemp sales, the industry is still very young. As a new industry, no one knows what will happen. Companies may reach or exceed the projection from New Frontier Data. Then again, the cannabis industry faces a lot of risks that could harm cash-strapped businesses struggling to earn profits.

The wide range of risks makes it crucial for the directors and officers of cannabis companies to get liability insurance that protects them from personal financial loss.

Risks Can Come at Unexpected Times

The cannabis and hemp industries face some ongoing dangers. A lot of states still haven’t adopted recreational cannabis laws. Nearly 18 states don’t even allow medical marijuana.

Luckily, most cannabis and hemp companies understand federal and state laws well enough that they can avoid prosecution. Plenty of other risks, however, can come at unexpected times.

In March, one of the world’s largest cannabis companies announced that it would layoff 500 employees and close two of its indoor cultivation facilities. The Canadian company says that it made the changes because:

  • The recreational cannabis market grew slower than expected in Canada.
  • Changes to federal law permitted outdoor cultivation after the company had invested in expensive greenhouses.

The cannabis company couldn’t have foreseen these risks when it spent a significant amount of money developing indoor cultivation facilities intended to meet the anticipated demand.

Risks That Could Harm Directors and Officers

Other hazards that could harm the directors and officers of legal cannabis and hemp companies include:

  • Failing to meet profit expectations.
  • Falling short of security requirements that protect inventory and cash.
  • Letting customers purchase more products per visit than allowed by local law.
  • Selling products that don’t comply with safety laws, such as labeling products and placing items in childproof containers.
  • Data breaches that leak customer information to criminals.

Like any business, cannabis and hemp companies can also get accused of things like:

  • Breach of duty.
  • Breach of contract.
  • Misrepresentation.
  • Unfair competitions.
  • Misappropriating trade secrets.

Any of these risks could leave companies open to lawsuits from investors, vendors, customers, or government agencies.

Protection Offered by Directors and Officers Liability Insurance

When companies make mistakes, directors and officers can expect repercussions. Failing to label a product correctly, for example, could mean that a vendor can sue the supplier. If the supplier mislabeled the product, the vendor could very well win the suit.

Directors and officers liability insurance helps ensure that the repercussions only affect the business. The insurance offers personal protection to directors and officers who hold policies.

Depending on the policy, directors and officers liability insurance may pay for legal defense related to:

  • Company performance.
  • Decisions that exceed a position’s role.
  • Not complying with regulations.
  • Regulatory infractions.
  • Mismanagement of funds.

Directors and officers liability insurance does not cover all activity, though. Business leaders should not expect liability insurance to protect them from:

  • Property damage.
  • Personally profiting from misdeeds.
  • Fraud.
  • Litigation started before getting liability insurance.

Finding Directors and Officers Liability Insurance for Cannabis Companies

Hundreds of insurance providers sell directors and officers liability insurance policies. Unfortunately, few of them are willing to sell policies to the directors and officers of cannabis companies. Even when a company operates legally, insurance providers tend to avoid the cannabis and hemp industries.

Directors and officers liability insurance also tends to cost a lot more for business leaders in the hemp and cannabis industries. Directors and officers working in the cannabis industry can expect to pay two to 10 times more than those working in areas like technology and manufacturing. Prices can range anywhere from $20,000 to $100,000 per year.

The industry has faced similar challenges from banks and lenders. Until Congress changed its “suspicious activity report” rule, most banks decided that they didn’t want to work with hemp growers, manufacturers, and sellers. Thankfully, the law has been changed to make banks feel at ease when creating accounts for hemp businesses.

The recreational cannabis industry, however, still faces a lot of challenges that prevent companies from accessing the services they need from banks and insurers.

Hopefully, the insurance industry will evolve as more states legalize recreational cannabis. Some insurance companies, however, will probably stay away from cannabis until the federal government lifts prohibition. Until that day comes, directors and officers will have to spend higher-than-average amounts of money on liability insurance available from a handful of companies.

Do Cannabis and Hemp Companies Need D&O Liability Insurance?

Anything can happen in a rapidly evolving market. Investors may feel angry when they don’t see quick returns. Government agencies may pursue litigation against cannabis companies that operate within the law. Business leaders could make bad calls that hurt company performance.

Given the unknown level of risk, it makes sense for companies to protect their directors and officers with D&O liability insurance. Without a reliable insurance plan, experienced CEOs and managers may choose to stay in other industries until they see more certainty. Losing those people would limit a company’s ability to reach or exceed expectations. That makes D&O liability insurance essential.

March 10, 2020 / by / in
Rule Your Extraction Business with an Iron Fist

When it comes to processing cannabis and hemp materials—extraction is one of the most popular methods. All plants are made of chemical compounds, like terpenes/terpenoids for smell and flavanoids for flavor. These compounds are often extracted in plants like lavender, and even your daily coffee or tea is similar. An extraction process essentially uses a solvent to separate the terpenes and flavanoids from the plant material.

There is countless extraction equipment manufacturers and systems on the market that all achieve the same thing, but with varied results in processing power, quality of product, and run-times. Additionally, not all extraction systems are built with quality materials—some are built using inferior steel and use cheap components and pumps. One closed-loop extraction system stands out, and if you’ve ever wondered how award-winning extracts are made, Iron Fist Extractors is the answer. These finely engineered, closed-loop extractors are designed to produce full spectrum extracts with amazing terpene profiles.

Iron Fist Extractors:

  • Made in USA
  • 100% American Stainless Steel
  • Fully Customizable
  • Versatile to use Butane or Propane
  • Use the Highest Quality of Parts and Components
  • Come equipped with Duel Haskel Recovery Pumps
  • Can achieve solvent recovery times of 1lb per minute
  • Produce award winning extracts

Whether you’re working with cannabis, hemp, or any plant you want to extract essential oils from, discover the difference an Iron Fist makes in your products.

Visit: https://ironfistusa.com/extractors/ for more information and pricing.

January 20, 2020 / by / in
Cannabis and Hemp in Thailand

Are you an entrepreneur or business person looking to invest in the cannabis and hemp industry? If yes, Thailand might be your most probable destination. With numerous developments, regulations, and research, the Thai’s cannabis market is becoming a hit, not only in Asia but also globally,

Thailand is among the most promising nations in terms of cannabis trade and consumption. While other governments are still putting restrictions on cannabis and hemp, Thailand is exploiting this somewhat controversial industry. This article provides a complete overview of the cannabis and hemp industry in Thailand. Read on!

History of Cannabis and Hemp in Thailand

Cannabis, (popularly known as kancha) and hemp use have come a long way, from the traditional kitchen ingredient to the modern medicinal substance. Laborers used marijuana as a muscle relaxer while women used it to ease labor pains. However, the Cannabis Act, B.E. 2477 of 1935, criminalized the possession, use, or sale of cannabis.

What Does Thai’s Cannabis Look Like?

Thailand’s kancha is different from that from other parts of the world. It is a pure Sativa landrace highly popular for its high THC content and relatively low CBD. Its leaves grow in clusters and feature wispy hairs. Also, it has a citrus scent and produces a lighter “high” than other types of cannabis.

The majority of Thai’s cannabis varieties take around 20 weeks to flower due to lack of light variation and temperature between seasons.

In the modern-day, many people in Thailand regard cannabis as traditional medicine. Unlike other drugs, cannabis doesn’t experience a lot of stigmas. The government’s contribution to the legalization of kancha removes any significant war on it.

Cannabis and Hemp Regulations in Thailand

Thailand has laws in place that regulate the production and use of hemp and marijuana. Although the rules were more stringent in the past, the Thai government is easing them day by day.

To start with, the government has separate laws for hemp and cannabis. Hemp is legally distinct from cannabis as it contains less than 0.2% THC. In 2018, the government enacted its first regulations that allowed government entities and agencies to apply for hemp cultivation permits. The registered entities would grow hemp in any of the following provinces: Nan, Chiang Rai, Mae Hong Son, Tak, Phetchabun, or Chiang Mai. Hemp strains from these provinces are highly regarded for their high-quality fibers, making them suitable for the textile industry.

In December 2019, Thailand legalized the medicinal use of cannabis. Medicinal kancha can be used to treat the following;

  • Multiple sclerosis
  • Child epilepsy
  • Cancer

Recreational use, however, is a crime that attracts more than 15 years in prison.

In the new regulations, 99% pure hemp extracts containing a CBD to THC ratio of 0.01%:0.2% weight can be used in pharmaceutical drugs and herbal products. Dried hemp back, seeds, fibers, and stems can as well be used in food products, cosmetics, and traditional medicines.

In recent regulations, Thailand removed hemp extracts and low-level cannabis from the list of banned narcotics. Hemp seed and oil derivatives are allowed. CBD extracts from hemp plants and marijuana were also removed from the list of banned narcotic substances.

Currently, kancha is grown by government agencies and research institutions such as universities. They grow industrial-grade cannabis rather than the typical garden cannabis.

Production and Trade of Hemp and Cannabis in Thailand

Thailand highly restricts the growth, manufacturing, and trade of both hemp and kancha. It is illegal to grow cannabis at home whether for recreation or medicinal use. Also, the sale of cannabis seeds is illegal. This means that you cannot purchase them in Thailand or buy from another country.

With a government permit, a farmer can cultivate hemp. The law requires that hemp must not exceed more than 1% THC. Hemp can only be grown in designated areas, while seeds can exclusively be sourced from licensed hemp-harvesting producers.

With a valid license, the farmer can grow, harvest, or process hemp for;

  • Research
  • Commercial use
  • Production and distribution of seeds
  • Household use

Thai Cannabis Market Scope

The Thai cannabis and hemp industry is soaring very fast since the legalization of medicinal cannabis and hemp on medicinal and food products. According to the Bangkok Post, Thailand’s cannabis industry is estimated to hit around USD 661 million by 2024.

Thailand approved USD 4 million to expand marijuana farms for medicinal purposes. This will help fend off any foreign competition for medicinal marijuana.

The Future of the Hemp and Cannabis Industry in Thailand

Thailand is poised to overtake the United States’ Hemp and Cannabis Industry within the next 5- 10 years.

There are various proposals to legalize the cultivation of kancha. Thailand is gearing up towards full legalization of kancha that will allow Thais to cultivate up to 6 cannabis plants at home. This kancha will be sold to the government for conversion to medicinal marijuana.

It looks likely that farmers will be able to plant cannabis trees in their gardens. While this will have to wait, the government has built a very large industrial-scale, medical marijuana facility. The Government Pharmaceutical Organization (GPO) is hoping to cultivate plants that will produce enough ingredients for the manufacture of a million, 5ml kancha oil bottles by Feb 2020.

Future kancha strains will have differing percentages of CBD and THC. Maejo University, the premier cannabis research institution, has developed a marijuana strain called Issara. This strain offers equal percentages of CBD and THC. These strain will treat illnesses and symptoms that require different ratios.

January 13, 2020 / by / in
Global Cannabis Markets to Watch in 2020

The global cannabis industry is taking shape, with new markets emerging gradually. From North America to Europe and Asia, Cannabis is becoming a new raw market for investors and business people. The recent wake of legalizations is leading to the emergence of new markets for cannabis investors.

2020 will likely be another year of the boom in the cannabis industry. With investors willing to push resources in this business, opportunities seem to emerge on the horizon. The global cannabis and hemp market is expected to hit over $40.6 billion by 2024, and these markets are emerging as the ultimate hits;

Canada

After the legalization of both medicinal and recreational marijuana, Canada is becoming a force in the industry. Big companies are gaining positions in this promising market. In 2019, Deloitte estimated annual revenue of cannabis sales at around USD 22.6 billion. The firm also estimates demand to go above 600,000 kilograms per year.

As of July 2019, there were about 38 licensed producers who could grow, harvest, and process cannabis. In Canada, marijuana has been legalized on the federal level. This provides companies operating in the industry with greater safety and security.

Below are the top Canadian cannabis companies;

  • Canopy Growth
  • GW Pharmaceuticals
  • Curaleaf Holdings
  • Cronos Group
  • Aurora Cannabis
  • Green Thump Industries
  • Tilray Holdings
  • Aphria
  • Trulieve Cannabis
  • CannTrust Holdings

All these companies have massive investments in the Canadian cannabis industry. Also, they have the largest marijuana stocks in 2020.

United States

Unlike Canada, Cannabis is legal on state rather than the federal level. As of 2019, the District of Columbia and 33 states had legalized marijuana for either medicinal, recreational, or both purposes. Only 14 states have legalized the recreational use of cannabis. Demand for marijuana is on the rise, with an estimated $8 billion in revenue generated in 2019.

An estimated 38.4 million people consume cannabis, either legally or illegally. In 2020, the cannabis market is poised to grow by more than 25%. The total legal cannabis sales are expected to reach nearly $30 billion by 2025. According to research by Business Wire, 36% of cannabis consumers reported daily cannabis use while another 59% admitted consuming cannabis at least once a week.

Florida, North and South Dakotas, New Jersey, Missouri, and Arizona states are likely to step up in their campaign towards the legalization of marijuana.

Thailand

Thailand is the first Asian country to legalize medicinal cannabis. It is fast growing in the cannabis industry after recent legalizations. In September 2019, Thailand lifted cannabis and hemp extracts from the list of banned narcotic substances. Thailand allows CBD extracts not exceeding 0.2% THC.

There is an ongoing proposed draft to allow Thais to grow a limited number of cannabis trees at home. Thailand’s cannabis industry is estimated to hit $661 million (around 21B bhat) by 2024. If exports are made legal, Thailand could be exporting approximately $20 billion by 2025.

Germany

In 2017, Germany legalized the use of medicinal marijuana. CBD oil, edibles, cosmetics, crystals, and capsules are allowed in German markets. However, THC levels are strictly controlled.

Germany allows imports exceeding 2,800 kilos of medicinal marijuana to meet local demand. In 2019, Germany’s Federal Institute for Drugs and Medical Devices (BfArM) issued licenses for domestic production of cannabis. The main aim of this licensing was to reduce the over-reliance of imports from Canada and the Netherlands.

In 2018, the German cannabis industry was valued €73.7 million. Cannabis patients are poised to exceed one million by 2024. By 2028, the cannabis market is estimated to reach €7.7 billion.

In 2020, around five cannabis companies could be listed in the European Stock Market. While stocked markets missed out in the early stages, German companies are looking to capitalize on the growth. By late 2020, German suppliers distributing various products will also multiply significantly.

Italy

In Italy, cannabis is legal for both industrial and medicinal uses. However, recreational use is decriminalized but highly regulated. Possession of small amounts of cannabis for personal use is a violation that’s subject to fines. Unlicensed cultivation of cannabis is illegal and subject to imprisonment.

Licensed cultivation of marijuana in Italy for industrial and medicinal purposes requires the use of licensed seeds. The Stabilimento Chimico Farmaceutico di Firenze (SCFF) is the only authorized grower of medicinal cannabis.

Although the cannabis market in Italy is meager, it’s expected to triple in 2020 from last year’s 200 kilograms. Despite these small quantities, Italy remains one of the largest European markets. Italy continues to legalize marijuana and might consider recreational use in the coming years.

Uruguay

Uruguay remains the pioneer country globally to legalize recreational marijuana. Also, it’s the first country to allow commercial trade of Marijuana.

In Uruguay, there are more than 7,163 home growers and over 36,487 marijuana customers. However, only two companies have licenses to grow high-THC medicinal marijuana.

Investors are betting on Uruguay to become a global export hub for medicinal marijuana. According to the Medicinal Union of Uruguay, investment in the cannabis market has surpassed USD 100 million. However, this investment is not enough to satisfy the current demand.

According to Monitor Cannabis, Uruguay’s cannabis market could exceed USD 85 million annually if the market is fully expanded.

The Bottom Line

Above are some of the most promising cannabis markets globally. For investors looking to put their resources in the cannabis industry, these are among the most profitable markets. While cannabis is subject to restrictions, it’s becoming one of the most profitable businesses to venture in. The global demand for cannabis exceeds the supply and regulations in place. However, the recent wake of legalizations gives hope to a promising future.

January 13, 2020 / by / in
Emerging Cannabis Markets to Watch in 2020

Although the federal government keeps dragging its heels, more and more states keep legalizing cannabis. When recreational cannabis sales started in Illinois on January 1, 2020, the state’s lieutenant governor, Juliana Stratton, bought a can of popular microdose gummies from a dispensary.

On January 1, Illinois became the 11th state to sell recreational marijuana. The new year may bring even more opportunities to entrepreneurs that want to enter the legal cannabis market.

Interested parties should keep their eyes on the following six markets.

Vermont

Vermont’s state government has already made significant moves toward legalizing cannabis sales. In 2018, Vermont passed laws making it legal for adults 21 and over to possess and grow cannabis.

In 2019, the Vermont House and Senate even started the process of approving marijuana sales. Unfortunately, the House went on break in May, leaving the final steps unfinished.

Pro-legalization advocates believe that the state will pick up the cause in 2020 to finalize sales. Of course, there is some opposition. The majority of the state’s citizens and legislators side with legalization, though, so there are good signs that Vermont will become the next state open to cannabis retail businesses.

New York

New York is an interesting state with a sharp divide between the opinions of people living in the urban south and those living in the more rural north.

The divide has frustrated pro-legalization activists in New York City for well over a decade.

With Andrew Cuomo as New York’s governor, the rest of the state may finally get the push it needs to catch up. Cuomo says that he plans to make legalization a priority for 2020. Part of his plan includes initiatives that should appease cautious legislators in Albany. For example, Cuomo wants to:

  • Create an Office of Cannabis Management that would regulate sales of medicinal and recreational cannabis.
  • Fund a hemp and cannabis research facility at the State University of New York (SUNY).
  • Work with neighboring states to prevent illegal, cross-border sales.

New York couldn’t get the job done in 2019, but 2020 brings new hope to cannabis entrepreneurs.

Arizona

Advocates in Arizona have been trying to legalize medicinal cannabis since the mid-1990s. Each attempt brings the state closer to legalization. Many people believe that 2020 will bring medicinal and recreational sales to the state.

In 1996, 65% of Arizona voters supported a ballot initiative that would let doctors prescribe cannabis. When legislators removed the prescription option, Arizonians voted against the initiative.

Voter support went down from there. In 2002, voters did not support medical cannabis. In 2010, 50.1% of voters supported medical marijuana. The law, however, included several limiting provisions that made it ineffective for many of the state’s residents.

A big push for recreational cannabis came in 2016, but the ballot initiative failed when only 48.7% of voters supported it.

Why would anything change in 2020? Mostly because it took monumental amounts of money for politicians and certain companies to change voters’ minds. There are some signs that no one wants to make such a financial commitment in 2020, which could mean that voters finally get the access they’ve asked for several times over the last few decades.

Also, another ballot initiative will appear in 2020. Although, there is some opposition.

Florida

Florida already has medicinal marijuana, which is great considering that the state struggles with one of the country’s highest overdose rates. Many people find that access to cannabis can curb cravings for opioids.

Evolving from medical to recreational cannabis takes a lot of political will, though. At the beginning of 2020, it looks like the state lacks enough signatures to get a voter initiative on the November ballot. Advocacy groups have until February 1 to get the signatures they need.

In other words, Florida has a fighting chance. If full legalization doesn’t happen this year, then the state has, at the very least, taken one more step to recreational cannabis.

New Jersey

Depending on which news source you pay attention to, recreational cannabis will “absolutely pass in 2020” or it “has absolutely no chance of passing in 2020.”

Both perspectives involve a lot of wishful thinking.

Here are the facts:

  • New Jersey has failed to pass recreational cannabis laws in the past.
  • Lawmakers have agreed to put recreational cannabis on the 2020 ballot.
  • The state government doesn’t have to abide by the voice of the voters.
  • Governor Phil Murphy supports full legalization.

There’s a good chance that New Jersey will soon get legal cannabis. 2020 is a good time for businesses to start exploring their options. Realistically, though, the state probably can’t have its laws in place until 2021.

New Mexico

New Mexico probably seems like a long-shot to most people who don’t know much about the state, which has a reputation for conservative thought. The reality is that New Mexico has a diverse, somewhat unpredictable citizenry that lean conservative on some issues and liberal on others. Not that cannabis legalization is necessarily a right or left issue, of course.

The good news for cannabis entrepreneurs is that recently-elected Governor Michelle Lujan Grisham has put legalization on her list of accomplishments for 2020. Her list also includes crime prevention, college tuition assistance, and importing prescription drugs from countries with lower prices.

Hopefully, cannabis legalization will not become a bargaining chip that gets sacrificed for the governor’s other priorities.

Recreational cannabis failed last year, but lawmakers have made changes to their approach. The majority of New Mexico residents say they support legalization. Now, it’s up to the legislature to make a decision.

No one knows how state laws will evolve. Cannabis businesses need to pay close attention to these six states, though. They could represent excellent opportunities for growth.

January 12, 2020 / by / in
Things to Consider When Buying or Selling a Cannabis Business in California

Buying or selling a business is a complex undertaking in most situations. But operating in the cannabis industry adds extra layers of difficulty. It’s highly regulated, and the laws may vary greatly from one jurisdiction to another. This is true even within a single state. In California, you must review several considerations before attempting to launch a cannabis business or transfer ownership of an existing cannabis entity. Be aware that industry regulations are evolving. Changes may occur from one legislative term to the next. The following are some of the many factors you must consider when buying and selling a Cannabis Business in California.

Buying a California Cannabis Business

To purchase a company that operates in the commercial cannabis field, you need to consider registration, licensing, and permit requirements for the state, county and city you will be operating in. The type of cannabis business you’re considering and any employee requirements are a couple of the things you need to review. You must also look closely at any rules and regulations that are specific to the city the business is in.

Licensing Authorities

California does not permit transfer of cannabis licenses. When purchasing a cannabis business, you need to obtain your own license. California has created three separate state-level licensing entities for the cannabis businesses.

  1. Bureau of Cannabis Control — The BCC Bureau issues licenses to businesses that sell, distribute, trade and test medical cannabis and cannabis for recreational adult use. It also handles licensing for temporary events. This Bureau issues licenses to cannabis distribution, manufacturing and retail microbusinesses, as well.
  2. CalCannabis Cultivation LicensingThe licensing branch of this California Department of Food and Agriculture division issues licenses to businesses that cultivate cannabis in California.
  3. CDPH’s Manufactured Cannabis Safety Branch — The MCSB is a division of the California Department of Public Health that regulates the manufacturing of commercial cannabis in the state.

Before buying a cannabis business, educate yourself on the licensing requirements of the California authority you will be dealing with. These typically include background checks and surety bonds. Depending on the type of business you’re licensing, they can also include inspections, environmental reviews and many other demands.

Business Type

The laws and regulations governing a cannabis business vary depending on the type of business you’re operating. Will you be growing cannabis or manufacturing, selling and distributing cannabis and cannabis products? These decisions not only determine which licensing authority you must use. They also impact how extensive the process is, what you need to do to ensure compliance and what the related expenses might be. For example, businesses that cultivate cannabis are subject to the most regulation. But manufacturing edibles includes many additional expenditures, like setting up a commercial kitchen, brand development and marketing. Don’t forget tax implications.

Workforce

You’ll need staff to run your cannabis business. It’s a booming industry and there’s lots of competition. California leads the way in cannabis employment numbers. But as more states enter the fray, it’s likely to become more challenging to attract experienced, qualified staff. Consider industry salary standards and how difficult it will be to maintain good employees and hire new ones, when necessary. Fortunately, California currently has no special employee licensing or certification requirements for cannabis workers. Though they do need to be 21 and pass background checks.

Local Legal Considerations

Municipalities throughout California address commercial cannabis regulations differently. Some don’t allow these businesses at all. In the ones that do support the cannabis industry, the laws governing licensing and operation may be more strict and demanding than the state level laws. For example, in Los Angeles, Proposition M breaks licensing into three phases, wherein existing medical marijuana dispensaries enjoy a grandfather clause. But as a buyer, you need to check whether the dispensary is on the city’s EMMD list. Other California cities have enacted their own local laws that you must be aware of before buying an existing cannabis business.

Selling a California Cannabis Business

As the owner of a cannabis business in California, you are aware of its potentially high value. But when selling, to attract a quality seller and make a good profit, you need to document everything. Give your buyer a reason to work with you and show them that your business is organized and well-run. You can make this impression with the following documentation.

  • Licensing Documents — Demonstrate proof of state licensing and compliance with all state and local regulations and requirements.
  • Proof of Ownership — Offer documentation of who owns the business. If it’s ever changed hands, ensure you can demonstrate legal transfer of ownership.
  • Current Contracts and Agreements — Operating a business requires many business transactions with vendors, suppliers, leasing companies, employees and other entities. Provide these to a buyer so they understand their ongoing obligations.
  • Accounting Records — Show your buyer what they’re getting into with detailed bookkeeping and accounting records of how your business is run. Reveal profits, losses, debts and projections.
  • Tax Records — Provide proof that you’re in compliance with tax laws and regulations.
  • Disclosure of Negative Factors — If you have legal issues, pending claims or lawsuits, be sure to reveal these issues to your buyer. Retain control of the narrative by being upfront and disclosing first.

Whether buying or selling a cannabis business in California, you must carefully review all the legalities. Look at laws and regulations on the state, county and city level to ensure full compliance. Turn to the services of professionals in the real estate, tax and legal fields. Be sure they have experience with commercial cannabis. Planning, knowledge, education and preparation are key to a successful business transaction in this industry. Perform due diligence before you sign.

January 9, 2020 / by / in
Cannabis & Hemp Insurance: Expectations for 2020

The hemp and cannabis industry experienced a few pleasant and not-so-pleasant surprises in 2019. Regardless, its value chain—primary, including seed providers and cultivators; secondary, comprising product manufacturers; and tertiary, consisting of retailers and supporting services providers—has flourished.

Cannabis/Hemp Industry in 2019

The amount of land that U.S. farmers are licensed to grow hemp has increased much more than in 2018. Hemp’s removal from the federal Controlled Substances Act via the 2018 Farm Bill and the ease of shipping it across state borders has further aided its production. Reports show that there is also a constant capital inflow into the cannabis industry.

In August 2019, the National Credit Union Administration allowed credit unions to serve compliant hemp businesses. The Food and Drug Administration is researching the safety of hemp-derived CBD. The Environmental Protection Agency is reviewing applications for hemp crop protection tools for 2020.

Federal drug authorities updated their guidance to reiterate that hemp is no longer a controlled substance. Now, 41 U.S. states have legalized hemp agriculture, which would raise employment in the industry. The industry will need not just growers or transporters but also personnel well-versed in finance, law, science, compliance, information technology, and more.

The industry is awaiting the fate of the Secure And Fair Enforcement (SAFE) Banking Act, which would give cannabis/hemp businesses access to traditional banking services and free them from insecure cash-only operations.

For now, federal regulators have stated that banks are not required to file a Suspicious Activity Report (SAR) on customers who cultivate hemp subject to applicable laws and regulations. Although banks do not have to accept hemp accounts, such clients can be treated like customers from other legal industries.

However, in the midst of all such positive developments, many publicly traded cannabis companies registered double-digit losses in the second quarter of 2019.

Opportunities for Cannabis/Hemp Insurance in 2020

Eligibility for USDA programs: Hemp farmers will be eligible for many United States Department of Agriculture (USDA) programs, including loans, some crop insurance policies, disaster aid and conservation schemes in 2020.

The USDA’s Risk Management Agency (RMA) has announced insurance coverage for industrial hemp growers from areas covered by hemp plans with USDA approval or who participate in approved state or university research. They can obtain insurance coverage under the Whole-Farm Revenue Protection.

USDA’s Agricultural Marketing Service (AMS) is formulating regulations for producing hemp and for submitting state, territorial or tribal plans. Once this process is complete, RMA, the Farm Service Agency (FSA), and other USDA agencies will announce the eligibility criteria for their programs, such as farm loans and disaster assistance. Farmers may also be able to buy FSA’s Noninsured Crop Disaster Assistance Program policies.

Legitimacy and rights: The USDA announcement will legitimize hemp as a row crop and may also help farmers to access other rights.

Availability of hemp products: With lesser federal regulations on manufacturing and distribution, hemp products will be easily available. Total legal sales of cannabis are estimated to reach around $66.3 billion by 2025.

New insurance carriers and policies: More insurance providers will enter thecannabis/hemp insurance arena. Businesses will enjoy higher liability limits. More outdoor cannabis crops will be covered, along with workers’ compensation for businesses. If the Safe Banking Act becomes law, more such opportunities may be possible.

Hemp growers, testing labs, and other organizations with access to sensitive product or personal data will need Health Insurance Portability and Accountability Act (HIPAA) compliance. They are legally liable to protect such data and may need cyber insurance policies.

Challenges for Cannabis/Hemp Insurance in 2020

The hemp/cannabis industry faces unique risks because it is young and has a quasi-legal status. Insurance has remained scarce and often unaffordable because insurers are not yet sure of the risk profiles of hemp/cannabis businesses.

Cultivation woes: Although hemp may bring farmers profits, growing it can be quite laborious. Many may not have the necessary equipment to cope with it. New machinery and retrofits can be expensive.

They also face many other problems, including seed fraud, thieves stealing plants mistaking them for marijuana, and oversupply. Apart from these, inclement weather and delayed plantingmay cause the harvest to be less than profitable.

Product liability insurance: The product liability premium rates for cannabis businesses may rise in 2020 because of the increasing E-cigarette or Vaping Product Use-Associated Lung Injury (EVALI) cases. Insurance providers may be stricter about underwriting and ask for insurance certification from vendors and additional insureds on third-party policies.

Preparation for future growth and expansion: As the initial excitement of starting up or entering the industry is dying down, businesses now have to take stock of further growth needs. Those who do not have good financial backing, robust systems, or well-managed processes may face challenges.

As many companies join hands to form multi-state operators, the U.S. Securities and Exchange Commission (SEC) or investors will scrutinize directors and officers to check the investments they made. This might increase the demand for directors and officers (D&O) liability insurance in the future. 

Regulatory testing: The standards for testing and grading of hemp/cannabis products in the industry are not uniform or reliable. Although many cannabis businesses standardize their ingredient labeling, some falsify labels, leading to lawsuits and claims. Penalties, fines, and non-compliance liabilities may increase if states start product testing and other regulatory activities.

Just like all other businesses, hemp/cannabis businesses also need insurance to protect their interests and handle liability exposures. They have had difficulties in obtaining it until now. However, the positive developments in 2019 and the work of agencies, such as Skyfront Insurance Services, which serve and protect compliant cannabis businesses bring hope to the cannabis industry.

December 24, 2019 / by / in
US Legislators Drop Burdensome Regulations That Kept Banks and Hemp Apart

When Congress passed the Hemp Farming Act of 2018, a lot of farmers, manufacturers, and retailers assumed that they could start selling their products just like other companies do.

These new businesses already had a lot of regulations to follow, such as ensuring THC levels below 0.03%. It didn’t take long before CBD and other hemp businesses discovered another roadblock.

Despite federal legalization of hemp, banks that worked with hemp companies needed to file “suspicious activity reports” about their clients.

Congress legalized hemp, but it still took a cautious approach that hurt the burgeoning industry from growing as quickly as expected.

Some banks filed their reports and continued working with legitimate hemp companies. Others didn’t want to deal with the extra work, so they decided not to accept hemp companies as clients.

Finally, Congress has found a solution that should benefit all parties.

What Are Suspicious Activity Reports?

All financial institutions are required to submit suspicious activity reports when they believe that a customer is using their services to launder money or commit fraud. The Treasury Department sets a 30-day window for banks and similar institutions to submit reports.

Suspicious activity reports can make it considerably more difficult for criminals to borrow, save, and access cash from legitimate institutions. No one doubts that the reports can do good things.

Unfortunately, many financial institutions felt that they needed to write reports about clients earning money from hemp. Hemp, after all, is a type of cannabis, which the federal government has not legalized.

Submitting suspicious activity reports assured that banks stayed on the right side of the law. In the financial industry, it makes sense to take an overly-cautious position so you never get fined by the government.

Not surprisingly, the most cautious institutions choose to deny clients earning money from hemp and CBD. This approach created a hardship for farmers, manufacturers, and retailers. Experts believe that the CBD market could reach $20 billion by 2024. Despite the industry’s great value and rapid growth, a lot of banks simply did not want to run the risk of accepting their business.

Congress’s Latest Move Makes Hemp Financing Easier

In November 2019, the Federal Reserve’s deputy general counsel told a group of banking leaders that the government would soon iron out issues that keep banks from working with the hemp industry.

Banks were already working on internal regulations for the industry. Without a clear sign from Congress, though, they couldn’t feel confident about their decisions.

The change in federal policy finally came in December 2019 when regulators stated that financial institutions shouldn’t consider hemp businesses “suspicious” anymore. Banks can still submit suspicious activity reports when they have evidence that a company is breaking the law, but they are not required to act as the “hemp police.”

The new policy essentially shifts responsibility from banks to growers and suppliers. Until recently, the government heavily relied on banks to report suspicious activity in an industry that financial institutions no little about. After the Farm Bill, banks found themselves in a precarious position. Now, the problem has been solved by recognizing that banks are not responsible for the activities of legal businesses.

Why Hemp Producers Need Banks

Anyone in the hemp industry will immediately realize the benefit of accessing legitimate financial institutions. The new friendliness between hemp and banking means that hemp producers will have easier access to:

  • Business loans that help companies grow in a competitive industry.
  • Low-interest lines of credit businesses can use for payroll and other expenses.
  • FDIC-insured accounts that protect money from theft.
  • Checking accounts that make businesses look more reliable when dealing with vendors.

Getting blocked from the financial industry has created a significant hardship for those in the hemp industry. Now, the federal government says it will take a more active role.

The Latest Approach to Hemp Regulation

For the most part, hemp growers understand that they can make a lot of money by following federal and state guidelines. A few farmers, however, have tried to grow high-THC cannabis under cover of industrial hemp.

The government will take a more active role in regulating the industry to make sure companies know that they will suffer repercussions for breaking federal cannabis laws. This change will likely mean that federal- and state-trained officials will spend more time visiting hemp farmers and testing their products. If the hemp has more than 0.03% THC, then companies will face consequences.

Unfortunately, the government doesn’t seem to have a policy that defines the consequences. A farm may get a warning for selling hemp with THC levels slightly higher than 0.03%. A farmer obviously growing cannabis intended for intoxication may face jail time as well as fines.

Much of the regulatory tests may happen without the knowledge of farmers and producers. Government agencies could purchase products from stores, test for THC levels, and determine whether the companies follow the law.

More Regulatory Clarifications to Come

Federal clarification makes it much easier for banks and hemp companies to do business together. Both industries will find that a relief that helps them grow and earn more money.

Still, hemp continues operating in a gray area because a small mistake could make products illegal. Hopefully, the government will continue refining its policies to help everyone involved make hemp products that benefit people and profits without unintentionally breaking the law.

December 23, 2019 / by / in
How Illinois Cities and Towns are Preparing for Cannabis Legalization

More states are legalizing cannabis both for medical and recreational use, a move that has gained increased acceptance among members of the general public. The reality of these law changes has some cities and towns scrambling to adjust. Many move to change their zoning laws and add city ordinances governing sales to deal with the new legislation. Others are bracing for the cultural changes they fear will follow. This situation is currently happening in Illinois, where recreational cannabis will become legal on January 1, 2020. When legal pot hits the Midwest, it has to say something about cultural attitudes.

Illinois Communities

Culturally, Illinois is divided into two basic parts: Chicago and Downstate. Chicago and its suburbs tend to be far more liberal than the downstate population, which is largely rural. So the legalization of cannabis has received mixed reviews in Illinois, although even some small conservative towns are eagerly anticipating the increased tax revenue generated by recreational cannabis sales.

Illinois is also bordered by some very conservative states such as Missouri. Although Missouri has technically legalized medical marijuana, many providers are reluctant to enroll patients in the program, partly because medical dispensaries are not opening until mid to late 2020. These circumstances mean that Missouri law enforcement is on high alert for Illinois cannabis sales that can easily cross the river. This type of legal quandary will undoubtedly play out in more states as cannabis is legalized in Mid-America and other more rural areas.

Zoning Laws

The state law allows individual cities and towns to decide if they will sell recreational marijuana. Chicago lawmakers have divided the city into seven zones and will allow 13 marijuana retailers in each. The mayor has introduced a zoning ordinance to ban recreational sales in the city’s famous Loop and Magnificent Mile area, however.

Some of the Chicago suburbs have decided to ban recreational sales. For instance, Arlington Heights will not allow recreational marijuana sales but Buffalo Grove will.

Small downstate towns like Quincy have approved recreational sales, largely to get much-needed tax revenue. Despite some last-minute zoning concerns, the city did vote to allow recreational cannabis sales in already zoned commercial areas with the stipulation they observe a 100-foot setback from daycare operations and schools. Several medical marijuana dispensaries have been designate dual sites by the state, meaning they can sell recreational marijuana as well as medical.

Local Ordinances

Illinois towns have hurriedly adopted new ordinances to deal with the recreational sales. Quincy’s recently adopted regulations include:

Illinois residents 21 and older can possess cannabis with a limit as follows:

  • 30 grams of cannabis flower
  • Up to 500 milligrams of THC contained in cannabis-infused product
  • 5 grams of cannabis concentrate

Non-residents 21 and older can possess cannabis as follows:

  • 15 grams of cannabis flower
  • 2.5 grams of cannabis concentrate
  • Up to 150 milligrams of THC contained in a cannabis-infused product

Since Quincy is a Mississippi river town, law enforcement is concerned that Missouri residents will buy their cannabis in Illinois and transport it over the bridge to Missouri where it is still illegal. Quincy police don’t plan to specifically try and stop this transport, but Missouri law enforcement may be tempted to closely monitor bridge traffic.

Tax Revenues

Illinois lawmakers are hoping for hundreds of millions in tax revenue due to the change in cannabis law, but officials from other states urge caution. Revenue estimates have often proven to be wrong, particularly in the early days of cannabis legalization.

Local tax revenue estimates are also uncertain. In the Quincy area, the county board is taxing the product at a max of 3.75. The city voted to tax the sales at the maximum of 3%. Although the town leaders don’t really know what kind of revenue to expect, they are hoping it will make a difference. Currently, the town is suffering from a revenue shortfall that has led to the recent adoption of an unpopular food and beverage tax.

Nationwide Concerns

What is currently happening in Illinois has already played out in other states, but the Midwestern dynamics are new. The only other Midwestern state that allows recreational cannabis sales is Michigan, and its law just went into effect December 1. Until now, recreational sales were legal in states that could be considered far more liberal than their Midwestern counterparts. These laws challenge what some residents still consider Midwestern values. While alcohol freely flows in the rural areas, cannabis has always been looked at with suspicion, even for medical use.

Clearly that attitude is changing since some Illinois small towns have voted to allow recreational sales. The state did not impose those sales on them. Now they are working to balance their concerns about pot with its business potential.

First Year Results

Legal cannabis has come to the heartland, and that may have long-ranging effects. These changes may influence other “fly-over states” to embrace recreational marijuana. The upcoming year will be quite informative. If things go well in Michigan and Illinois, can legalization in Missouri and Iowa be far behind?

Illinois has always been a odd blend of urban and rural concerns. In fact, downstaters often wish aloud that Chicago would spin off into its own state and leave the more conservative areas alone. But no downstate town had to allow recreational marijuana. Quincy voted to, and it’s not a progressive town in any way. That act alone indicates that the cannabis battle may be nearing its end. It’s not unreasonable to think it will be legal nationwide in just a few years, even if the federal government fails to act.

December 15, 2019 / by / in