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Bad Cannabis Headlines Dangerously Misinform Readers

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Marijuana laws are changing rapidly these days, so much so that even specialized news organizations solely dedicated to tracking cannabis policy sometimes have a hard time making sense of reforms.

Coverage this week by The Cannabist and Marijuana Business Daily provides a perfect example.

After California Gov. Jerry Brown (D) vetoed legislation that would have enacted new crimes prohibiting smoking or vaping tobacco and other substances on state coastal beaches and in state parks, the two news organizations reported the news with inaccurate headlines that could influence some readers to unknowingly break the law.

“California governor OKs marijuana use at beaches, state parks,” Marijuana Business Daily reported.

“Californians can smoke and vape weed in parks, on beaches, decides gov,” read The Cannabist’s headline of an Associated Press story.

While the reach of the legislation Brown vetoed did extend to cannabis as well as tobacco (“lighted or heated tobacco or plant product intended for inhalation, whether natural or synthetic, in any manner or in any form”), the fact is that public marijuana consumption is not currently permitted in California.

Brown’s veto of the proposed bills does not change that.

California marijuana policy experts say that the false headlines in Marijuana Business Daily and in The Cannabist, which is owned by The Denver Post, could have dangerous consequences.

“The harm is that people will smoke or ingest cannabis in state beaches and parks, thinking that the governor gave the go-ahead to such public ingestions by vetoing those proposed bills,” Omar Figueroa, an attorney who handles cannabis cases, told Marijuana Moment in an interview. “Mistake of law is no defense.”

Brown, who vetoed similar legislation last year, said in a statement that the proposals were too broad. “If people can’t smoke on a deserted beach, where can they? There must be some limit to the coercive power of government.”

As it stands, with his veto, people can still smoke or vaporize tobacco on those shorefronts, subject to individual beach policies and local codes. But as was the case before, and despite the inaccurate headlines in some outlets, they still can’t consume cannabis there.

That said, marijuana reform advocates were nonetheless relieved that Brown vetoed the bills.

“If smoking were banned on beaches statewide, we would likely see increased enforcement, which would result in more cannabis consumers, including medical patients, cited for public consumption,” Ellen Komp of California NORML told Marijuana Moment.

Dale Gieringer, also of California NORML, agreed that the legislation would’ve put marijuana consumers at greater risk. “By flagging all smoking (and vaporization) as illegal, it would have increased the likelihood of citation for [cannabis] users, who can otherwise avoid detection by discreetly acting like tobacco smokers,” he said, adding that the fines they could face would also have increased.

Alex Pasquariello, editor of The Cannabist, declined to comment for this story, citing the fact that the organization’s post consisted of an Associated Press story. He did not reply to a follow-up question specifically about the headline his organization chose for the story or its image caption reading, “Californians will be allowed to smoke weed on beaches, due to a veto by Governor Jerry Brown of a bill that would have banned the behavior.”

Chris Walsh, the vice president for editorial & strategic development at Marijuana Business Daily, also said that his organization’s story was largely comprised of Associated Press content. But he did acknowledge that his team erred in framing the story.

“Our editorial team has taken another look at it and we agree that the headline and brief need to be reframed and clarified,” he said. “The piece itself was mostly from the Associated Press, but we are looking into it now to get some additional information so we can clarify as needed. We realize now that the headline could be interpreted differently than intended and we will modify accordingly.

This story was updated to include reaction from Marijuana Business Daily and California NORML.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Tom Angell is the editor of Marijuana Moment. A 20-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

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Uber Will ‘Absolutely’ Explore Marijuana Deliveries When Federal Prohibition Ends, CEO Says

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The CEO of Uber said on Monday that the ride share company will “absolutely” explore adding marijuana deliveries to its services when federal prohibition ends.

Dara Khosrowshahi was asked about the prospect of expanding his business to include cannabis deliveries during an interview with CNBC. He said while the company remains focused on grocery and alcohol deliveries, in addition to its core ridesharing service, that’s certainly in the cards if marijuana is federally legalized.

Uber is interested in “the types of deliveries that a high percentage of consumers are going to want delivered fast into their home and are quite frequent,” he said. “We think, obviously, food, grocery, pharmacy and alcohol are part of that category,” but cannabis also holds potential.

“When the road is clear for cannabis when federal laws come into play, we’re absolutely going to take a look at it,” Khosrowshahi said. “But right now with grocery, with food, with alcohol, et cetera, we see so much opportunity out there and we’re going to focus on the opportunity at hand.”

The tech executive was specially asked about the possible expansion into the cannabis market in light of legalization recently being enacted in New York. And if polling from that state is any indication, Uber would see the demand for deliveries that it’s looking for, as 53 percent of New Yorkers said in a survey that they would favor having that option available to consumers.

But for now, the CEO said the business is keeping its eyes on current expansions, which includes its recent acquisition of the alcohol delivery service Drizly. That company did launch an ancillary cannabis delivery service called Lantern—but following the Uber deal, it announced that the two entities would be separated, with Lantern operating independently as a private company.

Of course, as a national corporation, Uber is also making a risk assessment given the ongoing ban on cannabis at the federal level. But a policy change to that end could come sooner than later.

Senate Majority Leader Chuck Schumer (D-NY) has said that a bill to legalize marijuana that he’s been working on with Senate Finance Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) will be released “shortly.”

On the House side, Judiciary Chairman Jerrold Nadler (D-NY) has similarly signaled that his cannabis descheduling bill—the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act—will be reintroduced this session. That proposal passed the House last year but did not advance in the Senate.

With Democrats in control of both chambers and the White House this session, there’s renewed hope among advocates that the days of prohibition are soon to be over. Still, questions remain about President Joe Biden’s role in the reform, as he opposes adult-use legalization and his press secretary said last month that his position “has not changed” to that end.

In any case, Uber’s apparent interest in participating in the market once those federal barriers are lifted is another sign of the industry’s potential. That said, many advocates have expressed that small businesses—particularly those operated by people most impacted by cannabis criminalization—should be prioritized in any legalization legislation over large companies.

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Congressional Researchers Analyze 280E Marijuana Tax Penalty And Legislative Solutions

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In a new report published this month, Congressional researchers examine tax policies and restrictions for the marijuana industry—and how those could change if any number of federal reform bills are enacted.

The Congressional Research Service (CRS) analysis focuses on a section of Internal Revenue Services (IRS) code known as 280E, which precludes cannabis companies from taking certain federal tax deductions or credits that are available to other businesses, regardless of their state legality. But they are still obligated to pay taxes on their federally illegal income.

“The Schedule I status of marijuana means that marijuana businesses are treated differently from many other businesses for tax purposes,” CRS said. However, “Congress has broad authority to alter the tax treatment of marijuana businesses.”

“The legislative history of Section 280E indicates that Congress enacted the provision to codify a sharply defined public policy against drug dealing,” the report states.

The provision was enacted in 1982 as a way to prevent drug traffickers from writing expenses off their taxes, but it is widely applied today on state-licensed marijuana growers, processors and dispensaries, greatly increasing their effective tax rates as compared to businesses in other industries.

280E applies to substances in Schedules I and II of the Controlled Substances Act (CSA).

“Recent legislative proposals aim to relax federal restrictions on marijuana or to mitigate the disparity between federal and state marijuana regulation,” the new CRS report states. “Many of these proposals would alter the tax treatment of marijuana businesses by re-scheduling or descheduling marijuana under the CSA or by making marijuana-specific exceptions.”

“Under these proposals, Section 280E would no longer prohibit marijuana businesses from taking deductions and credits,” it says.

While several bills were introduced last session to federally legalize cannabis—including the House-passed Marijuana Opportunity, Reinvestment and Expungement (MORE) Act—they have not been refiled so far this year.

Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) are in the process of developing legislation to end cannabis criminalization and promote social equity, and they’ve met with advocates about how best to draft that proposal.

Meanwhile, House Judiciary Chairman Jerrold Nadler (D-NY) recently said he will soon be reintroducing the MORE Act.

A number of standalone bills to remove the 280E penalty’s application on marijuana businesses have also been filed over the years in Congress, but none has ever been given a hearing or a vote.

But for the time being, the marijuana industry continues to face tax policy challenges under the umbrella of prohibition. And CRS noted that IRS “has offered little tax guidance about the application of Section 280E.”

It did provide some guidance in an update last year, explaining that while cannabis businesses can’t take standard deductions, 280E does not “prohibit a participant in the marijuana industry from reducing its gross receipts by its properly calculated cost of goods sold to determine its gross income.”

The IRS update seemed to be responsive to a Treasury Department internal watchdog report that was released last year. The department’s inspector general for tax administration had criticized IRS for failing to adequately advise taxpayers in the marijuana industry about compliance with federal tax laws. And it directed the agency to “develop and publicize guidance specific to the marijuana industry.”

One note that IRS especially wants to make clear to cannabis firms is that they still have to pay income tax. And CRS articulated that in its report as well.

“Like non-marijuana businesses, marijuana businesses are subject to tax on all of their income,” it said. “Under federal law, all income is taxable, including income from unlawful activities. In contrast, not all expenses are deductible from a taxpayer’s gross income.”

But paying those taxes has proved onerous—both for cannabis businesses and the IRS itself. The head of the agency told Congress last month that it would “prefer” for state-legal marijuana firms to be able to pay taxes electronically, as the current largely cash-based system is complex and inefficient.

Former Treasury Secretary Steven Mnuchin said in 2019 that he’d like to see Congress approve legislation resolving the cannabis banking issue and he pointed to the fact that IRS has had to build “cash rooms” to deposit taxes from those businesses as an example of the problem.

CRS also discussed legislation that’s “attempted to increase marijuana businesses’ access to banking and financial service” like the Secure and Fair Enforcement (SAFE) Act, which passed the House in 2019 and also as part of two COVID-19 relief packages. “Many financial institutions are unwilling to provide state-sanctioned marijuana businesses with common banking products and financial services due to federal laws that impose civil and criminal liability on financial institutions handling money tied to marijuana.”

While there may be that reluctance, federal data released earlier this month shows that the number of banks and credit unions that report servicing marijuana businesses seems to be stabilizing.

For three quarters in a row, those numbers were consistently declining—due partly to revised reporting requirements from the Financial Crimes Enforcement Network (FinCEN) and also because of the coronavirus pandemic. But the latest report signals that the trend is lifting.

Lawmakers in the Senate and House filed new bills to address the marijuana banking issue in recent days.

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Colorado Sold More Than $187 Million In Legal Marijuana In January

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The state has now surpassed $10 billion in total sales since legal cannabis commerce began in 2014.

By Robert Davis | The Center Square

Marijuana sales in Colorado reached $187,603,697 in January, the state’s revenue department said this week.

The state has now surpassed $10 billion in total marijuana sales since legalizing the drug in 2014. In return, the state has collected over $1.6 billion in marijuana taxes and fee revenues since then.

January’s sales were slightly more than the $186 million in sales in December 2020.

Marijuana taxes and fees are assessed against both recreational and medical marijuana. The tax and fee revenue is distributed to local governments and educational institutions.

Three-quarters of marijuana tax and fee revenue is appropriated to the state’s marijuana tax cash fund, which provides funding to the governor’s office, education department, and the attorney general’s office, among others.

Another 15.56 percent is apportioned to the state’s general fund, with the remaining 12 percent going to the state public school fund, according to the nonpartisan Legislative Council Staff.

Tax revenue is collected through a 2.9 percent state sales tax on marijuana sold in stores, a 15 percent tax on retail marijuana sold in stores and a 15 percent retail marijuana excise tax on wholesale sales or transfers of retail marijuana. Fee revenue comes from marijuana license and application fees.

In February, Colorado collected $34,747,575 in marijuana tax and fee revenue. The Colorado Department of Revenue will release the total sales for that month in April.

Colorado has collected a total of $69,728,521 in marijuana tax and fee revenue so far this year.

This story was first published by The Center Square.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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