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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.

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GOP Senator Pulls Back Marijuana Tax Amendment

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Despite saying this week that he would offer an amendment to help marijuana businesses achieve tax fairness, Republican U.S. Sen. Cory Gardner of Colorado did not end up forcing colleagues to vote on the issue during consideration of a broad GOP-led tax reform bill.

As a result, the measure, which would have exempted cannabis growers and retailers who operate legally under state law from a federal penalty on illegal drug sellers, is not currently attached to a broad tax reform bill that Republicans are working to send to President Trump’s desk by the end of the year.

Following a lengthy session during which other members offered various amendments, the Senate approved the legislation on a largely party-line vote early Saturday morning with a margin of 51 to 49.

Gardner was unsure he had enough support in the chamber to approve the amendment in light of the $5 billion price tag that Congress’s Joint Committee on Taxation reportedly scored it with.

Because the tax bill was being considered under a budget reconciliation process that allowed Republicans to avoid a filibuster and advance the proposal with 51 votes instead of 60, the overall plan needed to avoid increasing the deficit by more than $1.5 trillion over the next decade.

Since Gardner’s measure, while focused on allowing marijuana operators to be taxed fairly like other businesses, would in effect amount to a cut from their current rates, it would reduce revenue and add to the deficit.

Nonetheless, conservative anti-tax group Americans for Tax Reform included the measure in a list of “key votes,” calling it “good tax policy.”

“Support for the legislation should not be conflated with support or opposition to legalizing cannabis,” the organization wrote. “Instead, this amendment is about ensuring the federal government does not use the tax code to discriminate against legal businesses.”

Under current federal law, a 1980s provision — section 280E of the Internal Revenue Code — effectively forces cannabis businesses to pay a much higher tax rate than other companies.

“No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”

The statute was originally intended to to stop drug cartel leaders from writing off yachts and expensive cars, but today its language means that that state-licensed growers, processors and sellers of marijuana — which is still a Schedule I substance under federal law — can’t take business expense deductions that are available to operators in other sectors.

As a result, cannabis businesses often pay an effective tax rate upwards of 65-75 percent, compared with a normal rate of around 15-30 percent.

“Our current tax code puts thousands of legal marijuana businesses throughout Colorado at a disadvantage by treating them differently than other businesses across the state,” Gardner said in a press release upon cosponsoring a standalone bill to reform the provision last month. “Coloradans made their voices heard in 2012 when they legalized marijuana and it’s time for the federal government to allow Colorado businesses to compete. This commonsense, bipartisan bill will allow small businesses in Colorado and other states that have legal marijuana businesses to grow their operations, create jobs, and boost the economy.”

The marijuana reform provision was also not included in the version of the tax legislation recently passed by the House, where that chamber’s Rules Committee blocked floor consideration of an amendment on the issue two weeks ago.

Now, a bicameral conference committee will hammer out the overall differences between the two chambers’ bills into a single proposal that can be sent to the president. It is technically possible that the cannabis amendment could still be inserted in conference, though it would be unusual for congressional leaders to attach a provision that wasn’t approved by either chamber and which concerns a still fairly controversial issue like marijuana.

standalone House bill to shield state-legal marijuana businesses from 280E has 40 cosponsors. The companion Senate legislation has six cosponsors.

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GOP Senator Wants Tax Cut For Marijuana Businesses

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A Republican senator from a state where marijuana is legal is pushing this week to give cannabis businesses a measure of tax fairness.

Sen. Cory Gardner of Colorado wants to attach an amendment to a wide-ranging Republican-led tax reform bill that would allow state-legal marijuana growers, processors and sellers to deduct normal businesses expenses from their taxes, just like operators in other industries can.

Under current federal law, a 1980s provision — known as 280E — effectively forces cannabis businesses to pay a much higher tax rate than other companies.

The statute was originally intended to to stop drug cartel leaders from writing off yachts and expensive cars, but today its language means that that growers, processors and sellers of marijuana — which is still a Schedule I substance under federal law — can’t take business expense deductions that are available to operators in other sectors.

As a result, cannabis businesses often pay an effective tax rate upwards of 65-75 percent, compared with a normal rate of around 15-30 percent.

Gardner’s press secretary said in an email that “he plans to file an amendment” to the broader tax legislation this week to include a 280E fix so that the provision no longer applies to marijuana businesses that operate in accordance with state or local laws.

The senator also cosponsored a standalone bill to reform the provision this month.

“Our current tax code puts thousands of legal marijuana businesses throughout Colorado at a disadvantage by treating them differently than other businesses across the state,” he said in a press release about the bill. “Coloradans made their voices heard in 2012 when they legalized marijuana and it’s time for the federal government to allow Colorado businesses to compete. This commonsense, bipartisan bill will allow small businesses in Colorado and other states that have legal marijuana businesses to grow their operations, create jobs, and boost the economy.”

Marijuana businesses and their supporters failed to attach 280E reform language to the House version of the tax legislation this month. In that chamber, the Rules Committee blocked floor consideration of an amendment on the issue two weeks ago.

“When Congress passed 280E, they never envisioned an industry like ours meant to take ill-gotten gains from drug dealers,” Neal Levine, chairman of the New Federalism Fund, said in an interview. “The provision is misapplied to our industry. It’s actually helping the drug cartels it was meant to hurt,” he said, referring to the fact that extra taxes force legal providers to keep prices artificially high such that they sometimes can’t compete with the illegal market.

Levine’s group and others have been working to convince members of Congress to reform the provision, emphasizing that it’s not a pro-marijuana idea.

“Our industry is actually the only folks who have been able to take market share from the drug cartels,” he said.

Gardner mentioned the plan to attach the amendment to the tax bill to a Bloomberg reporter earlier this week.

The tax bill is currently on the Senate floor, and leaders are aiming to pass it before they go home for the weekend.

Even if 280E language is adopted on the Senate floor, in order to be enacted into law it will have to a survive a bicameral conference committee that merges the chamber’s bill with the House version that does not contain the provision.

In other financial legislative news of interest to the cannabis industry, House leaders also prevented consideration of an amendment to allow marijuana businesses to access banks this month.

This piece was originally published by Forbes.

(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)

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Marijuana Ads Don’t Increase Use, Study Indicates

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People exposed to advertising from marijuana retailers aren’t significantly more likely to use cannabis. That’s one surprising finding of a new study, although its authors mostly buried that conclusion in the framing of their paper, published this week in the American Journal of Public Health.

Exposure to any marijuana advertising in the past month did not significantly differ by participant gender, race/ethnicity, highest level of education completed, home ownership, residence in a metro area, or marijuana use (Table 3).” [Bolded emphasis added.]

The study, funded by National Institute on Drug Abuse and published online on Tuesday, mostly focuses on describing the reach of marijuana advertisements across communities in Oregon.

A passing mention in its abstract notes that “people who do not use marijuana…were as exposed to advertising as other groups.”

But despite that being a major counterintiutive finding of the study, it is not a focus of the paper.

Although the researchers determined that “exposure to advertising was significantly higher among people who said they had a marijuana store in their neighborhood,” such ad reach apparently doesn’t make much of a difference on whether people shop at those retailers or otherwise consume cannabis.

Among people who saw a marijuana ad within the past 30 days, 53 percent said they have never consumed cannabis, 54.9 percent described themselves as former users or had “experimented” with the drug and 57.6 percent are current users.

The study even identified one possible benefit of marijuana dispensaries: they provide educational information about the possible risks of cannabis use that might not otherwise reach potential consumers.

“Our study found limited exposure to marijuana health risk messages among adults in Oregon,” the authors, who work for the Oregon Public Health Division, wrote. “Nearly 5 times as many adults overall reported near daily exposure to marijuana advertising (7.4%) compared with health risk messages (1.5%). However, during the time of this study the only health risk messages being broadly implemented were 3 posters required at the point of sale about preventing child poisonings, use during pregnancy, and impaired driving.”

As to the broader interesting findings about marijuana use and advertising, the results don’t necessarily mean that advertising is completely useless for the cannabis industry.

Even if sponsored messages don’t seem to convince people who otherwise wouldn’t use marijuana to do so, advertising is still likely an important way for cannabis businesses to differentiate their specific offerings from those of their competitors in the minds of already-active consumers.

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