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Colorado Marijuana Social Equity Businesses Would Be Defined Under New Bill

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Colorado lawmakers advanced a newly introduced bill on Wednesday that would create a statewide definition of which businesses qualify as marijuana social equity license applicants and are eligible for certain incentives.

The legislation, which is the product of months of dialogue between reform advocates, industry stakeholders and legislators, was filed by Rep. James Coleman (D) with just days left in the legislative session and cleared the House Finance Committee in a vote of 9-2 just one day after its introduction. It would build on a current statewide accelerator program allowing eligible individuals to use existing marijuana facilities to build their business.

As it stands, only those from economically disadvantaged communities qualify for the accelerator program. This bill would create two additional categories for eligibility, with a focus on restorative justice.

Under the proposal, a person would be eligible under the social equity program if they met at least one of three criteria: 1) they lived in a designated economically distressed community for a minimum of 15 years between 1980 and 2010, 2) the applicant or a member of their immediate family has been arrested or convicted for a marijuana offense or 3) their income is at or below an amount to be determined later in rulemaking.

“A person who meets the criteria in this section for a social equity licensee, pursuant to the rule and agency discretion, may be eligible for incentives available through the Department of Revenue or Office of Economic Development and International Trade, including but not limited to a reduction in application or license fees,” the text of the bill states.

Advocates say this definition would help resolve some of the confusion that individual jurisdictions like Denver have faced when enacting their own equity programs.

“One of the things that we could not determine [in Denver] was who was going to be a social equity candidate. For many reasons people felt that that’s not something that the city needs to determine. People couldn’t agree on it,” Sarah Woodson, executive director of The Color of Cannabis, told Marijuana Moment. “I quickly identified that that needs to happen on a state level and the accelerator is a space where we can define social equity.”

Conor Cahill, the press secretary for Gov. Jared Polis (D), told Marijuana Moment that “the administration is supportive of this bill and looks forward to seeing it pass.”

“This legislation would create a social equity definition in statute. This is an important first step toward developing a meaningful social equity program to assist those who have been disenfranchised by the failed war on drugs,” he said. “Having a definition in statute will help local governments currently considering equity programs. The governor is committed to working with stakeholders to promote diversity within this growing industry and ensure efforts around this challenge are meaningful and purposeful.”

The legislation would also amend a policy prohibiting those with felony convictions in the past three years from obtaining a marijuana business license. Those applying as social equity applicants would not be subject to that prohibition.

Coleman, the bill’s chief sponsor, told Westword that he deliberately drafted the bill so that it wouldn’t have a fiscal impact, simplifying its path to passage with limited time left in the legislative session.

“My concern is whether we have enough time. I know this isn’t the priority right now. We have to get the school finance bill passed and the overall budget taken care of,” he said. “COVID-19 is primarily a health pandemic, but it’s also an economic pandemic.”

“We just want to make sure this is a fair, equitable industry,” he added. “We had another bill we were going to attach this to, but that had a very specific focus, so instead of attaching it there, we drafted a separate bill.”

As one of the first states to legalize cannabis for adult use, Colorado didn’t have the benefit of learning from the experiences of other states in terms of implementing social equity and restorative justice provisions for people from communities historically targeted by prohibition enforcement. Now legislators seem to be playing catch-up, with defining social equity as part of that process.

Woodson said that “everyone has different opinions” on why the state didn’t consider these policies earlier.

“The way I personally feel is that there weren’t enough people of color at the table,” she said. “That’s just what it is—we’re seeing that happen in our own country right now where we’re addressing systemic racism and policies and laws that don’t benefit people of color.”

“If there were more people of color at the table creating policies, policies would have been made that took into consideration people that were participating in prohibition,” she said.

Separately, Colorado issued its first marijuana delivery license in March and a limited number of shops have started offering that service.

Polis’s administration is also looking into solutions to cannabis businesses’ banking access problems that exist because of the federal-state policy conflict on marijuana.

Read the social equity bill below: 

Colorado social equity bill by Marijuana Moment on Scribd

This story has been updated to include comment from the governor’s office and to note the bill advancing in committee.

Michigan House Scales Back Bill That Would’ve Given Medical Marijuana Licenses To Lawmakers’ Spouses

Photo courtesy of Brian Shamblen.

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South Dakota Lawmakers Form Cannabis Caucus To Address Marijuana Legalization Issues

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The Senate majority leader said enacting a regulatory framework for legal cannabis will probably require more than one session of work.

By By: Nick Lowrey, South Dakota News Watch

Entrepreneurs across South Dakota are already taking steps to claim a share of the state’s soon-to-be-legal marijuana market, but legislators and regulators are off to a slow start in crafting laws and rules to govern the controversial new industry.

The sale, possession and use of recreational and medicinal marijuana are set to become legal in South Dakota for the first time on July 1. But when the 2021 South Dakota legislative session started on January 12, only one bill regarding marijuana had been filed.

A group of 15 Republican lawmakers have formed what they call a “Cannabis Caucus” to address marijuana issues this session. But leaders in both the Republican and Democratic parties say discussions on preparing for legalization and regulation of the business of marijuana sales, possession and use—one of the top matters facing the 2021 Legislature—have barely begun.

One high-ranking Senate leader said enacting a regulatory framework for legal marijuana will probably require more than one session of work and will likely spill into the 2022 session or require a special session to complete.

“Not everything will be done at the end of this session,” said Senate Majority Leader Gary Cammack, R-Union Center. “I know there has been talk about the need for a special session.”

Marijuana entrepreneurs, however, are not waiting for the Legislature to act. Many have been working for months to get businesses ready for the July 1 legalization date. The South Dakota Secretary of State’s Office handled 907 more new business filings during the last three months of 2020 than it had during the same period of 2019, many of them related to legal weed.

Exactly how many new business filings are related to marijuana is unknown, as the secretary of state’s office does not require new businesses to indicate a purpose or sales plan, said Jason Luntz, deputy secretary of state.

But as of January 11, a search of public business filings on the secretary of state’s website found more than 40 businesses with the words “cannabis,” “marijuana,” “pot” or “dispensary” in their names. Most of those businesses organized as limited liability companies or registered their business names after voters approved marijuana legalization on November 3, 2020.

Even as a court challenge of the legalization of recreational marijuana remains unresolved, experts say the state needs to move quickly to establish clear rules for growing and selling marijuana commercially. The state will need to license and regulate sales outlets, set up tax collections, define penalties for selling marijuana to minors and make laws related to the marijuana black market, said Kittrick Jeffries, a former marijuana industry compliance officer and founder of a new Rapid City-based cannabis consulting firm called Dakota Cannabis Consulting.

“I think South Dakota has a great opportunity here…but there are some really key things that need to be done before July,” Jeffries said.

If lawmakers and state regulators do not have the framework of a commercial market in place before marijuana becomes legal on July 1, anyone who wants to use cannabis after that date would be pushed to buy from the black market, which could expand and compete with legal, tax-paying retailers, Jeffries said.

Black market competition could weaken South Dakota’s legal marijuana market, leaving local businesses more vulnerable to interstate competition should the federal government choose to legalize marijuana, Jeffries said.

A few legislators have been considering marijuana regulation in the early days of the 2021 session. Rep. Mike Derby, R-Rapid City, is playing a lead role in forming what he calls the “Cannabis Caucus.” Derby said the group’s goal is mostly to share information and help educate other lawmakers as opposed to offering legislation or coordinating votes. Members plan to meet for the first time on January 21 to review bill drafts, Derby said.

One of the big issues Derby plans to work on is providing clarity for local governments. Dozens of marijuana businesses are already preparing to begin commercial marijuana growing operations or are preparing to open retail sales outlets in South Dakota. Municipal governments will need guidance on how to safely zone for often large, indoor marijuana farms needed to supply wholesale and retail outlets, Derby said.

“At the end of the day, we want to respect the will of the people,” Derby said. “We have an opportunity to look at what other states have passed, learn from their best practices, learn from their mistakes and maybe create a better process.”

Rep. Mary Fitzgerald, R-St. Onge, has called for legislation that would make using marijuana in a vehicle and driving while high illegal. South Dakota does not have laws banning marijuana use in vehicles or driving while high because any use or possession of marijuana is still illegal. As of January 13, Fitzgerald had not filed any legislation regarding marijuana use.

The only bill regarding marijuana legalization that had been filed by January 13 came from the Department of Revenue. Senate Bill 35 asks the Legislature to give the department $4 million to cover the costs of regulating the marijuana industry until tax revenue starts coming in. The bill also asks lawmakers to give the state Department of Health about $135,000 to help cover the cost of regulating medical marijuana.

Any recreational marijuana bills that legislators pass could be negated by a lawsuit seeking to declare the recreational marijuana vote result as unconstitutional. Backed by Gov. Kristi Noem (R), the lawsuit was filed by Highway Patrol Superintendent Rick Miller and Pennington County Sheriff Kevin Thom, who argue that the constitutional amendment passed by voters, known as Amendment A, should not have been on the November 3 ballot and is unconstitutional because it was too broad.

A hearing in the case is scheduled for January 27 in Hughes County circuit court, but no trial date has been set. The circuit court’s final ruling and any subsequent appeals to the state Supreme Court likely won’t be settled until well after the 2021 legislative session ends.

Ian Fury, a spokesman for Gov. Noem, said the governor is in discussion with lawmakers about marijuana legalization but has not engaged in filing or pushing any specific legislation so far. “Many legislators have an interest in this topic and we want to give them the opportunity to convey their thoughts and ideas on behalf of their constituents,” Fury wrote in an email to News Watch.

Some lawmakers question whether the Legislature should be involved in regulating recreational marijuana at all.

“My interpretation of Amendment A is that it doesn’t allow the Legislature to do anything,” said Sen. Arthur Rusch, R-Vermillion, vice-chair of the Senate Judiciary Committee.

Amendment A did not provide a regulatory framework for the industrial production or commercial sale of large amounts of cannabis. Instead, the amendment requires the state Department of Revenue to devise licensing and regulatory mechanisms that allow for the sale of recreational marijuana by April 1, 2022. Rusch said he believes Amendment A gave full authority over recreational marijuana regulation to the Department of Revenue.

“That’s one of the reasons I believe [Amendment A] is unconstitutional,” Rusch said.

Still, legislative leaders in both the Republican and Democratic parties acknowledged that a clear majority of South Dakota voters wanted to see marijuana legalized and that the Legislature is obligated to implement legalization measures.

“Our feet are set in concrete. Until the courts rule or voters overturn it in another election, it is our job to move forward with legalization,” Cammack said.

This story was first published by South Dakota News Watch.

Washington State Marijuana Homegrow Bill Draws Smooth Reception At Initial Hearing

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Cuomo’s New York Marijuana Legalization Plan Draws Mixed Reviews From Advocates

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After much anticipation, the full text of New York Gov. Andrew Cuomo’s (D) marijuana legalization proposal was released late Tuesday night as part of his budget request for 2021.

So far, the measure has been met with mixed reviews from advocates and stakeholders. While many feel encouraged that the groundwork seems to have been laid for a legal cannabis market, some are taking issue with provisions related to equity and regulatory control, as well as a continued prohibition on home cultivation. The proposal also lacks license categories for delivery services and on-site consumption.

The governor has released various details about his legalization plan in recent weeks, but this is the first time that the specific legislative language is available. Cuomo has twice attempted to enact the policy change through previous budgets, only for the idea to stall amid disagreements over details with lawmakers. This time around, the administration and legislators seem confident reform will advance, especially in light of legalization being enacted in neighboring New Jersey.

But based on feedback from advocates, it appears that there will still be significant efforts to amend the governor’s proposal as it is considered by the legislature.

Here are some of the main features of Cuomo’s legislation:

-There would be no home grow option for medical cannabis patients or recreational consumers. The governor’s budget proposal last year did include the option for patients but excluded the adult-use market—a decision that prompted controversy, especially after it was revealed that major marijuana companies urged the governor to continue criminalizing home cultivation.

-Cuomo and his budget director on Tuesday touted a new provision allocating $100 million in cannabis tax revenue to grants for communities most impacted by prohibition over four years. But advocates say that amount is far too little, which may create conflict when the bill heads to the legislature, where leaders have emphasized the need to aid people from communities harmed by the drug war.

-When it comes to local control, individual municipalities with populations of 100,000 or more will have the option to opt out of allowing marijuana businesses to operate in their area. The way the legislation is written, if a county decides to opt out, it wouldn’t apply to any cities within its jurisdiction that also have a population of 100,000 or more unless they proactively chose to enact their own ban. They have until the end of 2021 to opt out.

-The bill does not create licenses for delivery services or for on-site consumption at dispensaries, but does allow regulators to create additional license types, which leaves the door open for those categories to potentially come online in the future. It also provides for the issuance of caterer’s permit, which would allow the “service of cannabis products at a function, occasion or event in a hotel, restaurant, club, ballroom or other premises” where marijuana could “lawfully be sold or served” during certain hours.

-The proposal generally disallows vertical integration for adult-use cannabis businesses, preventing them from having ownership over everything from production to sales. However, existing medical cannabis organizations may be able to submit applications for recreational licenses and stay vertically integrated.

-Advocates are also pushing back against the concentration of power that would be given to an individual executive director of the proposed new Office of Cannabis Management, which would be responsible for regulating the marijuana and hemp markets.

-The governor is calling for three types of taxes on recreational cannabis products: one based on THC content to be applied at the wholesale level, a 10.25 percent surcharge tax at the point of purchase by consumers and applicable state and local sales taxes.

Activists expect that this proposal will serve as a starting point for negotiations with legislators, several of whom may well push for a greater emphasis on social equity in legalization legislation.

“It is encouraging that Governor Cuomo has now acknowledged the need to devote resources to social equity and community reinvestment in his plan to legalize adult use cannabis, but it is disappointing that his proposal, as stated, devotes only a fraction of the funding that is needed in these program areas,” Melissa Moore, New York State director of the Drug Policy Alliance, said in a press release.

“We, along with our community and legislative allies, have long said that legalization needs to be done right if it is to be done right now—that means centering communities that have borne the brunt of racist enforcement for far too long. Governor Cuomo has listened to the calls to include social equity in his legalization platform. But to the communities that have been brutalized by the immoral war on drugs for so long, the current proposal does not go even remotely far enough. We will not give up on getting this done right.”

Cuomo has recognized the need to enact the reform to promote racial justice and social equity, but he’s also repeatedly emphasized the economic opportunity that legalization represents, especially amid the coronavirus pandemic.

The administration is projecting that the state will take in $350 million annually in marijuana tax revenue once the program is up and running. Eventually, $50 million a year will go to social equity grants to promote participation in the industry by disadvantaged people.

A memo on budget revenue states that the proposal “would establish a robust social and economic equity program” that will involve “providing technical assistance, training, loans and mentoring to qualified social and economic equity applicants.”

Under the proposal, regulations for the state’s industrial hemp program seem as though they would go largely unchanged compared to the rules that took effect this year.

Unlike past sessions, the legislature will have more influence this year after Senate Democrats secured a supermajority in the November election. If the governor were to veto any bill over details he didn’t like, they could potentially have enough votes to override him.

To that end, New York’s legal cannabis market could end up looking more like what’s outlined in a bill introduced by Sen. Liz Krueger (D) and 18 cosponsors at the beginning of this month. The legislation would make it so adults 21 and older would be able to purchase cannabis and cultivate up to six plants for personal use.

It would also provide for automatic expungements for those with prior cannabis convictions and it also includes low- or zero-interest loans for qualifying equity applicants who wish to start marijuana businesses.

An 18 percent tax would be imposed on cannabis sales. After covering the costs of implementation, revenue from those taxes would go toward three areas: 25 percent for the state lottery fund, so long as it’s designated for the Department of Education; 25 percent for a drug treatment and public education fund and 50 percent for a community grants reinvestment fund.

In any case, there’s growing recognition in the state that legalization is an inevitability.

The top Republican in the New York Assembly said last month that he expects the legislature to legalize cannabis this coming session.

Senate Majority Leader Andrea Stewart-Cousins (D) said in November that she also anticipates that the reform will advance in 2021, though she noted that lawmakers will still have to decide on how tax revenue from marijuana sales is distributed.

Cuomo also said that month that the “pressure will be on” to legalize cannabis in the state and lawmakers will approve it “this year” to boost the economy amid the health crisis.

The push to legalize in New York could also be bolstered by the fact that voters in neighboring New Jersey approved a legalization referendum in November.

Separately, several other bills that focus on medical marijuana were recently prefiled in New York, and they touch on a wide range of topics—from tenants’ rights for medical cannabis patients to health insurance coverage for marijuana products.

Virginia Senate Marijuana Committee Approves Amendments To Legalization Bill

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Virginia Senate Marijuana Committee Approves Amendments To Legalization Bill

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A Virginia Senate subcommittee focused on marijuana policy met for a second time on Wednesday, agreeing to a set of amendments to a cannabis legalization bill that are expected to be formally adopted by a full committee on Friday.

The Senate Rehabilitation and Social Services Marijuana Subcommittee initially discussed the legislation a day earlier, on Tuesday, taking public testimony and debating issues such as which agency should regulate the legal cannabis program and whether local jurisdictions should have to opt in or out to allow marijuana businesses to operate.

At the most recent meeting, members reached several agreements on amendments in concept that will be taken up by the full panel. They also moved to refer the revised legislation to the Judiciary Committee and then the Finance Committee before it advances to the Senate floor.

The bill at hand was unveiled by Gov. Ralph Northam (D) last week and is being carried by top Senate and House leaders.

It would create a system of regulated and taxed marijuana sales and production, and allow adults 21 and older to purchase and possess up to one ounce of cannabis and cultivate up to four plants for personal use, two of which could be mature.

One of the decisions the subcommittee made was to recommend that an independent agency be responsible for regulating the marijuana program, rather than the state’s existing alcohol control department as would be the case under the governor’s bill as introduced. That also means that the timeline for sales implementation would have to be pushed back to 2024 instead of 2023 to provide time to stand up a new regulatory body.

“The committee feels that an independent agency is the right solution,” Chairman Jeremey McPike (D) said, adding that “this line of business is much different than the current work of” the  Virginia Alcoholic Beverage Control Authority.

The recommendation also calls for quarterly updates on the progress of regulatory implementation. If those show significant progress, legal sales could potentially come earlier than 2024.

The panel also narrowly agreed that the home cultivation option for adults should remain in the bill.

In terms of local control, members said that they would prefer for municipalities to have to opt out of allowing cannabis businesses in their areas if they didn’t want them, instead of being required to proactively opt in as is written in the current legislation. That recommendation comes in response to a recent policy change in Virginia that no longer allows for “dry” counties and instead requires jurisdictions to opt out of allowing alcohol businesses via referendum.

There was also some discussion about social equity licensing policy, with the panel urging a tightening of eligibility requirements. While the current bill says a business must have 50 percent ownership by disadvantaged people, the panel recommended upping that to 66 percent, for example.

The subcommittee talked about co-location issues and advised that there should be language added that allows overlap in recreational marijuana, medical cannabis and hemp production and sales. The current proposal could effectively restrict companies to just one or another form of cannabis.

Deputy Secretary of Agriculture and Forestry Brad Copenhaver, who testified on behalf of the Northam administration, said they “don’t see any issues as long as the products are kept separate, especially on a cultivation facility.”

“We don’t see any issues with that,” he said, “as long as the products themselves can be separately labeled and identified” and “as long as we can track and trace that.”

Members agreed to the overall set of amendments in concept in a 4-3 vote.

Next, the bill will get a full Rehabilitation Committee vote on Friday, where members will formally consider the subcommittee’s amendments. Judiciary will get the legislation next and, in its jurisdiction, will likely take on provisions related to crimes and penalties. After that, Finance will look at components such as the proposed tax policy.

Meanwhile, a companion bill in the House of Delegates is expected to be introduced soon and will be considered by the chamber’s Courts of Justice Committee on Friday.

The legislation’s provisions as introduced have been informed by two official state studies on legalization that were recently conducted by a legislative commission and a separate working group comprised of four Virginia cabinet secretaries and other officials, both of which looked at how to effectively implement legalization and submitted recommendations to the governor’s office late last year.

Those studies were required under a marijuana decriminalization bill that was approved last year.

Many of those recommendations have been incorporated into the new legislation, including provisions to promote social equity in the cannabis market. Notably, it would also apportion almost half of the tax revenue the state collects from marijuana sales to funding pre-kindergarten education—a policy championed by First Lady Pamela Northam.

A new 21 percent tax would be imposed on cannabis sales, and local jurisdictions that allow marijuana businesses to operate could levy an additional three percent tax. Existing state sales taxes would also apply on purchases, for a total potential 30 percent tax rate.

Revenue from the new state tax would go toward funding pre-k education (40 percent), a Cannabis Equity Reinvestment Fund (30 percent), substance misuse and treatment programs (25 percent) and public health initiatives (five percent).

This introduction of the bill comes one month after the governor included provisions to lay the groundwork for cannabis legalization in a budget proposal that also calls for millions of dollars to support expungements. Northam had campaigned on merely decriminalizing possession, but he publicly backed broader legalization of marijuana for adult use in November.

Northam said during his State of the Commonwealth address last week that cannabis prohibition was deliberately enacted as a means to discriminate against people of color.

Separate legislation to legalize cannabis for adult use was filed by Del. Steve Heretick (D) earlier this month. A companion version of that bill, sponsored by Sen. Joe Morrisey (D), was also up for consideration by the Senate panel on Tuesday, but he asked that it be “rolled in” to the governor’s proposal and that he be added as a chief sponsor. That request was approved by members.

Meanwhile, legislation to stop police from searching people or seizing property based solely on the smell of marijuana in Virginia is set to take effect after lawmakers adopted recommended changes from the governor in October.

Also during the recently concluded special session, Northam signed another bill that will allow people issued summonses for cannabis offenses under the state’s new decriminalization law to prepay their civil penalty rather than having show up in court.

Nevada Governor Pledges Marijuana Tax Dollars For Schools In State Of State Address

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