For the fifth month in a row, Illinois is again reporting record-breaking marijuana sales, the state Department of Financial and Professional Regulation announced on Monday.
Despite the coronavirus pandemic, Illinois has seen escalating cannabis sales month-over-month. In September, consumers purchased more than 1.4 million marijuana products worth a total of nearly $67 million. Almost $18 million of those sales came from out-of-state visitors.
In August, the total sales reached about $64 million—the previous monthly record. The new adult-use sales figures don’t include data about purchases made through the state’s medical cannabis program.
This latest data seems to support the notion that the state’s marijuana market is “recession-proof” and “pandemic-proof,” as a top regulator said in August.
State officials have emphasized that while the strong sales trend is positive economic news, they’re primarily interested in using tax revenue to reinvest in communities most impacted by the drug war. Illinois brought in $52 million in cannabis tax revenue in the first six months since retail sales started in January, the state announced in July, 25 percent of which will go toward a social equity program.
“We were not doing this to make as much money as fast as we possibly could,” Toi Hutchinson, senior cannabis advisor to Gov. J.B Pritzker (D), said. “We were actually doing this for people,” with a focus on supporting communities most impacted by the drug war.
In May, the state also announced that it was making available $31.5 million in restorative justice grants funded by marijuana tax revenue.
That said, ensuring an equitable market as promised hasn’t been easy. Regulators have recently faced lawsuits after dozens of would-be social equity licensees were denied an opportunity to participate in a licensing lottery over alleged problems with their applications. The state said it would approve 75, but only 21 ultimately qualified—and critics complain that the resources it takes to submit an acceptable application creates barriers for the exact people the special licenses are supposed to help.
The governor announced last month that new procedures would be implemented allowing rejected applicants to submit corrected forms. But on Monday, three investors who are finalists from the initial round filed a lawsuit against the state, alleging that the administration’s decision to permit resubmissions was politically motivated and illegal.
For now, the out-of-state sales data seems to support Pritzker’s prediction during his State of the State address in January that cannabis tourism would bolster the state’s coffers.
Prior to implementation, the pardoned more than 11,000 people with prior marijuana convictions.
Over in Oregon, officials have been witnessing a similar sales trend amid the global health crisis. Data released in August reveals that the state saw about $106 million in medical and recreational cannabis sales, marking the third month in a row that sales exceeded $100 million.
CBD Company’s Appeal Could Let Marijuana And Psychedelics Companies Trademark Businesses Pre-Legalization
As it stands, you can’t trademark a product that’s not currently legal under federal law—like marijuana or psychedelics. But a CBD beverage company is appealing that rule, and it could have wide-ranging implications for burgeoning industries surrounding potentially soon-to-be-legal substances.
The U.S. Patent and Trademark Office (USPTO) says that companies cannot secure trademarks for products that aren’t lawful for commerce, even if they’re simply submitting “intent to use” applications that could take years to process while a pending policy change works its way through Congress or federal agencies.
“While applicant may be anticipating that CBD-based beverages will be made lawful at the federal level within the time frame for filing an allegation of use, that anticipation does not make this application registrable,” USPTO wrote in explaining its decision to deny a registration to Joy Tea, which markets hemp-derived CBD drinks. “The lawfulness of the goods is determined at the time the application is filed and not what may or may not be lawful at the federal level years from now.”
Joy Tea is appealing the rejection with the Trademark Trial and Appeal Board.
While hemp and its derivatives like CBD were legalized under the 2018 Farm Bill, USPTO denied its trademark request because the Food and Drug Administration (FDA) does not currently have regulations in place that allow for the lawful marketing of cannabinoids in food items or dietary supplements.
While the federal food regulator has said it’s working on rules to allow for the marketing of CBD-infused products, USPTO says that for now, “FDA intentions, public opinion in favor of legalization of cannabis, and anticipation of change in the current law have no bearing on the prosecution of a trademark application.”
But Larry Sandell, an intellectual property attorney at Mei & Mark LLP who is representing Joy Tea, told Marijuana Moment that it’s improper to deny his client a trademark registration in the meantime.
“The general idea as to why [companies submit intent to use applications]—outside the cannabis space—is if you’re marketing a new product, and you’re starting to lay the groundwork, it would be terrible if somebody could just swoop it up and beat you to the trademark office and steal it out from under you,” he said.
Traditional pharmaceutical companies that are interested in selling products that aren’t currently approved by FDA have this option—but CBD businesses are barred.
“There’s no real logical basis for the split,” Sandell said.
But USPTO said the comparison is “misleading because pharmaceuticals are not per se unlawful.”
Joy Tea “has not argued or demonstrated that it is seeking or has sought FDA approval for the sale of its CBD-based beverages,” the agency said. “Applicant’s goods are not merely ‘unapproved’ but are actually ‘unlawful.'”
To resolve the issue, Joy Tea, is seeking an appeal.
“At base, this Appeal seeks to overturn, or at least narrow, this per se rule,” the company’s filing states. “No statute or applicable regulation supports disqualifying an applicant’s bona fide intent that stems from a belief—especially an objectively reasonable belief—that its intended future commerce will be legal future commerce,”
It further argues that “market movement in cannabis-related stocks evinces that—notwithstanding the current law—many people anticipate changes in federal law toward cannabis legalization in the immediate future and have been willing to invest in this belief.”
If the appeal succeeds and companies are prospectively able to trademark products that aren’t currently legal under federal law, that would have a significant impact on businesses entering the space.
If it fails, however, that would mean that the status quote prevails, putting these companies “in a terrible spot,” Sandell said.
It would mean, for example, that a company could preempt another company that plans to sell a cannabis product by taking their business name and using it for a legal, unrelated purpose.
Should Joy Tea’s current effort fail, Sandell said they will appeal to a federal circuit court. They’re expecting a response to the initial briefing by mid-summer.
Read the text of the appeal on the CBD trademark below:
Photo by Kimzy Nanney.
New House Bills Would Make Cannabis Businesses Eligible For Federal Small-Business Aid
Lawmakers in the U.S. House of Representatives have introduced three new bills to make state-legal marijuana businesses eligible for federal small business services, including loans, disaster relief and grant programs.
The package of legislation is aimed at establishing parity for cannabis businesses, which are currently prohibited from receiving federal aid due to marijuana still being classified as a Schedule I controlled substance. The country’s legal cannabis industry nevertheless now supports nearly 320,000 full-time jobs in the U.S., according to industry estimates.
With more states pursuing cannabis legalization, a growing number of legitimate small businesses are excluded from critical @SBAgov programs.
Read more about their legislation here 👇
— House Committee on Small Business (@HouseSmallBiz) April 20, 2021
The measures are largely similar to legislation introduced by the lawmakers in 2019, with some small changes.
One bill, sponsored by House Small Business Committee Chairwoman Nydia Velázquez (D-NY), would allow marijuana businesses to access resources from the federal Small Business Administration (SBA). The Ensuring Safe Capital Access for All Small Businesses Act of 2021, which had not been assigned a bill number as of Tuesday afternoon, would expand access to services such as microloans, disaster assistance and the agency’s loan guaranty program.
“With more and more states pursuing legalization, including my home state of New York, there are a growing number of legitimate small businesses that are excluded from critical SBA programs,” Velázquez said in a statement, noting that much of the cannabis industry consists of small businesses.
Compared to Velázquez’s 2019 bill, the new version adds clauses meant to expand the availability of services. While the 2019 bill applied to SBA itself, provisions in the new legislation also prevent SBA intermediaries, private lenders and state and local development companies from declining to work with businesses simply because of their marijuana-related work.
Another new section deals with debentures—certain unsecured loan certificates—and clarifies that SBA may not decline to purchase or guarantee a debenture just because of a business’s involvement in cannabis. Nor can other small business investment companies decline to provide assistance to the cannabis sector.
“This legislation will spark growth by extending affordable capital to small firms in the cannabis space,” she continued. “Simultaneously, the bill acknowledges the structural disadvantages facing entrepreneurs of color and seeks to level the playing field.”
Another newly refiled measure, H.R. 2649, sponsored by Rep. Dwight Evans (D-PA), would establish a U.S. Small Business Administration (SBA) grant program to provide funding to state and local governments to help them navigate the licensing process for cannabis businesses. The bill, which also removes marijuana from the Controlled Substances Act, specifies that the grant money should be used to benefit communities disproportionately impacted by the drug war.
My #HomegrownAct would help small businesses navigate #cannabis licensing & employment with a focus on communities most impacted by the War on Drugs.
Read more here: https://t.co/Do7ek2STWB https://t.co/K91iHPcCqk
— Congressman Dwight Evans (@RepDwightEvans) April 20, 2021
“My bill would act as a poverty-buster and help homegrown small businesses, which are the backbone of our economy and our neighborhoods. We need to make sure that the booming legal cannabis industry does not become consolidated in the hands of a few big companies,” Evans said.
Marijuana Moment is already tracking more than 1,000 cannabis, psychedelics and drug policy bills in state legislatures and Congress this year. Patreon supporters pledging at least $25/month get access to our interactive maps, charts and hearing calendar so they don’t miss any developments.
Learn more about our marijuana bill tracker and become a supporter on Patreon to get access.
A third bill, H.R. 2649, from Rep. Jared Golden (D-ME), would prohibit SBA partners that provide guidance and training services from denying help to businesses solely because of involvement in cannabis. The changes would affect providers such as SBA’s Small Business Development Centers, Women’s Business Centers and the Veterans Business Outreach Centers, among others.
“Our continued economic recovery depends on the health of American small businesses of all kinds. Especially in this environment, no Maine small business owner should be turned away from crucial SBA programs that could help them create jobs and lift up the economy,” said Rep. Golden. “My bill would help address this problem by providing small business owners directly or indirectly associated with the cannabis industry with access to the services and resources they need to get their small businesses off the ground and grow.”
Meanwhile, federal lawmakers have been making headway on other cannabis-related proposals. The House passed a cannabis banking bill on Monday, and broader legislation to legalize cannabis at the federal level is expected to be introduced soon.
The banking legislation would ensure that financial institutions can take on cannabis business clients without facing federal penalties. Fear of sanctions has kept many banks and credit unions from working with the industry, forcing marijuana firms to operate on a cash basis that makes them targets of crime and creates complications for financial regulators. The full House passed the bill on a 321–101 vote.
“Even if you are opposed to the legalization of cannabis, you should support this bill,” sponsor Rep. Ed Perlmutter (D-CO) said on the House floor. “The fact is that people in states and localities across the country are voting to approve some level of cannabis use, and we need these cannabis businesses and employees to have access to checking accounts, payroll accounts, lines of credit, credit cards and more.
Other Democrats, including Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) are working on legislation that would end federal cannabis prohibition completely.
Schumer said last week that the long-awaited proposal would be introduced “shortly” and placed on the floor “soon.” Schumer has so far declined to discuss the bill’s specifics, though he’s stressed that it will prioritize small businesses and people most historically impacted by the drug war.
In an interview with Marijuana Moment this week, Schumer worried that passage of the House banking bill could actually undermine broader congressional cannabis reform this year.
On the House side, Judiciary Chairman Jerrold Nadler (D-NY) said recently that he plans to reintroduced his own legalization bill, the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, which cleared the House in a landmark vote last year but did not advance in GOP-controlled the Senate.
Meanwhile, support for legalization among U.S. voters continues to grow. More than 9 in 10 Americans (91 percent) now support legalizing cannabis for either medical or adult use, according to a Pew Research Center poll released on Friday. Sixty percent of respondents said that cannabis should be legal for both medical and adult use. Thirty-one percent said it should be legalized for therapeutic purposes only, while just eight percent said it should continue to be criminalized across the board.
A majority of those in every age, race and political demographic included in the poll said they feel marijuana should be legal in some form, although many Republicans remain wary of adult-use legalization. Seventy-two percent of Democrats favored both medical and adult-use legalization compared to only 47 percent of Republicans.
Among the minority in opposition to federal legalization: President Joe Biden (D). White House Press Secretary Jen Psaki said last month that the president’s position on the issue “has not changed,” meaning he still opposes the reform. on Tuesday, Psaki refused to say whether Biden would sign or veto a cannabis legalization bill if passed by Congress.
The president instead backs modestly rescheduling the plant, decriminalizing possession, legalizing medical cannabis, expunging prior marijuana records and letting states set their own policies.
Read the full text of the new legislation below:
Illinois Gets More Tax Revenue From Marijuana Than Alcohol, State Says
Illinois took in more tax dollars from marijuana than alcohol for the first time last quarter, according to the state Department of Revenue.
From January to March, Illinois generated about $86,537,000 in adult-use marijuana tax revenue, compared to $72,281,000 from liquor sales.
Those following the cannabis market in Illinois might not be entirely surprised, as the state has consistently been reporting record-breaking sales, even amid the pandemic. In March alone, adults spent $109,149,355 on recreational cannabis products—the largest single month of sales since retailers opened shop.
It was in February that monthly cannabis revenues first overtook those from alcohol, a trend that continued into March.
If the trend keeps up, Illinois could see more than $1 billion in adult-use marijuana sales in 2021. Last year, the state sold about $670 million in cannabis and took in $205.4 million in tax revenue.
Officials have emphasized that the tax dollars from all of these sales are being put to good use. For example, the state announced in January that it is distributing $31.5 million in grants funded by marijuana tax dollars to communities that have been disproportionately impacted by the war on drugs.
The funds are part of the state’s Restore, Reinvest, and Renew (R3) program, which was established under Illinois’s adult-use cannabis legalization law. It requires 25 percent of marijuana tax dollars to be put in that fund and used to provide disadvantaged people with services such as legal aid, youth development, community reentry and financial support.
Awarding the new grant money is not all that Illinois is doing to promote social equity and repair the harms of cannabis criminalization. Gov. J.B. Pritzker (D) announced in December that his office had processed more than 500,000 expungements and pardons for people with low-level cannabis convictions on their records.
Relatedly, a state-funded initiative was recently established to help residents with marijuana convictions get legal aid and other services to have their records expunged.
But promoting social equity in the state’s cannabis industry hasn’t been smooth sailing. The state has faced criticism from advocates and lawsuits from marijuana business applicants who feel officials haven’t done enough to ensure diversity among business owners in the industry.