Connect with us

Business

Marijuana Businesses Don’t See 280E Reform Success, But There’s Still Hope

Published

on

Fairness. That’s what marijuana businesses say they’re seeking to win as part of a broad Republican tax reform plan moving through Congress this month.

To date, they haven’t had much luck, but that doesn’t mean the fight is over.

Under a 1980s federal provision — known as 280E — cannabis businesses are forced to pay a much higher tax rate than companies in other industries.

The statute was originally intended to to stop drug cartel leaders from writing off yachts and expensive cars, but today its plain 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.

Last week, those businesses could not get any member of the House Ways and Means Committee to introduce — never mind muster enough bipartisan support to pass — an amendment attaching a 280E fix to the tax overhaul bill. Amendments on other topics were adopted or rejected on party-line votes.

The legislation was then approved, with all Republicans in support and all Democrats in opposition, and sent to the House Rules Committee to make preparations for a floor vote.

On Tuesday, Congressman Jared Polis (D-CO) did file a 280E amendment in the Rules panel, intended for floor consideration. He described the proposal as “essentially revenue neutral” in comments before the committee, of which he is a member.

Referring to the up to 70 percent effective tax rate that legal cannabis businesses are forced to pay because they cannot take expense deductions, Polis said 280E makes their prices artificially high and “prevents them from being able to completely undermine the criminal cartels” because those organizations can sometimes undercut legal prices.

Repealing the outdated provision would be the “nail in the coffin of the criminal cartels that jeopardize the health of our kids and our safety,” he said.

But the panel, as expected, did not allow the measure to advance before the full House, as has been the case with every marijuana amendment over the course of the past year.

What’s more, the panel advanced the tax bill under a “closed rule” that blocked all 139 submitted amendments on a broad range of topics from reaching the floor.

(One of those additional measures, by Congressman Lou Correa (D-CA) would establish a 15 percent federal excise tax on legal marijuana sales with revenue earmarked toward reducing the deficit.)

Polis’s motion to amend the rule to specifically allow the 280E measure to be considered on the floor failed on a party-line vote of three to eight.

The tax bill will now go before the full House later this week where it is expected to be narrowly approved.

In the meantime, advocates are hanging their hopes on the Senate, where the Finance Committee is marking up its version of the tax reform legislation this week.

Get access to this exclusive analysis for Marijuana Moment Patreon supporters that spells out which senators cannabis interests need to win over in order to approve a 280E amendment in committee. A sufficient number of GOP members of the Senate Finance Committee have supported marijuana measures in the past to put 280E reform within reach.

How Marijuana Businesses Can Win Tax Fairness Under Trump Plan

A total of 355 amendments have been filed before that panel.

While none are listed as explicitly dealing with 280E, the legislative text for the measures hasn’t been posted online, and one amendment in particular from Sen. Ron Wyden (R-OR) is described in a fashion that seems as though it may concern the marijuana tax provision: “Amendment of a perfecting nature to help small business.”

Wyden is the sponsor of a standalone 280E reform bill similarly titled, “The Small Business Tax Equity Act of 2017.”

Advocates have had success garnering increasing bipartisan support for that bill and standalone 280E reform legislation in the House this year as compared to versions filed in the past Congress. But those bills are not going to move though committee, to the floor and to the president.

The only real hope of getting a reform enacted into law is to attach it to a broader moving vehicle like the GOP tax bill.

And now, because of the failure to approve a 280E amendment on the House side, the only hope lies in the Senate. That means either getting an amendment adopted in committee or on the floor.

The latter will be a much harder path because the bill will likely be considered by the full body under an agreement that limits the number of amendments, and Senate Democratic leaders are likely to focus their efforts on measures concerning middle-class tax relief and general tax rates for businesses.

While convincing Senate Republicans to amend their leadership’s important bill in committee is a big ask, it is seen as not nearly as heavy a lift as convincing House GOP members to vote to change the bill in their chamber would have been.

So now, industry interests are hoping that Wyden’s amendment is about 280E, that he can hold all the Democrats on the panel in support of it and that a select number of targeted Republicans will go along with the plan.

Find out which senators cannabis businesses need to target to win a 280E reform amendment in the Senate Finance Committee in this exclusive analysis for Marijuana Moment Patreon supporters:

How Marijuana Businesses Can Win Tax Fairness Under Trump Plan

Even if 280E language is adopted on the Senate side, it will still have to a survive a bicameral conference committee that merges the bill with the House version which does not contain the provision.

Wyden’s office and cannabis business advocacy interests active on Capitol Hill did not respond to queries from Marijuana Moment for this story.

If you value staying updated on cannabis news, please start a monthly Patreon pledge to support Marijuana Moment!

Tom Angell is the editor of Marijuana Moment. A 15-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.)

Business

Cypress Hill Rapper Who Opposed California Legalization Opens A Marijuana Store

Published

on

On Wednesday, rapper B-Real of Cypress Hill and Prophets of Rage will celebrate the grand opening of his new “Dr. Greenthumb” recreational marijuana dispensary in southern California.

It’s the latest stage in what’s been a significant evolution for the prominent cannabis-friendly musician, who less than two years ago declared himself opposed to the state’s marijuana legalization ballot measure that is making his new venture possible.

In a press release issued Friday advertising “an all day blowout” at Dr. Greenthumb in Sylmar, California, B-Real is described as “a prominent figure at the forefront of cannabis legalization for over two decades.”

“We have a lot of history behind us as it relates to music and the pro-legalization movement,” B-Real said, according to the statement.

That history includes opposing Proposition 64, which legalized marijuana for adults 21 and over and also paved the way for regulated commercial storefronts like the one B-Real is opening.

In the run-up to the November 2016 election, where Prop. 64—also known as the Adult Use of Marijuana Act—passed with more than 57 percent of the vote, the rapper used social media to agitate against its passage.


On October 10, 2016, less than a month before Election Day, the rapper shared an image on social media that claimed Prop. 64 “helps keep the drug cartels in business,” “sets up HUGE growing operations for rich white people, destroying small businesses” and “turns rights into priviledges” [sic].

“Read up Cali!” B-Real wrote on Twitter, where he posted the image that claimed “This is NOT Legalization. VOTE NO.”

B-Real’s opposition was similar to anti-legalization messaging coming from other marijuana advocates, many of whom claimed that the measure was a corporate giveaway that would harm small-and-medium producers. At least some of that has come to pass as the cannabis economy adapts in response to the new reality of broader legalization.

But B-Real seems to have adjusted to the new reality almost immediately.

On Election Night, after cannabis ballot measures won in California, Maine, Massachusetts and Nevada, he posted a message of congratulations.

“Although I’m someone that was and is concerned about prop 64, California made history tonight and to that I tip my hat,” he wrote.

In an e-mail sent via a spokeswoman in response to Marijuana Moment’s questions about B-Real’s evolution on California legalization, the rapper took a free-market approach. He opposed Prop. 64 because of legalization’s regulations and taxes, he explained.

“I was opposed to it at the time because some of the new regulations and penalties along with overwhelming taxation which seemed to be unfair to smaller businesses,” he wrote. “Additionally, a number of other complicated issues that are just now being addressed with new and changing policies. I still think there are things that need further due diligence to give the small business owner a chance at succeeding before the big businesses start to come into play.”

A week after the election, B-Real released a record that, according to a press release, “passionately advocates for marijuana legalization across all 50 states.”

In promotional material for “Prohibition Part 3,” B-Real appeared in a photoshopped image smoking marijuana in public—an act that, were he to do it in real life, is punishable only by a $100 citation thanks to Prop. 64.

And earlier this year, B-Real gave an interview to a New Zealand-based website in which he declared that legalization has “been great.”

“For most of us that have been in the culture for a long time, we’re just seeing and waiting for more of the regulations to happen to know how it’s going to operate officially,” he told Under the Radar. “Right now all the rules and regulation aren’t implemented and in place so we’re just taking it as each day comes and try to be informed and being a step ahead. But it’s been great, a lot of people are happier.”

Regulated and taxed commercial sales of marijuana began in California on January 1.

B-Real, whose musical repertoire with Cypress Hill includes “Hits from the Bong,” “Dr. Greenthumb” has been trying to enter the marijuana-dispensary business since 2015.

In February of that year, he won a lottery drawing to open one of the first medical-cannabis dispensaries in Santa Ana, in Orange County, California.

But by September 2016, shortly before B-Real’s public disavowal of marijuana legalization, the dispensary had still yet to open.

Now, thanks to the passage of Amendment 64 over his own objections, B-Real will be able to sell cannabis to adults over 21 years of age regardless of whether they have a doctor’s recommendation.

“I never changed that stance, but I do have a brand that myself and my partners have been building for a number years in the cannabis industry aside from my over 20 years of advocacy,” B-Real said in his statement to Marijuana Moment about his concerns with the measure. “My intention was always open a shop when the right opportunity presented itself and that we could be fully compilant [sic]. This would ultimately allow me to have a landing place for our brands in the cannabis community for recreation and medicinal consumers.”

The rapper also said that he plans to use some of the proceeds from the new retail operation to “give back to the community and create programs for the youth and show the positive impact from the cannabis community and break some of the still existing opposition.”

“Good can come from this community and we plan to educate through our example,” he said.

Photo courtesy of Festivalsommer // Biha.

If you value staying updated on cannabis news, please start a monthly Patreon pledge to support Marijuana Moment!
Continue Reading

Business

Workplace Deaths Drop After States Legalize Medical Marijuana

Published

on

Workers appear to be safer in states that have legalized medical marijuana, according to a new study.

The research, scheduled to be published in the International Journal of Drug Policy in October, is the first of its kind to explore the relationship between medical cannabis laws and workplace fatalities.

Analyzing data from the Bureau of Labor Statistics from 1992 to 2015, a team of researchers found that workplace deaths declined by about 34 percent five years after a state legalized medical cannabis. The trend was most pronounced among workers between the ages of 25 and 44.

“The results provide evidence that legalizing medical marijuana improved workplace safety for workers aged 25–44.”

Because no previous studies have specifically investigated the relationship between legal cannabis and workplace fatalities, the researchers said the results could have gone either way.

Would legalizing cannabis put more workers at risk given the “short-term effects of marijuana use on psychomotor performance and cognition,” or might it lead to fewer workplace deaths in light of what we know about the use of cannabis as a substitute for alcohol and prescription drugs?

Theoretically, if people use marijuana as an alternative to alcohol or pharmaceuticals like opioid-based painkillers, the risk of impairment on the job could be lower, the researchers wrote.

And the data seems to back that up. Though the exact cause behind the trend warrants further research, one finding seems to substantiate the substitution theory: rates of workplace fatalities were lower in states that include pain as a qualifying condition for medical marijuana.

“Specifically, legalizing medical marijuana was associated with a 19.8 percent reduction in the expected number of workplace fatalities among workers aged 25–44 if pain was included as a qualifying condition; if pain was not included as a qualifying condition, the association between legalizing medical marijuana and workplace fatalities was not statistically significant.”

The researchers also observed that states where collective cultivation of cannabis is permitted experienced fewer workplace fatalities, indicating that ease of access may play a role in mitigating these incidents.

Photo courtesy of The International Journal of Drug Policy

How this study could impact public policy

As more states have pushed forward with efforts to legalize cannabis, a conversation has been brewing about employment rights in legal jurisdictions. Courts in numerous states with medical marijuana laws on the books have affirmed employers’ right to terminate workers who test positive for marijuana metabolites, even if they’re registered patients. A handful of states, including Arizona and Illinois, have gone the opposite direction, however, granting employment protections to medical cannabis patients.

More recently, drug reform advocates have been pushing for anti-discrimination policies that would protect marijuana consumers in the workplace. A bill introduced by Rep. Charlie Crist (D-FL) last month would ensure that federal workers wouldn’t be penalized for using cannabis off-the-clock in a legal state, for example.

Part of the logic behind blanket bans on marijuana use is that it is an impairing substance that could jeopardize worker safety. Evidence to support that claim is lacking, and this new study offers a fresh perspective on the debate.

Congressman Pushes Federal Employment Protections For Marijuana Consumers

Photo courtesy of WeedPornDaily.

If you value staying updated on cannabis news, please start a monthly Patreon pledge to support Marijuana Moment!
Continue Reading

Business

Washington State Prepares To Rewrite Marijuana Testing And Packaging Rules

Published

on

Marijuana regulators in Washington State will entertain sweeping changes to how marijuana is tested, processed, packaged and sold in one of the U.S.’s oldest recreational marijuana markets, officials announced late Wednesday.

Recreational cannabis has been sold in regulated retail outlets in Washington since 2014. Consumers there pay one of the country’s highest tax burdens, generating nearly $400 million in revenue through the first three years of legalization, as the Stranger reported in late 2017.

But medical marijuana patients have long complained about limited product availability. And a recent string of testing labs suspended for erratic results that allowed unsafe product to reach retail shelves has shaken confidence in product safety.

“Requests from the industry have…been received regarding testing requirements, and changes in testing requirements in other states have prompted further review of WSLCB rules for potential adjustment,” the new notice from the Washington State Liquor and Cannabis Board said. “Additionally, the WSLCB has heard from the medical marijuana patient community that they would like to see additional product types or levels of potency that are not currently supported by the regulatory structure.”

“For these reasons, changes to products, serving amounts in packaging, and other related requirements may be considered,” the regulators announced Wednesday.

Wednesday evening’s notice is the initial notification of potential rulemaking, and “no rule language is offered at this stage of the process.”

Members of the public can submit comments or proposals until October 24. No proposed rules changes are expected to be filed until “on or after October 31,” the notice said.

“Following the comment period, the agency will send out and publish the proposed rules, establish a comment period on the proposed rules, and hold a public hearing before the rules are adopted,” according to the agency.

Until then, the agency “will consider the following topics for potential rulemaking changes,” according to Wednesday’s notice:

  • Lot and batch sizes;
  • Fields of testing and pass/fail level adjustments;
  • Potency testing requirements;
  • Pesticide testing requirements for all cannabis products;
  • Heavy metals testing requirements;
  • Sample deduction requirements;
  • General testing rule adjustments;
  • Product, THC serving limits, and packaging requirements; and
  • “Other related rule changes that may be necessary or advisable,” according to the notice.

Whatever “further adjustments” the agency will propose are meant to “increase efficiencies in testing” and “increase the availability of compliant [cannabis] products,” the notice said.

Anyone interested in submitting comments or proposed rules can contact Joanna Eide, Policy and Rules Coordinator, at [email protected].

If you value staying updated on cannabis news, please start a monthly Patreon pledge to support Marijuana Moment!
Continue Reading
Advertisement

Stay Up To The Moment

Marijuana News In Your Inbox


Support Marijuana Moment

Marijuana News In Your Inbox