In an effort to ensure the spoils of marijuana legalization are available to everyone, Washington State Gov. Jay Inslee (D) signed a bill on Tuesday to allow state regulators to funnel unused marijuana business licenses to people from communities that have been negatively impacted by the drug war.
The legislation came at the request of state cannabis regulators, who have pointed out that Washington’s legalization law, which voters approved in 2012, failed to include any provisions aimed at addressing past prohibition harms.
The new law signed by Inslee aims to diversify the industry by issuing more business licenses to people negatively affected by drug law enforcement and providing them with technical assistance to get their companies off the ground. It creates a state Marijuana Equity Task Force and allows the Washington State Liquor and Cannabis Board (LCB) to grant forfeited, canceled, revoked or otherwise unissued marijuana business licenses to qualified equity applicants.
“HB 2870 creates a new social equity program that provides business opportunities to people from disproportionately-harmed communities so they can benefit economically from the cannabis industry and become a cannabis retailer,” Inslee said in a statement that his office shared with Marijuana Moment.
According to the ACLU, black people in Washington State were roughly four times more likely to be arrested on cannabis charges prior to legalization than were white people, despite similar rates of use. That disparity is similar to those in other states, such as New York. And while legalization itself has reduced the number of people arrested on marijuana charges, racial disparities in arrests remain.
Since legalization, Washington’s marijuana industry has also been overwhelmingly white. The state Commission on African American Affairs, using statistics from the LCB, recently estimated that just one percent of cannabis production and processing licenses have been issued to African Americans, who also have majority ownership of only three percent of the state’s marijuana retail licenses.
Paula Sardinas, a member of the state Commission on African American Affairs, told Marijuana Moment that she testified on behalf of amendments to expand program funding and ensure its existence for years to come.
“After eight years of working with communities of color from Florida to Washington, I’m very proud to have played a major role in crafting Washington’s statewide social equity program,” she said in an email, adding that the effort resulted in a tenfold increase in funding.
Sardinas noted that Washington’s black community had long been frustrated with the state’s cannabis law, Initiative 502, for failing to address equity concerns. “Eight years after I-502,” she said, “the black community reached a boiling point.”
“I’m very thankful to Gov. Inslee for his support” for the equity program, she added.
In comments earlier this year, LCB Director Rick Garza seemed to acknowledge that Washington’s existing cannabis law fell short on issues of equity.
“Initiative 502 missed an opportunity to incorporate a focus on social equity,” Garza told lawmakers earlier this year. “The history of cannabis prohibition shows abundant evidence there was disproportionate harm in communities of color, and that those harmful effects remain with us today.”
To qualify for the new program, an applicant must be from a “disproportionately impacted area,” defined as a census tract that has high poverty and unemployment rates, a high rate of participation in income-based government programs and high rates of arrest or punishment of cannabis-related crimes. The applicant must also submit a “social equity plan” showing how their business would help achieve equity-related goals.
According to the bill’s text, the changes are intended “to reduce barriers to entry to the cannabis industry for individuals and communities most adversely impacted by the enforcement of cannabis-related laws” and establish a state cannabis industry that “is equitable and accessible” to those hit hardest by anti-drug laws.
Equity advocates applauded the change, noting that legalization alone isn’t enough to address past drug war harms.
“Washington State was ahead of the curve with adult use, which has advanced the cause of ending the war on black and brown communities tremendously,” Jason Ortiz, president of the Minority Cannabis Business Association (MCBA), told Marijuana Moment. “It is inspiring but not surprising to see Washington leaders like Rick Garza and Governor Inslee continuing to lead by example by admitting the mistake of not including equity before, by doing it now.”
Equity efforts have become increasingly mainstream in the years since Washington and Colorado first approved legal marijuana. A number of other states that legalized more recently, including Massachusetts, Illinois and Michigan, have already adopted equity measures, though the details of those programs vary greatly from state to state.
In December, MCBA held a conference aimed at ensuring that states that are considering legalization, such as New York, New Jersey, Connecticut and Pennsylvania, include measures to promote social equity and empower communities that have been harmed the most by prohibition enforcement.
“Equity programs strengthen our industry while empowering our communities,” Ortiz said, “and will be a vital part of any successful legalization campaign moving forward.”
Florida Regulators Blast Oregon Hemp Products And Encourage Consumers To Buy Local In New Alert
Florida regulators are calling out Oregon hemp businesses over products that they say contain rocks and sticks and have failed to meet regulatory guidelines on allowable THC content. Instead, consumers should buy local products made in Florida, officials say.
The Florida Department of Agriculture and Consumer Services (FDACS) recently released a consumer alert to warn Floridians about complaints it has received concerning poor quality hemp items from Oregon. Separate new guidance was issued on the cannabinoid delta-8 THC, a psychoactive compound that is increasingly being marketed and catching the attention of regulators.
“The department routinely finds violative products and conducts investigations based on consumer complaints,” FDACS said in the Oregon hemp warning. “Recently, the department has received several consumer complaints regarding shipments of hemp from Oregon.”
Those concerns are concentrated in three areas. The complaints have noted issues with Oregon hemp shipments for plants containing “rocks, sticks and other foreign material,” fraudulent certificates for laboratory analyses and items containing more than 0.3 percent THC, which is the allowable limit under federal statute.
“The department actively inspects for sanitary operating conditions and tests for label accuracy and contaminants unsafe for human consumption,” the notice states. “The department will continue to work with the United States Department of Agriculture (USDA) and the Oregon Department of Agriculture to contact firms in Oregon, notify consumers, and request remedial actions be taken.”
Regulators advised consumers to seek out products from businesses approved by USDA and to look for items that have a “Fresh From Florida” logo for quality assurance.
“Not only are you getting a product that is subject to Florida’s comprehensive seed to sale inspections, you’re also helping support Florida farmers,” the Florida Department of Agriculture and Consumer Services (FDACS) said.
Nikki Fried, who heads FDCAS as commissioner of agriculture and consumer services, has publicly stated that she’s a medical cannabis cardholder in the state—and she’s also running for governor. Prior to winning elected office, she previously lobbied on behalf of a plant farm that was later bought out by a major cannabis company.
Fried has made cannabis policy a priority throughout her tenure, and her agency has separately released new guidance on the marketing of delta-8 THC.
“The FDACS team is on the ground daily working to make sure the rules are being followed and that hemp extract products do not contain contaminants unsafe for human consumption,” it said. “Over the past year, the department has observed a growing interest in the sale of Delta-8-tetrahydrocannibinol (“Delta-8-THC”) and received numerous inquiries regarding its safety.”
It cautioned that the “until comprehensive, nationwide standards are adopted, consumers have no way of knowing what post-processing steps were taken to ensure the safety of these products” containing delta-8.
Marijuana Legalization Increases Home Property Values, New Study Finds
There are plenty of marijuana NIMBYs out there, but a new study found that cannabis legalization and the presence of dispensaries actually increases home property values.
The research from Clever Real Estate draws on data from Zillow, the U.S. Census and other sources. A main takeaway is that from 2017 to 2019, “home values increased $6,338 more in states where marijuana is legal in some form, compared to states that haven’t legalized marijuana.”
Part of the reason for the increased value is that legalizing and regulating cannabis means tax revenue for states. And that revenue translates into “new investment in things such as public services and infrastructure,” the company found, driving up property value.
For every $1 million in additional tax revenue from marijuana sales, home values increase by $470, according to the study.
Take Illinois as a case in point. Last year, the state sold about $670 million in cannabis and took in $205.4 million in tax revenue. And that revenue has gone towards a wide range of causes such as supporting organizations that work to decrease street violence. If successful, reducing violence in a given community would be one simple way to increase property value.
The Clever Real Estate study also found that states that legalize for adult use see the greatest gains in home value.
“Between April 2017 and April 2021, property values rose $17,113 more in states where recreational marijuana is legal, compared to states where marijuana is illegal or limited to medicinal use,” it said. And for the states that have enacted legalization but where sales have yet to start, “home values are predicted to increase by an average of $61,343.”
The presence of cannabis dispensaries nearby also seems to be correlated with an increase in home value.
“Home values increased $22,090 more in cities with recreational dispensaries, compared to home values in cities where recreational marijuana is legal but dispensaries are not available,” the study says. “With each new dispensary a city adds, property values increase by $519.”
“When we controlled for other factors, we found that home values in areas that have legalized recreational marijuana leapt by $17,113 more than places where marijuana is illegal or only allowed for medicinal use. Even when we limited the comparison to recreational versus medicinal legalization, this disparity persisted. Places that legalize recreational marijuana saw home values increase by $15,129 more than those that only legalized medicinal use.”
Last year, a separate analysis from economists at the University of Oklahoma similarly found that states that legalize marijuana actually see a boost in housing prices, with the effect most pronounced once nearby retail outlets open for business.
“This demonstrates that [it is] not simply the benefits of increased tax revenue, but also the existence of the dispensaries themselves, that is driving the price increases,” the researchers found. “The dispensaries act as commercial amenities that the public puts a premium on being nearby.”
Photo courtesy of WeedPornDaily.
Missouri Governor Vetoes Medical Marijuana Tax Deduction Bill
The measure, if enacted, would not have changed the federal 280E provision that remains in effect against cannabis businesses.
By Jason Hancock, Missouri Independent
Missouri Gov. Mike Parson (R) vetoed legislation Friday that would have lifted a prohibition on licensed medical marijuana companies deducting business expenses on their taxes.
In his letter vetoing the measure, Parson didn’t mention the medical marijuana provisions. He said his decision to reject the bill came down to a section lawmakers included that would have provided tax relief for businesses impacted by city-wide or county-wide public health restrictions.
Parson said those provisions would have created “significant unintended consequences that could greatly harm localities.”
In vetoing the bill, however, the medical marijuana provision was also struck down.
Missourians voted to legalize medical marijuana in 2018. But under federal law, growing, transporting or selling marijuana remains a crime.
Because of this dynamic, marijuana companies differ from every other legal business in the state because they can’t deduct ordinary and necessary business expenses on their tax returns.
While federal law remains unchanged, the legislation approved nearly unanimously in both the House and Senate would have changed that for state taxes.
David Smith, a certified public accountant from St. Louis County who works with numerous medical marijuana companies, said during a Senate hearing earlier this year that Missouri’s existing law could mean an effective tax rate for those businesses of 70 percent or higher.
“Some companies may even be subject to income taxes while operating at a loss,” Smith said.
Andrew Mullins, executive director of MoCannTrade, said it was “both common sense and smart public policy to put medical cannabis businesses on a level playing field with all others that pay state business taxes.”
“While disappointed in the veto, we remain encouraged by the overwhelming bipartisan support for a measure of basic tax fairness that received near-unanimous votes in both the state House and Senate,” Mullins said in a statement to The Independent. “As our state’s newest industry continues to create thousands of new jobs and generate tens of millions in new spending each month, we look forward to again passing this policy change and seeing it signed into law.”
Another casualty of the veto was a provision providing sales tax exemptions for certain cancer treatment devices. Parson wrote in his veto letter that he supports this tax deduction and hopes lawmakers will pass it again next year.