January 2018

Massachusetts Cannabis Control Commission Releases Draft of Regulations for Implementation of Adult-Use Marijuana

On December 21, 2017, the Massachusetts Cannabis Control Commission filed a first draft of regulations for the purpose of implementing the legality of adult-use marijuana. The draft—935 CMR 500.000—reflects more than 80 policies discussed and voted upon the prior week.

It details, among other things, the approval of products and requirements for labeling, packaging, advertising, and serving sizes, as well as the enforcement of regulations, security, and municipal protections.

Following is a summary of some of the regulations pertaining to business establishments.

Marijuana Establishments

General Requirements

  • No licensee shall be granted more than three licenses in a particular class, except as otherwise specified. An independent testing laboratory or standards laboratory may not have a license in any other class. No individual or entity shall be a controlling person over more than three licenses in a particular class of license.

License classes are as follows:

  1. Marijuana Cultivator:

               Tier 1: Up to 1,000 square feet of canopy

               Tier 2: 1,001 to 5,000 square feet of canopy

               Tier 3: 5,001 to 10,000 square feet of canopy

               Tier 4: 10,001+ square feet of canopy

  1. Craft Marijuana Cooperative
  2. Marijuana Product Manufacturer
  3. Marijuana Retailer (Storefront, Delivery-Only, Marijuana Social Consumption Establishment, Primary Use, Mixed Use)
  4. Marijuana
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As we’ve blogged before, we don’t believe that Attorney General Sessions’ revocation of the Cole Memorandum will have much impact on the regulated, licensed marijuana industry. As of this post, we’ve neither heard nor read of any U.S. Attorney seeking to prosecute a licensed, compliant marijuana operation. Beyond statements by key political players, certain data points can give the industry comfort. Below are some that we believe illustrate that the attorney general’s actions and statements will not meaningfully reverse the progress that the industry has realized over the past few years.

  • Per an October 2017 Gallup poll, 64% of Americans support marijuana legalization, including 51% of polled Republicans. Per a July 2017 Quinnipiac University poll, 75% of Americans, including 59% of Republicans, oppose the enforcement of federal marijuana laws in states that have legalized cannabis.
  • The legal cannabis industry (not including cannabis-adjacent businesses) employs an estimated 165,000 to 230,000 workers. This is two to three times more workers employed by the coal-mining industry.
  • Although estimates of actual revenues from legal cannabis enterprises vary, The Arcview Group states that, in 2016, the industry generated at least $6.7 billion—that figure is projected to increase to $21 billion by 2021.
  • The cannabis
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Congratulations to Vermont

Last week, the Vermont House and Senate passed H.511, which seeks to permit recreational- and adult-use marijuana in the state. The law would remove civil penalties by allowing individuals to possess one ounce or less of marijuana, as well as up to two mature and four immature marijuana plants to grow at home. Expected to be signed into law by Governor Phil Scott, the bill would go into effect on July 1, 2018.

Although H.511 does not provide or allow for licensure of adult-use cannabis cultivation, processing, or dispensary operations, supporters nonetheless see it as an important first step to full implementation of an adult-use marijuana program in Vermont.

As other commentators have noted, the passage of H.511 is important for two other reasons:

  • This is the first time a state legislature has legalized recreational marijuana. The eight states that presently permit adult use got there via citizen ballot initiatives.
  • The legislation was passed (and the governor has pledged to sign the bill into law) after Attorney General Sessions’ revocation of the Cole Memorandum, giving hope to many in the industry that Sessions’ actions will not chill the industry.

Here at the Blog, we congratulate Vermont’s legislature … Keep reading

Assessing the Sessions Memo's Impact on Legalized Marijuana

As most are by now likely aware, last Thursday, Attorney General Jeff Sessions issued a memorandum to all U.S. Attorneys entitled “Marijuana Enforcement,” which noted that decisions to prosecute even legal marijuana have been, and shall continue to be, guided by prosecutorial discretion, in light of the government’s “finite resources.” It went on to state that previous guidance with respect to marijuana enforcement, including the Cole Memorandum, was “unnecessary” and, therefore, rescinded.

The Massachusetts U.S. Attorney, Andrew Lelling, who was confirmed just last month (December 2017), said the following soon after the release of Attorney General Sessions’ memo:

This office will pursue federal marijuana crimes as part of its overall approach to reducing violent crime, stemming the tide of the drug crisis, and dismantling criminal gangs and in particular the threat posed by bulk trafficking of marijuana, which has had a devastating impact on local communities … As with all of our decisions, we will continue to use our prosecutorial discretion and work with our law enforcement partners to determine resource availability, weigh the seriousness of the crime and determine the impact on the community.

In a further statement, he went on to say:

I

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Earlier today, Attorney General Jeff Sessions issued a memorandum rescinding several Obama-era policies (notably outlined in the Cole Memo) regarding the possession, distribution, and cultivation of marijuana. Whereas the government has largely allowed states to decide how best to define and enforce their positions on cannabis, the Attorney General has now essentially green-lit prosecutors across the country to determine how to enforce federal drug laws regarding the substance, particularly alarming those in states that have moved to legalize.

We believe that further information is necessary to truly assess what impact, if any, this development may have on the industry. For now, our message is: Let’s not overreact.

Sessions saying that it is now up to individual AGs to determine how to handle cannabis, is not much different from the way things are being done now. The Cole Memo was simply a list of prosecutorial priorities. It never prevented the Justice Department from going after cannabis entities—it just stated that, unless certain things were happening (e.g., money laundering or sales to minors), the feds wouldn’t waste resources. Now that Justice is short-staffed and underfunded, it’s doubtful that there will be much movement on this front, except in, perhaps, … Keep reading

What to Watch For: The Near-Term Outlook on Cannabis

We anticipate 2018 as being a pivotal year for cannabis across the country. As momentum for the movement to legalize continues to build, here are some of the things we’re keeping an eye on.

Rohrabacher-Blumenauer Extension
The Rohrabacher-Blumenauer Amendment was extended until January 19, 2018, as part of the budget deal passed on December 21, 2017, that averted a federal shutdown. With the New Year, we are eager to see whether Congress will continue to extend the protection provided by the Amendment, which prevents the federal government from using federal funds to prosecute fully compliant and licensed medical marijuana operations. Should the Amendment not be extended, attention will turn to Attorney General Sessions, to see what measures he may take to shut down or otherwise impede the progress of the industry.

While there is certainly legitimate cause for concern, many industry advocates doubt that the Attorney General will do much in the way of going after licensed medical facilities, given that the Amendment does not bar the use of federal funds for crackdowns on the recreational cannabis industry, coupled with the fact that the government has, at least to date, not begun any such crackdowns.

Tax Code
For 2018, … Keep reading