Tag Archives: California

The Ganjapreneur’s Road To Something Bigger

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Imagine – it’s 2025 in California. Marijuana has been recreationally legal for almost ten years. You leisurely walk into the local gas station and purchase a pack of Marley Natural Special Blend – a brand of marijuana cigarettes. While you stand outside and light up, people walk by you as they file in and out of the store. No one says anything to you. No one calls the police. No one cares what you are doing. Marijuana has taken root in the mainstream American culture. Big Marijuana has risen.

So what exactly is Big Marijuana? Is it the same as Big Tobacco? The answer to this question depends on how “Big Tobacco” is defined.

Generally, Big Tobacco is a derogatory term referring to the industry that consists of the largest tobacco companies in the United States. Big Tobacco reached the height of its power in the early 1960’s and was known for its enormous spending on political influence. Its lobby centered attention on the notion that the science of tobacco was uncertain, and it called into question each medical and scientific finding that was released to the public.

Now on the decline, Big Tobacco corporations such as Phillip Morris, R.J. Reynolds, and Lorillard are credited with a long history of lying to Americans about the dangers of smoking. Their exploits include having doctors promote cigarettes as medicine and deliberately targeting children as “tomorrow’s potential regular customers.” Although Big Tobacco’s glory days have passed, it still remains a powerful entity, and is being used as the model to explain what the rising marijuana industry could one day become.

Will Big Marijuana follow the same path? This question is difficult to answer. However, certain parallels between Big Tobacco and the rise of marijuana in the United States are striking. Take, for example, the strategy employed by Big Tobacco of having doctors promote cigarettes as medicine. Is marijuana currently being promoted as a medicine? The legalization of medical marijuana in 23 out of our 50 states says that it is. What about the strategy employed by Big Tobacco of questioning each medical and scientific finding that was released? There sure seems to be a large variance of opinions about marijuana throughout the scientific and medical communities. Do you see the pattern? Or it is too soon to tell where the marijuana industry is headed? Or maybe you don’t care about the ethics of Big Tobacco, but you smell a business opportunity in Big Marijuana. You might be in luck.

As each year passes, more and more states and municipalities across the country are choosing to decriminalize marijuana and some are going a step further in choosing to legalize and regulate it. Nationwide support to end prohibition is increasing every day and money that was once being lost by enforcing the ban against marijuana is now being found through tax revenue from the regulation of marijuana’s distribution. In states like Colorado and Washington, millions of dollars are flowing from consumer pockets and into the hands of state governments and bold businessmen. In states where marijuana remains illegal, the black market continues to generate an exorbitant amount of untaxed profit for the opportunistic outlaw.

Whatever shape the marijuana industry may take in the future, it is clear that it is not going away. For a country that prides itself on its capitalist foundations, there is simply too much potential profit and opportunity for the marijuana industry to stagnate. As time moves forward, Big Marijuana will inevitably show its face, however beautiful or ugly it may be. If I – the entrepreneur, businessman, visionary – wanted to be that face, how would I get there?

In the hostile and dynamic legal environment that surrounds the marijuana industry, how would I advertise and market my company’s product or service to consumers? How would I expand my business across state boundaries? How would I protect my brand? How would I take on investments and stay on good terms with the IRS? And for all of this, is it even possible to build Big Marijuana?

These questions are daunting, and as the law changes daily the answers to these questions follow suit. But all hope is not lost. There are companies out there that have formed their own answers to these questions. Take Marley Natural, for example: the company that is planning on being the “Marlboro of Marijuana” plans to launch its first product in “Late 2015.”

If they can do it, so can I. In this multi-part series I will envision a potential framework of how a company might overcome some of these obstacles. Stay tuned for more.

Jeff Madrak for Drug Law and Policy – Follow us on Twitter @DrugLawPolicy

Legalization Regulation From the Ground Up: Humboldt County Is Turning Its Black Market Green

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Humboldt County is the ideal location for drug policy reform; the problem is that there are too many solutions and a rapidly approaching deadline. The legalization of recreational cannabis use in California is like a train speeding down the tracks to a bridge that hasn’t been built. The bridge could take many forms but the architect’s creativity may be limited to what has been done before–instead of what could be done better. In 2016 California voters will have the unique opportunity to do something better and turn a black market green, both economically and environmentally.

California Cannabis Voice Humboldt (CCVH) is working to pass an ecologically sustainable land use ordinance for Humboldt County that would provide a path to legitimacy for Humboldt County Cannabis Farmers. The work of CCVH and that of other local interest groups seeks to preserve the expert horticulture and grassroots organic living of a region known as the “Emerald Triangle” by both cannabis connoisseurs and the Office of the National Drug Control Policy. Humboldt has a multitude of constituencies (including law enforcement, entrepreneurs, cannabis users, generational growers and local citizens not involved in the industry) who do not want twenty-five percent of the local economy to crash. The one thing all parties can agree on is that cannabis legalization in California will have a disproportionate impact on Humboldt County, a position supported by Jennifer Budwig’s landmark 2011 University of Washington study.

Humboldt County relies on the illegal marijuana industry for 25% of its economy. This does not mean that everyone in the region is involved in illegal activities, but everyone who is involved in the illegal industry participates in other legal industries like grocery shopping, eating out, buying fertilizer, tools, property, and using gas. Budwig estimates that the public services like fire, police and schools are entirely supported by the “round trip dollar” economic boost produced by the legal activities of people involved in the marijuana industry.

This type of heavy reliance on a cash crop is not new for rural America, but encouraging “bottom up” planning is. In January, 2011, then-newly-elected Colorado Governor John Hickenlooper initiated one of the most aggressive “bottom up” economic development planning strategies ever devised in the United States. The strategy was outlined in his Executive Order, which provided that:

             “In order to grow Colorado’s economy, it is vital to engage Coloradans across the state in developing a comprehensive and collaborative approach to economic development. This new approach is designed to identify the needs, priorities, vision, strengths, and weaknesses of each of the state’s counties, and incorporate them into 64 economic development plans, tailored to each county. These plans will roll up into fourteen regional plans that will comprise a comprehensive, statewide economic development plan.”

 

Two years later when recreational marijuana was legalized in Colorado, each county/city regulated its respective cannabis market, and the cannabis industry created thousands of jobs. It is important to take pause to imagine the future of Humboldt, on the brink of the biggest economic shift of its primary cash crop and the potential gains of the California economy, in deciding how best regulate recreational use. In theory, California could create 58 tailored plans based on the needs, priorities, vision, strengths, and weaknesses of each of the counties.

Humboldt CCVH is advocating protecting small marijuana growers in order to preserve the little guy. At a recent county board of supervisors meeting CCVH packed the house with standing applause when Mr. Bruner encouraged the board to “help the small farmer to understand he doesn’t have anything to be ashamed of. She doesn’t have anything she shouldn’t be proud of.” In support of the proposed ordinance, Bruner, the business manager at the Wonderland Nursery in Garberville,  said that the ordinance and eventual legalization of recreational marijuana could work financial wonders on the county’s economy and tourism industry while preserving its small farms and local businesses.  Bruner cautioned that past legalization in other states have appealed to larger corporate farms and environmentally unsustainable growing practices, and that a continuation of past practices would limit the ability for a county like Humboldt to reap the rewards of what has become its trademark crop.

This is the situation now with medical marijuana, failed retailers and growers have returned to the illegal market because of the legal complications that came from the lack of clear regulatory boundaries or guidelines in the Compassionate Use Act.  CCVH and other advocacy groups want to improve upon medical marijuana regulation and get ahead of recreational cannabis regulatory issues to preserve their way of life, encourage legal activity and help struggling local economies.

In 2016 California voters have a unique opportunity to help Humboldt County turn its black market green. In order to do that we need comprehensive policy reform based on the wealth of knowledge and experience of those living behind the Redwood Curtain. The next blog will take a deeper look into the proposed legislation by CCVH and other proposed solutions from the ground up.

Keri Gross for Drug Law and Policy – Follow us on Twitter @DrugLawPolicy

Diversion from the Black Market Also Involves People, not just Plants

Much of the focus in the coverage of state regulated marijuana has been on the plants, the product, and the money. Michelle Alexander, Associate Professor of law at Ohio State University and renowned author, has illuminated the irony of a movement where whites are now looking to marijuana with dollar signs while communities of color still suffer the consequences of the failed war on drugs. “Here are white men poised to run big marijuana businesses, dreaming of cashing in big—big money, big businesses selling weed—after 40 years of impoverished black kids getting prison time for selling weed, and their families and futures destroyed. Now, white men are planning to get rich doing precisely the same thing?” This highlights the importance of focusing on the people, especially those communities who have been affected most, in the rehabilitation of California’s relationship with marijuana.

No matter how you view marijuana reform, any chance of a successful rehabilitation of California’s drug policy must focus on people. Some see marijuana reform as a civil rights issue, citing the failed war on drugs and overcrowding of prisons as evidence that change is needed. If you view reform as a civil rights issue, how do you reconcile that belief with a system where the people who have been the most adversely affected by the war on drugs are now precluded from taking part in the state-regulated market? Others see drug use as something that isn’t going to change, so the government might as well collect additional tax revenue. If you are part of the group who sees dollar signs from tax revenue, the success of taxation depends on a shift from the black market to the legitimate market. This would depend on those currently operating in the shadows being able to operate, or get hired by, legitimate businesses. Regardless of the policy goal, the most important aspect of rehabilitating California’s relationship with marijuana is the shift from the black market to the legal market, which includes the people.

Black market marijuana is grown and sold by a black market labor force. What happens to that labor force when marijuana is legalized? The Cannabist recently published an article on black market growers in Colorado’s state regulated market. Titled “A divided weed world: Black market growers and legit industry jobs,” the article addresses the problems of merging the black market and the legitimate marijuana trade. First, there are the legal hurdles to overcome. If a person has a certain criminal record, he or she legally cannot receive a business license. Those looking for employment at a cannabusinesses must be of good moral character, meaning any criminal history will be considered. Additionally, black market growers aren’t financially incentivized to enter a legal market, where they will take a significant pay cut if they can even get a job. The competition for work is high and most available jobs are entry-level, paying $10 per hour.

Additionally, the legitimate marijuana business is wary about including those who previously operated in the shadows. Being “in any way connected to black market growers (or any type of crime) is the kiss of death in this business.” Not only is it a legal issue, legitimate marijuana businesses are split on the benefit of including black market growers in their operations. Some business owners cited applicable knowledge and experience as the positives of a black market background, but applicants are “better off never mentioning he or she has experience growing and selling their own.” Even in the absence of a criminal record, there is a “stigma that comes with being a black market grower.” There is the concern about bad habits that would be carried over and the sometimes-rocky transition of going from being your own boss to integrating into an already established and functioning business.

While the Cannabist article explored some the problems faced by a small segment of the black market in Colorado, it provides a lens with which to view the broader problem of integration into the legal market in California. Not only will there be growers needing to transition to the legitimate market, there will be trimmers, processors, and dealers. Street level dealers and trimmers do not have the same level of specialized skill and knowledge as growers. Dealers may arguably have more of a tendency to flout laws, for example by selling to minors. Each different area of employment will bring to light different problems and policy considerations.

There is also the criminal history of black market workers to consider. A criminal record makes it difficult to find any gainful employment, but this will be exacerbated in the legitimate marijuana market by regulations that exclude the justice involved from receiving licenses or being hired. The effect of criminal records for both licensing and employment purposes will have a greater impact on communities of color in California, where Latinos are arrested at higher rates than whites, and Blacks are arrested at an even higher rate. While there will be disparate impacts from barriers based on criminal history in California, there are also race-neutral reasons for excluding the justice-involved in the state regulated market that require consideration. For example, it would be reasonable to refuse a business license to an individual convicted of financial crimes to prevent money laundering. Also, because legitimate marijuana is still a cash-only business, barring convicted tax evaders or embezzlers would be sensible policy.

Furthermore, economic requirements, wages, and competition will be a contributing factor to keeping black market workers from turning legit. The licensing structure and any vertical integration requirements could prevent individuals from opening their own businesses. Like in Colorado, those making money in the black market will not be incentivized to transition to the legal market at a significant pay cut, where their wages will also be taxed. In California, where we have one of the nation’s highest wealth gaps and where Black and Latino communities have much higher poverty rates than whites, economic barriers also adversely affect communities of color. This reinforces Michelle Alexander’s point that those with the money and the privilege will be the people profiting off of marijuana reform.

My future posts for the Drug Law and Policy Blog will delve into the barriers to entry into the future state-regulated market for black market workers in California, with a focus on policy that will best serve to bring them into the fold. Ultimately, there is a general lack of information in about the black market in California, including the racial make up of the labor force, so there are questions that will go unanswered. This fact remains true – without transitioning the black market workforce to the legitimate market, marijuana reform will not succeed in the way we hope. Stay tuned for more information as I wade through the murky waters of black market industries and the ever-evolving arena of state-regulated marijuana.

The Champagne of Cannabis Should Not File for Bankruptcy

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Humboldt County is the Champagne of Cannabis. Ask anyone in the marijuana industry where the best “weed” in the country is grown and he or she will reply Humboldt or the “Emerald Triangle.” While this northern California region prides itself on its reputation, praise alone won’t pay the bills. The county is predicted to lose 25% of its economy with the legalization of recreational use in California. Some may interpret this as the intended demise of the illegal market. After enduring the departure of the timber and fishing industries, however, Humboldt already one of California’s poorest counties, does not have the economic elasticity to bounce back from another failed market. Humboldt is savvy to the tides of change, though, and local interests groups are advocating for better policy reform to preserve their beloved region and its famous cash crop. My blog series will focus on the lessons learned from Humboldt County’s long history with cannabis reform and why the state should follow the lead of local interest groups and residents who are dedicated to an environmentally sustainable, safe and economically profitable cannabis industry.

My name is Keri Gross and I am a JD candidate at Santa Clara Law School. I majored in Ethic Studies, Spanish and Biology at Humboldt State University. I’d like to think I represent both the outside the box thinking one would expect from innovative Silicon Valley as well as a collaborative social justice approach to critical problem solving. I came to law school after working with teen moms and adjudicated youth through Planned Parenthood’s community health education program. Inspired by this work I am now branching into criminal law, health law and policy reform. My goal is to make my legal work accessible, engaging, impactful and reliable.

Marijuana Taxation: Can Taxes Help Shape a “Healthy” Marijuana Market?


Alexa Quinn
J.D. Candidate 2016

Can marijuana legalization raise revenue and eliminate the black market? And can marijuana taxes help offset other social harms attributed to marijuana use? My research will try to answer these questions through comparing the different approaches taken by Colorado and Washington in structuring their recreational marijuana markets. I’ll also look at the lessons we learned from taxing and regulating the alcohol and tobacco industries. Legalization forces us to consider a number of issues. My focus is on the benefits and drawbacks of taxation schemes and market structures as they relate to eliminating the black market, normalizing use, and sustaining the recreational market (e.g., price control, revenue, etc.). My goal is to weigh the social tradeoffs inherent to the various ways to tax marijuana and establish what the best options are for California. In the end, I think we’ll find that California can better serve its goals by establishing recreational marijuana taxes and regulatory schemes that simply pay the costs to oversee the legalized system and do not function as a “get rich quick” plan for the state.

About the Author:

Alexa Quinn is a lifelong resident of the Golden State. Ms. Quinn grew up in sunny southern California and completed her undergraduate degree in the very diverse city of San Francisco. She is a second year law student at Santa Clara University School of Law. She recognizes the immense change marijuana legalization can bring to her home state. California has an opportunity to give its voters a marijuana initiative that is, among other things, sound, fiscally responsible, feasible, and represents the entrepreneurial and innovative style of its residents. It is important to Ms. Quinn that the 2016 California ballot initiative seizes the opportunity to create balanced and informed policy. To see future posts by this author please follow this blog. You can also follow Alexa Quinn on twitter @aquinn_dlp.

California’s Retail and Commercial Future with Legal Marijuana

If California legalizes marijuana in 2016, her citizens will have to decide a number of important questions as to the nature of marijuana sale and consumption within her borders. To address this, my writing will focus on questions regarding the potential future existence and regulation of retail point of sale cannabis consumption. Will marijuana be sold exclusively in the classic “dispensary,” with actual consumption of the marijuana allowed only within the privacy of the home, or will there be commercial establishments where cannabis can be bought and consumed socially on premises, similar to a bar serving cigars or alcohol? I will explore contemporary examples of point of sale consumption in Colorado and Washington, and how the interplay between local zoning laws and state and municipal smoking bans could affect the existence of similar businesses in California. All told, I intend my writing to illuminate the difficult choices Californians will need to make about their state’s future societal and commercial relationship with legal marijuana.

My name is Philip Brody, and I’m a current 3L at Santa Clara University School of Law. More importantly, I’m a native Californian who loves and cares about the future of my state. We Californians will have a number of very important electoral decisions to make in 2016, with marijuana legalization being among them. Through the Drug Law and Policy Project, I hope to provide a practical envisioning of what forms a future California could take with safe, legal marijuana.