11/2/18

As California Goes, So Goes the Nation

Southern California recently hosted the Cannabis Business conference jointly presented by the California Cannabis Industry Association (CCIA) and the National Cannabis Industry Association (NCIA).  Over the course of the two-day event, there were over 70 speakers discussing various topics including policy, licensing, finance, and entrepreneurial opportunities.  We have been closely monitoring the status of cannabis legislation and regulation and while there were many other presentations that could be outlined, we chose to focus on those related to these issues. We feel that most cannabis entrepreneurs and entities are primarily interested in laws and regulations as they will have the most immediate impact on their operations.  While it won’t happen overnight, momentum is gaining at the state and federal level to embrace the cannabis industry in its many forms.  It only seems fitting that the largest cannabis market in the nation is leading the way in establishing replicable legislation for the rest of the country.

On January 1^st, 2018, California achieved a legislative milestone by legalizing recreational cannabis use.  It took decades of work from lawmakers and lobbyists alike, but its impact will be felt for years to come.  As the industry continues to evolve, updated legislation and regulation will need to run parallel.  To this end, CA introduced 60 cannabis related bills in 2017, 54 so far in 2018, and is anticipating 70 for 2019.  A fundamental law of American politics states that when this amount of legislation is being drafted and voted upon, there is sure to be no shortage of lobbyists on hand to guide the pens.  Those who advocate for the success of the cannabis industry should know that the CCIA is one of the leaders in this field, and they are dedicated to assisting lawmakers in this process.  The CCIA believes in industry regulation, however, they steadfastly oppose any cannabis company being regulated out of business.  They feel that there must be an opportunity for the small business sector to operate profitably. 

At the moment, CA cannabis regulations are still on a “temporary emergency” basis due to the infancy of the industry.  However, the CCIA is cautiously optimistic that permanent regulations will be in force by the end of 2018.  Their current legislative focus includes:

• Lower Taxes
• Compassionate Care Programs
• Municipal Acceptance of Cannabis Businesses
  • Currently, 1/3 of CA Municipalities Allow Cannabis Companies
• Legalization of Hemp
• Development of a Banking Sector

To achieve these goals, the CCIA has established committees in various fields.  Most notably, they include insurance and banking which are leading the discussion boards among cannabis companies.  While there are currently various options available, the general consensus is that in order to truly unleash the cannabis market, the federal government will need to take action.

A Federal Perspective

As a testament to how far the cannabis industry has come, the CA Cannabis Business Conference featured two U.S. Congressmen from both sides of the aisle advocating on its behalf.  This display of support from the federal level is a clear sign that the winds of change have begun to blow.  Congressman Lou Correa (D) of California sat alongside Congressman Dana Rohrabacher (R) of California to discuss their views on the cannabis industry and the federal government’s role in its regulation.

This display of support from the federal level is a clear sign that the winds of change have begun to blow.

Congressman Rohrabacher’s stance on the issue was refreshing to say the least.  Historically, the Republican party has shown much more resistance to the idea of legalizing cannabis.  As a stereotypical conservative, his views seemed much more interesting due to their anecdotal nature.  Surprising as it may be, the basis for his support of the federal legalization of cannabis is summarized as follows:

• Freedom:  Congressman Rohrabacher believes that cannabis being illegal is a violation of the 10^th amendment.  He feels that cannabis legalization is an issue to be decided by the states, and the current federal law is an example of government being too big.
• Suffering: There are currently many individuals that can benefit from having access to cannabis.  From the elderly to our Veterans, he feels that denying them cannabis products as a means to ease their suffering is unethical.
• Opiate Crisis: Contrary to some of his peers, he believes that cannabis is a gateway OUT of opiate use, not the other way around.  He prefers the pain reducing benefits of cannabis in lieu of opiate based pain killers.
• Votes: He is a politician after all.  The fact that more Americans support the legalization of cannabis than ever before means there is a voter base to be gained.
• Class Adjudication: No crime has a larger disparity in result related to class than that of cannabis possession.  The fact is, wealthier Americans have the resources to quickly navigate the legal system to avoid serious and permanent judgement.  The poor do not have these resources and are ultimately saddled with more severe legal repercussions.

Congressman Rohrabacher has personally discussed these issues with President Trump on several occasions.  The President has assured him that he agrees with his stance on the 10^th amendment and believes this should be an issue decided by the states.  He was quoted saying, “love Trump or hate him, so far he has kept that promise.”  It seems that regardless of the upcoming elections, there are big changes coming in Washington.  There will be new republican leadership representing younger constituents.  This new guard of republicans will be much more agreeable to change and is sure to support the bill that Congressman Rohrabacher is authoring intended to ensure the federal government respects state law.

A strong advocate for the cannabis industry, Congressman Lou Correa’s comments were interesting but far more in line with what you would expect from a CA democrat.  He continues to advocate cities to open their doors to cannabis companies, much like he accomplished in Santa Ana.  His most poignant comments were that “cannabis is a science and facts issue, not a political issue”.  Up to this point, research has been stifled due to federal restrictions.  This has led to a lack of scientific consensus regarding the benefits, effectiveness, and dangers of cannabis.

Overall, the address was extremely encouraging.  If for no other reason, there was a moment in time in which republicans and democrats were not having a debate that required there be a loser.  Perhaps, in an overwhelmingly ironic moment, it will be cannabis that allows our politicians to come together.

Perhaps, in an overwhelmingly ironic moment, it will be cannabis that allows our politicians to come together.