Los Angeles hiring cannabis social equity program manager

The Department of Cannabis Regulation (DCR) in the city of Los Angeles is looking for someone to run its social equity program.

The project is part of a handful of efforts in California intended to get minorities and those negatively affected by the war on drugs involved directly in the state’s legal marijuana industry.

According to an online job posting, the position pays $95,776 to $140,021, requires a master’s degree and at least three years of experience with either economic and community development or providing services to low-income, minority or underserved communities.

The L.A. social equity program has been a point of contention for many in the city’s struggling legal cannabis market and has not yet been fully rolled out.

Other California cities that have social equity programs include Oakland, Sacramento and San Francisco.

California state marijuana excise tax could go up July 1

California state marijuana excise tax could go up July 1

Although the California marijuana industry has hoped for tax relief as it struggles to compete with a thriving illicit market, a tax increase could be on the way.

A tax hike would hit cannabis companies’ bottom line and could drive more consumers into the illicit market in search of cheaper marijuana products.

But an increase isn’t a foregone conclusion. Moreover, a tax cut could occur.

The California Department of Tax and Fee Administration (CDTFA) uses a 60% markup rate, along with the average market price of wholesale marijuana, as a basis for the state’s 15% marijuana excise tax.

That markup rate has to be recalculated every six months, and CDTFA Director Nicolas Maduros told an industry conference this week in Sacramento the excise tax may go up this summer.

“We’re responsible for resetting that markup rate every six months, so it will be reset July 1,” Maduros said, when asked during a panel with other MJ regulators.

“It’s based on market data, and I think particularly once …track-and-traceis more fully utilized, that we’ll have some better pricing data to figure out what that markup rate should be,” Maduros said.

The state track-and-trace system launched in January but is only used by cannabis companies with annual business licenses.

And so far just a fraction of the legal companies have obtained those permits, which means most of the industry isn’t feeding data into the track-and-trace system.

“We’re administrators, so it’s not up to us to sort of use that as a way to lower or increase the tax burden. We’re simply looking at what the facts are. It’s up to the legislature … to determine what the actual tax rate is,” he said.

When asked if the markup rate – and therefore the excise tax – could increase, Maduros said: “It could.”

It’s worth noting, however, that the rate also could either decrease or stay the same.

A CDTFA spokesman said in an email that there’s also no cap on how much the markup rate could increase – or decrease.

What a markup could mean

Maduros said after the panel that any decision on the markup rate and the excise tax will not be made until June at the earliest.

The markup recalculation would not affect the state cultivation tax, which is $9.25 per ounce of flower, $2.75 per ounce of leaves and $1.29 per ounce of fresh plant.

California Cannabis Industry Association Spokesman Josh Drayton said that a tax increase “would only further damage the supply chain as it competes against the illicit market.”

But, Drayton emphasized, it’s possible the excise tax may either stay the same or even decrease, and said it’s too early to tell what will happen with the CDTFA’s recalculation.

“I think we need full implementation of Metrc and track-and-trace before we consider any increase,” Drayton said.

“We have not seen any data that would support an increase in the excise tax for any part of the supply chain.”

Separately, a state bill to temporarily reduce state cannabis taxes is awaiting hearings in the California Legislature.

If successful, Assembly Bill 286 would reduce the excise tax from 15% to 11% and suspend the cultivation tax until 2022.

California only made half as much on 2018 marijuana taxes as expected

When California, the most populous state in America, legalized recreational marijuana last year, many had high hopes for the industry, writes Joseph Misulonas. But unfortunately, it appears initial projections for the success of the industry were a little off.

The California Department of Tax and Fee Administration announced that in 2018 the state collected $345.2 million from marijuana taxes. While that is a huge number, it's actually only slightly more than half of the state's initial projections of $643 million in tax revenue that they predicted they would receive in 2018. 

Many have argued why the state didn't make more money off of legal sales. The biggest reason seems to be the tax rate. California has some of the highest cannabis taxes in the nation, and customers can sometimes pay tax rates up to 45 percent on their marijuana purchases. These high prices are forcing many cannabis users to continue purchasing black market marijuana. This would also explain why California cannabis sales actually decreased between 2017 and 2018, despite it being legal recreationally last year.

Despite the fact that almost everyone acknowledges the tax rate is an issue, California legislators continue dragging their feet on the issue and not passing bills to lower the rate, despite several proposals to do so.

Wall Street Analyst Estimates US Cannabis Market Will Reach $47 Billion

For years, “$20 billion by 2020” was an oft-heard refrain from market analysts who saw a bright and prosperous future for the legal cannabis industry. Now, with that horizon fast-approaching, analysts are setting their sights on what the next decade has in store. And one analyst, RBC Capital Markets’ Nik Modi, is seeing green.

Analyst Says Concentrates and Edibles Could Propel Sales To $47 Billion Annually

RBC Capital Markets, an investment bank that’s part of Royal Bank of Canada, issued a memo to clients outlining the rapid growth of the U.S. marijuana sector. The memo, authored by Nik Modi, shows how cannabis sales in the U.S. are gaining ground on beer and wine sales.

Projecting a compound annual growth rate (CAGR) of 17 percent, Modi estimates that the legal cannabis category could reach $47 billion in sales annually in the United States within the next decade, according to Business Insider.

Yet the cannabis market in the U.S. faces uncertainties that Canada does not. Regulatory environments are constantly and rapidly shifting as states implement legalization and adopt different approaches to dealing with federal prohibition. Investing in the industry still carries risk.

But RBC Capital Markets analyst Nik Modi brushed off concerns about the unpredictability of legal cannabis in the U.S.. Instead, he drew clients’ attention to a shift in consumer trends that is already having a major impact on domestic retail markets.

Data from BDS Analytics, included in Modi’s memo, shows that the margin on cannabis flower has steadily declined since the beginning of recreational sales in Colorado in 2012. That’s indicative of a larger national move away from flower and toward cannabis edibles and concentrates.

In Colorado, flower made up 70 percent of legal sales when shops opened in 2014. By the end of Q4 2017, flower accounted for just 46 percent of total sales. Picking up the slack were edibles and concentrates. Both are surging in popularity everywhere, and Modi thinks those forms of cannabis can propel total sales beyond $47 billion a year by 2027.

Including Illegal Cannabis Sales Drastically Shifts Financial Forecasts

Another eye-catching aspect of Modi’s analysis is another BDS Analytics chart showing the estimated U.S cannabis market size. The chart compares cannabis sales to spirits, wine, cigarettes, and beer. From spirits at $58 billion to beer $117 billion, all four categories best cannabis at $50 billion. But interestingly, the chart includes total legal and illegal cannabis sales to arrive at the $50 billion figure. It’s unclear what proportion of that amount is made up by illegal sales.

Other cannabis market analysts say that illegal sales still account for the majority of total marijuana purchases in the U.S. But as legalization continues to channel consumers into the legal market, illegal sales are slowly declining.

While access to legal cannabis expands nationwide, the size of the illegal market remains difficult to measure. So does predicting how much of it will move aboveboard in the coming years.

RBC Capital Analyst Praises Big Investment in Canadian Cannabis

The letter RBC Capital Markets sent to clients also lauded Constellation Brands’ recent $4 billion investment in one of Canada’s largest medical cannabis producer Canopy Growth Corp. Constellation Brands is the firm behind the popular beverage companies Modelo, Corona and Svedka. The company has been moving incrementally into the Canadian cannabis market, upping its stake each time. Nik Modi says he’d like to see more companies make similar moves in the cannabis space.

Oklahoma Legalizes Medical Marijuana

Marijuana is now legal in Oklahoma for medical purposes.

Voters approved State Question 788 in Tuesday’s primary, which makes it legal to grow, sell and use marijuana for medicinal purposes. The law provides no outlines on qualifying conditions, giving physicians broad latitude to determine why they recommend medical marijuana to patients. Under the law, adults with a medical marijuana license would be authorized to possess up to 8 ounces of marijuana, six flowering plants and various weight of edibles and marijuana concentrates derived from the plant.

“The passage of State Question 788 highlights the strength and diversity of public support for laws allowing the medical use of marijuana,” said Karen O’Keefe, director of state policies for the Marijuana Policy Project, a drug policy reform group. “Most Oklahomans agree that patients should be able to access medical marijuana safely and legally if their doctors recommend it. It is noteworthy that this measure passed in such a red state during a primary election, when voter turnout tends to be older and more conservative than during a general election.”

Oklahoma becomes the 30th state to legalize cannabis for medical use. Legal recreational marijuana has been approved in nine states and Washington, D.C., which continues to ban sales, unlike the state programs. Despite the states’ efforts to scale back on criminalizing the plant over the past few years, marijuana remains illegal under the federal Controlled Substances Act.  

Former President Barack Obama’s Justice Department allowed states to forge their own way on marijuana policy with guidanceurging federal prosecutors to refrain from targeting state-legal marijuana operations. But in January, Attorney General Jeff Sessions rescinded the Obama-era guidance, a move that has possibly paved the way for a federal crackdown on legal marijuana. But states that have legalized medical marijuana retain some protections from federal interference under a budget rider known as the Rohrabacher-Farr amendment, which must be renewed every time Congress passes a government-funding bill.

In order to more fully protect marijuana states from the policies of federal prohibition, Sens. Cory Gardner (R-Colo.) and Elizabeth Warren (D-Mass.) introduced a bill earlier this month that would allow businesses and individuals working in the burgeoning legal marijuana industry in states around the nation to operate without fear of Department of Justice prosecution. The bill would also protect banks that work with state-legal marijuana businesses. President Donald Trump has said he will “probably” support the bill.

Marijuana is the most commonly used illicit substance in the United States, and the trend of states bucking prohibition in favor of legal regulation of the plant reflects a broad cultural shift toward greater acceptance of marijuana. National support for the legalization of the drug has risen dramatically in recent years, reaching historic highsin multiple polls. And states like Colorado, the first to establish a regulated adult-use marijuana marketplace, have seen successes that have debunked some lawmakers’ and law enforcers’ predictions that such policies would reap disaster.

Detroit Proposes Limits on Licensed Marijuana Dispensaries

The City of Detroit may impose limits on the number of licensed marijuana dispensaries it allows. City Councilmember Chris Tate has proposed a new ordinance that caps the number of cannabis dispensaries at 75. The proposal also gives the city authority to regulate businesses involved in cannabis cultivation, manufacturing, testing, and distribution.

The measure also encourages potential owners of cannabis businesses to offer community benefits in their permit applications. Tate told local media that the new ordinance will allow medical marijuana patients and the city at large to coexist.

“Approving this ordinance would finally bring some closure to this issue and chart the path to the future of this industry in the City of Detroit and the State of Michigan,” Tate said. “The goal has always been to ensure that we have an industry that is respectful of the neighborhoods, the communities it is located in, but also considerate to individuals seeking safe access to alternative medication. This ordinance balances those two needs with the preservation of neighborhoods being the top priority.”

Amir Makled is an attorney who represents medical marijuana dispensaries in Detroit. He believes that city officials should not establish arbitrary limits that can hinder the growth of the cannabis economy.

The ordinance goes against “the will of the voters,” Makled said. “I understand the city has an interest in curtailing the amount of dispensaries they have or medical marijuana facilities. But I think they should have allowed the market to determine what was a reasonable amount of facilities to have.”

Can Cannabis be the Economic Boost Detroit Needs?

Makled also said that cannabis is a chance to revitalize Detroit’s depressed economy. But for that to happen, city officials must embrace the new opportunity.

“If Detroit is going to make a comeback and have new industries come into the city, they should welcome this industry,” Makled said. “It can create a tax base and a whole new hub for the industry, so I’m surprised they’re curtailing that growth.”

The new ordinance would also clarify “drug-free zones” and zoning and distance requirements for cannabis businesses. Earlier this year, Chief Judge Robert Colombo Jr. of the Wade County Circuit Court partially overturned Proposal A — which was approved by voters in November 2017, and would have allowed dispensaries within 500 feet of each other. It also allowed dispensaries to locate near liquor stores, child care centers, and other so-called sensitive use establishments.

Judge Colombo also entirely struck down Proposal B, which voters also passed last year. That law established zoning regulations for pot businesses and permitted dispensaries and processors in all business and industrial districts.

Detroit Corporation Counsel Lawrence Garcia said Tate’s proposal will guide the growth of the cannabis industry.

“Detroit’s new, proposed ordinance will…resolve some of the confusion created by some of the misguided zoning restrictions that were originally part of the ballot initiative,” Garcia said in a statement. “In short, the new ordinance, if passed, will clarify Detroit’s common-sense regulation on medical marijuana activity and will allow for all five of the legal uses contemplated by state statute.”

Marijuana Sales: Strong in Nevada, Disappointing in California

© ThinkstockLegal sales of marijuana for recreational use began last July in Nevada and in January in California. Although California sells a lot more legal weed than Nevada, California sales are much lower than projected while Nevada's are much higher.

First the good news. From July 2017 through March 2018 (the first nine months of Nevada's fiscal year), combined taxable sales of marijuana totaled $386 million, of which nearly $305 million represents sales for recreational use. Sales in March posted a record total of just over $41 million. Through March, the state has collected almost $49 million in taxes, about 97% of its estimated full-year take of $50.32 million.

The less-good news about recreational pot sales comes from California, where the latest projections based on sales to date estimate sales will be about half the original estimates.

According cannabis industry analyst firm New Frontier Data, sales in California this year will total $1.9 billion, exactly half the original estimate of $3.8 billion. Giadha Aguirre De Carcer, CEO of New Frontier, told the Los Angeles Times that strict rules on growers, distributors, and retailers combined with low governmental authorization in California cities are to blame.

Only about 30% of California's 540 cities have have so far permitted commercial cannabis activity. The effect has been to send consumers to the black market where they pay no taxes and illegal sellers easily undercut legal prices.

In February the Los Angeles Police Department shut down 8 illegal pot stores but the deputy chief told the Los Angeles times that another 200 to 300 illegal stores were still operating in the city.

Marijuana tax collections in California totaled $33.6 million in the first quarter of 2018, virtually guaranteeing that the state would not reach its estimated 6-month total of $175 million in tax collections.

California's estimated legal and illegal marijuana market totals around $7.8 billion. About $2.3 billion comes from sales of medical marijuana. If the legal market is only taking about $1.9 billion of the total, the rest ($3.6 billion) is going to the illegal market.

And that illegal market is only for sales inside the state. California also exports (illegally, of course) tons of marijuana. State residents consumed about 2.5 million pounds of marijuana (most of it illegally) in 2016 and produced about 13.5 million pounds. Those 11 million pounds are sold, illegally, to out-of-state buyers.

Marijuana's margin, like alcohol, is going to be captured in the end product, investor says

• When looking to the future of cannabis, Navy Capital founder Sean Stiefel says the marijuana industry will look a lot more like the alcohol industry, than big tobacco.
• Insofar as the alcohol industry has distinctive branding, different product lines and end product-based margins, the marijuana industry could be quite similar.
• In the short-term, Steifel anticipates Canada's impending nationwide legalization will drive marijuana prices way up.

There's going to be a massive undersupply of pot: Marijuana investor  5 Hours Ago | 04:23

Navy Capital founder Sean Stiefel says for the burgeoning marijuana industry, the profit isn't in the plant — it's in the end product.

"We're talking about vapes, oils, edibles, topicals, sprays -- all of that stuff is coming, and as science catches up to marijuana, you'll see more and more of those end products," Stiefel said on CNBC's "Closing Bell."

Stiefel founded New York-based investment firm Navy Capital in 2014. In 2017, the firm launched Navy Capital Green Fund, which invests in public equities in the global legal cannabis industry.

In Denver, where recreational marijuana has been legal since 2014, Stiefel said sales of the cannabis plant don't dominate the market, so much as products derived from the plant. And that's where the big money is.

"Look on the other side of it, the cosmetics and some of the more luxury items -- you can't keep them on the shelves," he said.

As for the future of the burgeoning industry, Stiefel thinks marijuana will look a lot more like the alcohol industry than big tobacco, but will likely share traits with both.

Insofar as the alcohol industry has distinctive branding, different product lines and product-based margins, the marijuana industry could be quite similar. And while Steifel does not consider cannabis purely a commodity, like tobacco, he does hope the cost of the actual plant will decline considerably.

"We actually would like for the price of raw marijuana to come down, because we are believers that the margin, like alcohol, is going to be captured in the end product," Steifel said. "You don't necessarily know the price of grain or potatoes going in the vodka or beer, but you know the price of the beer, and there's tremendous margins to be captured when you make products for the end user."

In the short-term, however, Steifel anticipates Canada's impending nationwide legalization will drive marijuana prices way up.