Your Week in Cannabis, Big Industry Developments
New Year, New Cannabis Business Rules
The United States has legalized cannabis this year. There are a few updates that could open up new opportunities.
Delivery vehicles in California will be able to carry up to $10,000 of cannabis, up from the current $5,000. The inventory can be unordered and not set aside for a specific customer. Current California regulations state that no more than $3,000 of a total allowable $5,000 of inventory can be unordered. Chris Violas is the chief executive of BLAZE, a company that provides software for the cannabis retail industry.
Delivery of cannabis.
Carrying inventory that isn't spoken for is called the "ice-cream truck model". Delivery vehicles aren't branded as rolling weed stores because the driver carries cash and cannabis which could be attractive to thieves. If a customer is interested in buying from the inventory the retailer has, it would be possible for them to be notified that the vehicle is in their neighborhood. Delivery trucks returning to base between deliveries can result in more sales for the retailer.
Since Las Vegas tourists can buy cannabis, there have been few places to smoke it. Soon, that will change with the introduction of the state's newly licensed consumption lounges. Twenty recipients were granted licenses by the Nevada Cannabis Compliance Board, which allowed them to build new facilities and sell products from other cannabis companies. Social equity applicants got half of the licenses. Existing retail operators that wanted to add a consumption space were given an additional set of licenses.
Hudson Valley Cannabis News Updates
Fourteen municipalities are leaning-in. There is a Leaning- Out. Opted-in was 37. It was Opted-Out. It's not determined: 58. There are upcoming meetings.
In accordance with the Marijuana Regulation and Taxation Act, towns, villages, and cities have until the end of the year to decide if marijuana cafes and dispensaries can locate in their communities. Villages within towns are able to make their own decisions. When a town opts out, it only affects the unincorporated areas of those towns.
Even though the Town of Ramapo has yet to make a decision, the Village of Suffern decided to leave on October 3, 2011. As the year winds down, there will be a lot of new laws passed for those opting out.
The opt-back-in vote may not have much meaning if the state restricts the number of licenses issued.
The first national cannabis expungement month has finished. Goodness Growth held its first-ever national cannabis expungement month on October 6th. In September, Goodness Growth hosted expungement clinics in Minnesota, Maryland and New York and helped more than 100 people get their cannabis charges expunged from their records.
A virtual expungement clinic was hosted by Goodness Growth in New York. The clinic offered resources for people who have experienced trauma related to their arrest and conviction. Interested persons can take an expungement pre-qualification survey or access information and resources by visiting www.wocworldwide.com.
New York has a Cannabis Control Board. The public was given the chance to listen in.
Allowing dispensaries to sell flower marijuana products to qualified patients is one of the changes to the medical cannabis program. Although home cultivation for patients is not allowed, the body is very committed to drafting these regulations and issuing them for public comments and expects it to be an agenda item in the upcoming board meetings.
Patients and caregivers will no longer have to pay a $50 registration fee to access flower cannabis products at the existing dispensaries.
The New York Civil Liberties Union's chief equity officer was also signed off on by the board.
How will interstate commerce affect the marijuana industry?
Marijuana can't be imported from or exported to another state if it's produced in one state. Each state has laws limiting the movement of marijuana to within the state. Marijuana is a Schedule 1 controlled substance.
Looking forward to the federal legalization of marijuana, or at least a provision allowing for interstate transactions, sends chills up the spine of local growers, processors, distributors, and investors.
State laws that restrict interstate commerce are not allowed under the Commerce Clause. State laws prohibiting the import and export of marijuana are likely to be unconstitutional if challenged.
States have an interest in protecting their home-grown farmers until that happens.
States with established supply chains would have a cost and logistical advantage over states that have recently legalized recreational use. The established states have an oversupply of products. Local efforts to establish local supply networks would be hampered by the fact that marijuana is grown out west. Climate control costs are added to facilities in northern states as most year-round growing will take place in indoor greenhouses.
Interstate commerce is bad for small farmers and social equity businesses. California and Oregon would be helped by it. It's a disaster for newly legalized states to play catch up with established supply chain infrastructure. Allan Gandelman is the president of the New York Cannabis Growers and Processors Association.
In those two states, people are selling their cannabis at a low cost of production, which drives the market prices to the lowest levels. The only people who will survive in that system are the large corporations that can scale up and have the financial resources to take a loss for a few years.
The interstate movement of marijuana is likely to happen. New states need to speed up the development of their local industries to fight off competition from established states and eventually import from Mexico and Columbia, where costs are cheaper.
There are agreements among neighboring states that could allow interstate commerce before federal legalization. Even with federal legalization, retail would probably remain local through licensed shops, similar to licensed liquor stores, and Congress would likely ban shipping marijuana products through the mail.
A wave of investment, consolidation and competition, all of which could dramatically change how New York businesses and state government approach the development and acceleration of a New York-based marijuana market, could be brought about by federal descheduling.
A cannabis financial news site has been acquired by a communications company.
The Green Market Report has a monthly average of 150,000 page views. The New York-based digital media outlet focuses on topics such as cannabis legislation.
KC Crain, president and CEO of Crain Communications, said in a news release that they are excited to add Green Market Report to their 21 brand portfolio. The financial, business and economic side of the cannabis industry is what they focus on.
The sale/leaseback deal was closed in New York. According to Goodness Growth, it sold 92.3 acres of land for over a million dollars. Goodness Growth's existing cannabis cultivation and processing facility is located next to the site of a juvenile detention center. A new 324,000-square-foot cannabis cultivation, processing, and research and development facility will be built using a tenant improvement reimbursement from Iip.
The U.S. House has passed banking legislation before.
The National Defense Authorization Act was amended by the US House of Representatives.
The SAFE Banking amendment would allow financial institutions to do business with cannabis companies and prohibit the government from ending a financial institution's deposit or share insurance solely because of their cannabis clientele.
Only a few financial institutions are willing to provide banking services to cannabis companies. Many smaller and diversity-owned entities are foreclosed by the high fees charged by institutions that are willing to take the risk. Reduced access, high barriers to entry, and an unwarranted dependence on cash transactions have hampered the economic development of the cannabis industry. A major security concern to the cannabis industry and to municipal governments that host cannabis businesses is limited banking.
The Senate is currently working on its own version of the legislation. The IRS provides resources to help cannabis business owners navigate their tax responsibilities. The IRS focuses on the tax implications for the rapidly growing cannabis industry in its most recent issue. Section 280E of the tax code applies to businesses in states that have legalized the sale of marijuana.
Thirty-six states and the District of Columbia have legalized marijuana for recreational or medical purposes. California, Washington and Colorado provide tax guidance for businesses and we encourage industry members to be compliant with state taxes as well. The IRS expects unlicensed and licensed marijuana businesses to continue to grow despite the fact that 14 states still ban cannabis use.
Marijuana is still considered a Schedule 1 controlled substance by the federal government, so there is a caveat to the fact that all deductions and credits aren't allowed for an illegal business. Advertising expenses, wages and salaries, and travel expenses are not deductible.
The IRS has some helpful tips for cannabis/mari marijuana business owners.
You know your investors.
There are thousands of people trying to get into the industry, but there are some pitfalls that business owners need to be aware of to make sure their investors don't cause more harm than good. Financing and ownership arrangements within the industry have been created because of the social stigma and federal designation as illegal substances. A beneficial owner enjoys the benefits of ownership, but the title or activity of the property is different. This can make it difficult for a business to file a tax return or accurately report gross receipts. The potential for these arrangements is explored by IRS examiners.
Cannabis/marijuana business owners should be aware of investors who will try to put money into new businesses that could cause them to lose their entire business. If one of these silent investors gives initial money, say $5,000 or $10,000, and it grows to where they can claim ownership, these businesses can become complicit in laundered money for drug traffickers.
Make sure you are licensed.
You need to be licensed for your location. Marijuana businesses are regulated by state and municipal regulatory agencies.
Paying your taxes on time is important.
Even if you use cash, you still have to file and pay your taxes on time.
Income derived from legal sources and income derived from illegal sources is not different. You have to report it on your tax return. Section 280E of the tax code applies to businesses that sell marijuana in states that have legalized it.
Section 280E doesn't prohibit participants in the marijuana industry from reducing their gross receipts by calculating the cost of goods sold to determine their gross income. A marijuana dispensary can't deduct advertising or selling expenses, but it can deduct its cost of goods sold.
Cannabis businesses don't have an exemption from their employment tax obligations, and they often need to make quarterly tax payments. Business owners need to pay their taxes on time.
There are taxpayers in segments of the industry who don't file tax returns. The owners of businesses should be aware of IRS priorities.
The use of Cryptocurrencies in the cannabis industry is a priority. The IRS considers it property and there are gains that are taxed.
Cash transactions should be reported.
Marijuana is listed as a U.S. Schedule 1 drug and many businesses don't accept cash for transactions.
Good records to keep.
All records that support an item of income, a deduction or a credit should be kept regardless of whether they are tracked electronically or hard copy. It is important for a cannabis business to maintain records for all expenses, even those that are not deductible at the federal level, because good, well-organized records make it easier to prepare a tax return, track expenses, and help provide answers if necessary.
The final members of New York's cannabis oversight panel have been appointed.
Governor Kathy Hochul appointed two people to New York's cannabis market oversight and regulatory panel on Tuesday.
The president of the Dormitory Authority of New York State and the assistant to the president of the Retail, Wholesale Department Store Union were appointed.
The Office of Cannabis Management will be set up by Hochul so they can hit the ground running.
Hochul named a former Assemblywoman from Brooklyn as the chairwoman of the board and a former Drug Policy Alliance official as the executive director.
The panel is in charge of setting regulations for the state's cannabis industry, including the sale of commercial retail products. The board was created as part of the broader legalization package approved last spring. The board will have the power of revocation in the industry.
Some towns opt out of the economic benefits of the cannabis economy.
A major cannabis facility may be coming to the area.
A major cannabis growing, processing, packaging and distribution facility is planned for the Ellenville area.
The site of the former Schrade knife company in Ellenville has been eyed by Cresco Labs.
The facility will employ hundreds of people. The facility is expected to be at least 360,000 square feet and will include a new building for cultivation, as well as space for processing, packaging, distribution, and offices.
There are over 400 farms and over 60,000 acres of farmland in the county.
New York State towns have until the end of the year to decide if they want to allow marijuana shops. The towns have decided to join.
It's unlikely that Poughkeepsie will opt out of cannabis sales.
In the city limits, there is support for allowing dispensary and on-site marijuana use.
In the Hudson Valley, the towns of Rhinebeck,Phillipstown, Middletown, Crawford, the Village of Chester, and the Village of Cold Spring have all decided not to join.
There are cannabis flowers in the area.
The Mid- Hudson Correctional Facility in Orange County will be re-purposed as a center for medical/recreational cannabis cultivation and production. The 150-acre campus was sold as a surplus state property.
The first cannabis growing facility in New York will be located on the former prison grounds. GTI has operations in 15 states.
The first phase of GTI's build out is worth $60 million. 150 to 200 jobs with benefits will be created by GTI, many of which are in the six-figure range, when the next two phases are completed. The project is expected to be up and running by the year 2020.
The town of Orangetown doesn't allow recreational marijuana lounges or retail marijuana stores.
The Town of Orangetown opted out of marijuana lounges and retail stores in the unincorporated areas on June 22, 2021. The Villages of Piermont and NYack are unaffected by the decision to opt out. The Town of Orangetown asked the Cannabis Control Board to prohibit the licensing and establishment of dispensary and consumption sites in the unincorporated areas of the town.
The town of Stony Point doesn't allow recreational marijuana lounges or retail marijuana stores.
The Town of Stony Point decided not to sell marijuana at retail stores. The decision was unanimous but there was a caveat that the town might reconsider after the cannabis control board is formed.
The entire town is affected by the decision to opt out.
The Medgar Evers College, part of the City University of New York, is offering a cannabis minor degree program to help students enter the legal marijuana business.
Prerequisite courses for many of the other cannabis courses can now be taken by students in this degree program. Four courses from any of the 13 newly developed courses can be used to earn a cannabis degree minor in one of four different tracks. The courses give educational opportunities to all CUNY students via e- permits. The skill-building instructional support needed to foster new cannabis leaders in the areas of testing, cultivation, business, and health will be included in the cannabis minor and upcoming adult education program. More...
Marijuana lounges and retail marijuana stores are not welcome in Westchester communities.
Several Westchester communities have decided not to allow cannabis lounges and dispensary within their borders. Bronxville, Kisco, North Salem and Lewisboro are all within the same area.
The Village of Mamaroneck and the town of Dobbs Ferry are considering opting out.
The Town of Mamaroneck and the City of Rye will hold public meetings in September of 2021.
25% of each community will have to sign a petition requesting a referendum in order to hold a public referendum. The governing body can be reversed by a simple majority. If a public referendum is required, supporters of opting out should wait and vote on the issue.
Keywords: cannabis,Marijuana,York,York State towns
Source: rcbizjournal.com