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Pot entrepreneurs flocking to the Bible Belt for low taxes

Pot entrepreneurs flocking to the Bible Belt for low taxes

oklahoma cannabis industry news

Jessica Baker takes a cutting of a plant at the Baker’s marijuana nursery at Baker Medical, Wednesday, Feb. 26, 2020, in Oklahoma City. When voters in conservative Oklahoma approved medical marijuana in 2018, many thought the rollout would be ploddingly slow and burdened with bureaucracy. Instead, business is booming so much cannabis industry workers and entrepreneurs are moving to Oklahoma from states with more well-established pot cultures, like California, Colorado and Oregon. (AP Photo/Sue Ogrocki)

OKLAHOMA CITY — From their keen taste for sun-ripened pot to their first meeting at a pro-marijuana rally in college in the 1990s, everything about Chip and Jessica Baker fits the stereotype of cannabis country in Northern California, where they lived for 20 years.

Jessica, with wavy hair that falls halfway down her back, is a practicing herbalist, acupuncturist and aromatherapist who teaches classes on the health benefits of cannabis. Scruffy-bearded Chip wears a jacket with a prominent “grower” patch and hosts a marijuana podcast called “The Real Dirt.” They started their pot business in rugged Humboldt County when it was the thriving epicenter of marijuana cultivation.

But the couple bid goodbye to the weed-friendly West and moved somewhere that might seem like the last place they would end up — Oklahoma.

They’re part of a green rush into the Bible Belt that no one anticipated when Oklahoma voters approved medical marijuana less than two years ago. Since then, a combination of factors — including a remarkably open-ended law and a red state’s aversion to government regulation — have created such ideal conditions for the cannabis industry that entrepreneurs are pouring in from states where legal weed has been established for years.

Though 11 states have fully legalized marijuana for recreational use, Oklahoma’s medical law is the closest thing to it: Anyone with any ailment, real or imagined, who can get a doctor’s approval can get a license to buy. It’s not hard to do. Already, nearly 6% of the state’s 4 million residents have obtained their prescription cards. And people who want to sell pot can do it as easily as opening a taco stand.

“Oklahoma is really allowing for normal people to get into the cannabis industry, as opposed to other places where you need $20 million up front,” said Jessica Baker.

The Bakers have a marijuana farm about 40 miles (65 kilometers) from Oklahoma City, along with a dispensary, nursery and gardening shop in a working-class part of town where virtually every vacant shop and building has been snapped up by weed entrepreneurs in the last year.

When he leased his place, which had been vacant for 10 years, Chip Baker said, “to celebrate, the owner went to Hawaii for a month.”

Unlike other states, Oklahoma did not limit the number of business licenses for dispensaries, growers or processors.

In less than two years, Oklahoma has more than 2,300 pot stores, or the second most per capita in the U.S. behind only Oregon, which has had recreational marijuana sales for five years. Oklahoma has four times more retail outlets than more populous Colorado, which pioneered full legalization.

“Some of these states are regulating cannabis like plutonium,” said Morgan Fox, a spokesman for the National Cannabis Industry Association, the national trade group for marijuana businesses. “And the financial burdens that are placed on licensed businesses are so onerous, that not only is it very difficult to stay in business, but it’s also very difficult for the legal, state-regulated systems to compete with the illicit market.”

Marijuana taxes approach 50% in some California communities and are a factor in some business closings.

California requires a $1,000 application fee, a $5,000 surety bond and an annual license fee ranging from $2,500 to $96,000, depending on a dispensary’s projected revenue, along with a lengthy application process. Licenses can cost $300,000 annually.

In Oklahoma, a dispensary license costs $2,500, can be filled out online and is approved within two weeks.

Arkansas, next door to Oklahoma, also has medical marijuana, but like most such states, it allows purchase only for treatment of certain diseases, such as glaucoma or post-traumatic stress disorder. It also requires a $100,000 surety bond. Louisiana, which also tightly restricts prescriptions, has only nine licensed dispensaries.

Ford Austin and his sister opened the APCO Medical Marijuana Dispensary in a gentrifying part of Oklahoma City after he gave up on plans for a California weed store. “There’s way more opportunity here,” he said.

Sarah Lee Gossett Parrish, an Oklahoma attorney specializing in cannabis law, said about 15% of her cannabis clients are coming from out of state.

“I frequently receive calls from people in the cannabis industry in California,” Gossett Parrish said.

People in some rural towns are worried about the Wild West atmosphere of the boom, particularly where shops with funny weed-pun names, waving banners and blinking signs have opened near schools and churches.

A Republican state legislator, Jim Olsen, has proposed a bill banning dispensaries within 1000 feet (305 meters) of a church. “While I recognize that some people do find pain relief from medical marijuana, with children we really don’t want them to think that when they reach problems in life, that marijuana is a good answer to that.”

But Republican Gov. Kevin Stitt and the GOP-controlled Legislature have shown no interest in reining in the industry since the ballot measure authorizing it passed overwhelmingly. The industry has mostly fought off local attempts at zoning.

Many communities are welcoming cannabis shops because of the sales tax revenue. In college-town Norman and in Oklahoma City, at least a half dozen businesses have joined the chambers of commerce.

“In our community, I think most businesses view them as equals,” said Scott Martin, president of the Norman Chamber of Commerce. “We’ve even had a handful of ribbon cutting ceremonies.”

Marijuana sales generated $54 million in tax revenue last year, accounted for the sharpest ever annual decline in empty mid-sized industrial properties in Oklahoma City, and booked up electricians around Tulsa outfitting new grow rooms with lights and temperature controls.

Even some longtime opponents of marijuana legalization have softened their tone.

Sheriff Chris West in Canadian County, one of many law enforcement officers who decried the 2018 legalization ballot measure, says a number of farmers he knows have decided to switch crops.

“I’ve had them call me and tell me, ‘Sheriff, we’re going to venture into this business and we’d like for you to come out and see our facility, because we want you to know what we’re doing.’ And these are longtime, good, godly, Christian families that see it as an income opportunity.”

Is Cannabis Flower Falling Behind?

Is Cannabis Flower Falling Behind?

Until recently, most people who tried cannabis for the first time, tried it by smoking flower.

The times are changing, and the demographic of people trying cannabis for the first time is changing too. The tradition of a couple buddies in the woods smoking out of an apple is slowly being replaced by 75 year old grandmas going to the dispensary for a vape pen.

Ok, maybe that’s an exaggeration. But not by much.

As popular as extracts are becoming, are they really putting cannabis flower at risk of falling off in popularity? The short answer is that it already has.

The rise of concentrates

Cannabis concentrates didn’t become popular until 2014, when legal cannabis really started to kick off in Colorado. The most common types were shatter and wax, both of which are processed using Butane as a solvent.

At first, a lot of consumers avoided concentrates not just for their increased potency, but also because of the process used to make them. In the early days of cannabis extraction, there were dozens of accidents involving lab fires, explosions, and un-purged concentrates that would catch on fire when dabbed.

Due to the unreliability of extractors at the time, unfamiliarity with the product and process, and the high cost compared to cannabis flower, cannabis concentrate sales hardly surpassed 10% of total cannabis sales in 2014.

Just in the last 5 years however cannabis concentrates have developed exponentially. Cleaner, tastier concentrates like distillate, live resin and rosin grew in popularity. With the rise in e-cigarette users across the country, cannabis vape pens started becoming more popular as well.

As more concentrate brands entered the market, prices dropped, making concentrates more affordable for the average consumer. A gram that would cost $50 in 2014 was only $20 in 2018.

And just like that, cannabis concentrates took up 27% of total cannabis product sales in 2018. And that number is steadily rising.

Convenience and cost

The biggest bump to concentrate sales over the last two years has been due to vape pens. With more legal cannabis available across the country, more people began looking for a quick and easy way to use cannabis that doesn’t involve rolling a joint or packing a bowl.

Vape pens made it simple for anybody to get a quick, discreet puff of cannabis oil and receive the same effect as smoking a joint, more or less.

The rise in older cannabis consumers taking advantage of the medical and recreational cannabis and the desire for a more versatile and discreet consumption mechanism led to vape pens filling the void.

Even though vape pens are traditionally more expensive than cannabis flower, the concentrated doses make the product last much longer for casual consumers, making them much more cost effective.

But the vape pen industry took a major hit in 2019 when the country was hit by the “vape crisis”.

A serious issue

If there’s a cannabis product that is seeing success in the legal industry, it’s a guarantee there is someone replicating it in the illicit market. And in any market, there will be bad actors who care more about profits than the customer.

These snake-oil salesmen cut their vape pen cartridges with a liquid form of Vitamin E. When heated up, Vitamin E turned into Vitamin E Acetate, a toxic gas that would reconvert to a viscous solid in consumer’s lungs.

If that sounds bad, it was.

A total of 64 people died due to the illness caused by these faulty products, with another 2,758 hospitalized.

Suffice to say, the vape pen industry took a major hit during this time as many consumers questioned whether or not their vape pens were safe. But like most health scares that spread across the media like a wildfire, this “crisis” faded away in a matter of months, and vape pens have steadily risen back to where they were, with no signs of stopping.

The future of cannabis flower and concentrates

Consumer spending on cannabis concentrates rose 49% in 2018, pulling in $2.9 Billion. By 2022, spending is expected to reach $8.4 Billion. Cannabis flower sales still made up 43% of sales, but vape pens alone made up 23%, and cannabis concentrates other than vape pens made up only 9%.

Vape pens have become the main form of consumption method for cannabis concentrates, but cannabis flower still sits at the top as the most affordable, and frankly easier option for consumers.

As easy to use as vape pens are, they aren’t for everybody. Staying on top of charging, making sure you’re cartridge doesn’t get clogged, these are things that some people just don’t want to deal with.

Grinding up a little bit of bud in your fingers and tossing it in a bowl will work every time, as long as you have a lighter.

I like to say that cannabis flower is King (or more accurately, Queen). It doesn’t matter what new creative products come out, the majority of those who consume cannabis will always have the nostalgic enjoyment you can only get from cannabis flower.

That flashback to the first time, the funniest place you had to smoke, and all those great memories.

Sure, we’ll have some of those memories with concentrates and all the crazy places you can easily sneak in a vape pen, but it just won’t be the same. At least for me.

Virginia Marijuana Laws Might Be Changing

Virginia Marijuana Laws Might Be Changing

When you think of cannabis friendly, Virginia definitely isn’t one of the states that comes to mind. But that could be changing.

The state House on Monday passed HB 972, a decriminalization bill, with bipartisan support. Delegates voted 64-34 for the measure, with a number of Republicans joining Democrats in favor. The state Senate is expected to pass its own version shortly.

If passed, the legislation would scrap criminal charges for possessing marijuana and replace them with small fines. Supporters have argued the measure is needed in part because African Americans are disproportionately charged with drug crimes.

Virginia Marijuana Laws

Virginia marijuana laws have always been strict, with the most minor offense having the potential of jail time for possession of a half ounce. Right now, a person who is found with half an ounce of the drug can be jailed for up to 30 days and/or be fined $500. The second time it happens, jail time is increased up to a year and the fine increases up to $2,500.

To make matters worse, the state has a proven track record of negatively impacting minority communities with Virginia marijuana laws, specifically people of color. In fact, people of color are currently three times more likely to be arrested for cannabis possession than white people. But the reality is that no matter their skin color, people arrested for cannabis in Virginia are less likely to find jobs and housing.

If the new bill passes through the State Senate, it will be a big step in the right direction for the state after killing a full-blown legalization bill in 2019.

What is HB972?

House Bill 972 is a very simple bill. All it would do is decriminalize possession of a half ounce of cannabis, resulting in just a $25 fine if caught. With a simple, straight forward goal, it’s easy to see why the bill was able to garner bipartisan support.

Of course there are those who are against the bill, some of whom are surprisingly pro-legalization groups. The ACLU for example claims the bill doesn’t do enough, and that more people will be incarcerated for not being able to pay the $25 fine. Frankly this is asinine. If you can afford to buy a half ounce of cannabis, you can afford a $25 fine, or you shouldn’t be buying cannabis because you don’t have your priorities straight.

So the question that is being asked now that decriminalization seems likely is, when can we expect legalization?

Virginia Cannabis Legalization

It’s probably safe to say right now that Virginia marijuana laws won’t be moving toward legalization in 2020. Right now, Virginia lawmakers sent the idea of legalization to a non-partisan committee to study, they say that the study could take a year. The results may give lawmakers guidance on whether they want to re-visit legalization in 2021.

In the meantime, Virginians trying to access cannabis medically are in for quite a struggle. Virginia technically doesn’t even have a functioning medical marijuana program. What they do offer is an Affirmative Defense clause for patients who given permission by their physician to use cannabis.

However, not many doctors are prescribing cannabis because of the legal risk and lack of incentive. Not that patients would really benefit from permission anyway.

All Virginia marijuana laws allow currently are CBD oil and THC-A oil, neither of which are psychoactive or regulated. This leaves patients who are given permission very few options, including traveling across state lines to states like Maryland to obtain medical cannabis with the risk of getting arrested upon re-entry to Virginia.

Suffice to say Virginia won’t be turning into a cannabis haven any time soon, but residents can hopefully rest easy soon knowing they’ll no longer risk jail time for half a little bit of cannabis.

Whoopi Golderbg’s Cannabis Business Tanks

Whoopi Golderbg’s Cannabis Business Tanks

Whoopi & Maya, the medical cannabis company co-founded by Whoopi Goldberg, is closing up shop, according to a statement posted on its website.

In an interview with CNN Business, Rick Cusick, a Whoopi & Maya board member who helped found the company with Goldberg and Om Edibles founder Maya Elisabeth, said he received word Friday from Goldberg that she planned to step away from the brand.

“It became clear to everybody that Whoopi and Maya wanted a divorce,” Cusick said, noting he was speaking for himself and not the company or its board. “How do you do that? Because both of them were very integral to what we were doing.”

Whoopi Goldberg’s cannabis blunder

Four years ago this week, Whoopi & Maya launched with a specific focus on providing medical cannabis for people who suffered from menstrual pain. When they started the company, Goldberg and Elisabeth saw a large market opportunity in an area that not many people wanted to address, Goldberg told The Cannabist, the Denver Post’s cannabis-centric website, in 2016.
 
“They wanted to include menstrual cramps in the list of things you can prescribe medical marijuana for,” Goldberg said in the interview, “but the governor said that will never happen in New Jersey because our doctors only prescribe marijuana for ‘real’ pain. The fact that people think of (women’s health) as a niche market — that he didn’t think of menstrual cramps as ‘real’ pain — tells me that there’s a lot of education to do on this subject.”
 
The reasons for the closure of Whoopi & Maya went beyond personal fissures, Cusick said.

No special treatment for celebrities

When the company launched, California was still a solely medical cannabis market. Come November 2016, the state passed Proposition 64, which legalized adult-use sales. As the state folded in the medical cannabis regulations into the new program, it was difficult for operators like Whoopi & Maya to adapt, he said.

“Suddenly we’re jumping through hoops like every other company in California,” he said. “We were well on the way to [being cash-flow positive] but then we had to jump through hoops to change our packaging … and then change our packaging again.” Working in an emerging industry proved challenging, he said.

 
 
New York Cannabis in 2020: Will the state legalize?

New York Cannabis in 2020: Will the state legalize?

New York cannabis legalization could be bigger than California. But it all depends if the state Governor’s promise holds true.

New York tried and failed to legalize cannabis in 2019 even with broad support for legalization in the state. But now Governor Andrew Cuomo is promising 2020 will be the year it finally happens.

New York cannabis legalization would change the entire cannabis industry landscape, with such a huge population there’s no doubt a legal industry would succeed. But it all depends on the laws that pass, regulations and restrictions that the state puts on the new market that could damage it before it takes off.

New York Cannabis History

New York has always had a patchy relationship with cannabis and crime in general. The state received national backlash when the police department’s Stop-and-Frisk program was revealed to target minority communities, with most busts being for small amounts of cannabis possession, typically an eighth or less. Despite the state decriminalizing small amounts of cannabis possession in 1977, a loophole in the law allowed police to still unfairly arrest people.

In 2013, the Stop-and-Frisk law was found unconstitutional and was ended. Ever since then, the underground cannabis culture and industry has been slowly building in New York. Similarly to D.C. which legalized cannabis in 2017 but banned any dispensaries from opening, the decriminalization of cannabis in New York has led to rise in discreet delivery service, corner shops and other services for New Yorkers to get their cannabis with ease.

Not to mention that New York already has a medical cannabis program that could easily expand into a recreational market. In other words, the state is ripe for a legal market to explode.

Will 2020 Be The Year?

In early January of 2020, Governor Cuomo highlighted adult-use cannabis legalization as one of his 2020 priorities. His proposal includes forming an Office of Cannabis Management to regulate medical, adult-use and hemp programs; ensuring that social equity and social justice needs are met; working in concert with neighboring states; and creating a cannabis and hemp research center at the State University of New York.

New York is already a very expensive state, especially for those living in the city. It’s possible New York follows in the foot steps of California or Illinois and puts exorbitant taxes on cannabis goods while also allowing local municipalities to add their own taxes on top. If this happens, a legal industry could be extremely hindered (just look at California’s first year of legal cannabis).

The light at the end of the tunnel

One of the main reasons New York has put so much urgency into legalization is because of the so-called “vape epidemic” that struck the country in 2019. In case you missed it, hundreds of people became very sick from using private market vape cartridges that contained dangerous chemicals not typically found in legal products. The epidemic winded down at the end of 2019, but not until close to 50 people died from the illness.

While some states took the opportunity to use this epidemic as an excuse not to legalize, New York recognized that legalizing would open up a safe-access market for consumers that could prevent another epidemic. The Governor has already been meeting with fellow governors from Pennsylvania and Connecticut to discuss ideas as all three states move closer to legalization in 2020.

Cuomo said he wanted to legalize in 2019, and even with strong public support, wasn’t able to get it done. 2020 might just be another broken promise to try and stay in office, or a legal New York cannabis market could come and change the whole industry in a span of 12 months. We all have to stay tuned to see.

Illinois Recreational Cannabis: What to know for January 1st

Illinois Recreational Cannabis: What to know for January 1st

As soon as the clock hits midnight on January 1st, Illinois recreational cannabis sales are set to begin.

Illinois has been setting up regulations and requirements for recreational cannabis businesses over the last year, and it is all leading up to the first day of legal sales on January 1, 2020. The people are excited, and the state is ready to start pulling in those tax dollars.

However there are plenty of differences in the Illinois recreational cannabis laws and regulations for consumers that any would be dispensary-goer should know.

Who can buy Illinois recreational cannabis?

Just like every other recreational cannabis state, you must be 21 to purchase cannabis legally in Illinois. Out-of-state visitors will also be more limited in how much they can purchase compared to state residents, however there is no difference in price for in and out of state customers.

Illinois residents age 21 and over may possess 30 grams of cannabis flower, 500 mg of THC in a cannabis-infused product like edibles, and 5 grams of cannabis concentrate in total. These amounts are halved for non-residents. 

The totals are cumulative, so an Illinois resident could have 30 grams of flower, 500 mg of infused product and 5 grams of concentrate all at the same time. The same goes for nonresidents and their limits.

Where can I buy legal cannabis?

On January 1st, there are only going to be 37 Illinois recreational cannabis dispensaries open for business. If you’re in Chicago or the surrounding area you’re in luck, because that is where 24 of the dispensaries are located.

Champaign-Urbana, Peoria and Springfield all have two dispensaries nearby, and Carbondale, Effingham, Ottawa, the Quad Cities, Quincy and Rockford will each have one dispensary. Unfortunately, the state won’t begin reviewing applications for more dispensaries until March 15. Once approved, licenses will be distributed starting May 1st. On July 1st, up to 40 grower and infuser licenses will be issued along with an unlimited number of transportation licenses for in-state transport.

In other words, it’s going to be a slow start with limited access to Illinois recreational cannabis for most residents. The state will examine the progress through 2020 to determine whether or not more licenses need to be issued.

What about the taxes?

Like any recreational cannabis industry, Illinois is collecting some hefty taxes off the sale of legal cannabis. A good way to put it is, the higher you get, the higher the tax. For example, cannabis products with a THC level of 35% or less will only have a tax of 10%, and products over 35% will have a 25% tax. Basically, flower will have a 10% tax and concentrates will have a 25% tax. All infused products including edibles will have a 20% tax.

Additionally, state and local taxes will also apply, and the state law allows for municipalities to tax up to 3%. And if that isn’t enough taxes for you, local sales taxes also apply. The Illinois sales tax is currently 6.25%.

With limited access and extremely high taxes, it’s safe to say that Illinois recreational cannabis is not going to be cheap. But if there’s anything we can take away from other legal markets with high taxes, it’s that people are willing to pay for safe, legal access to cannabis.

Lastly, consumption

One thing that Illinois holds over other recreational cannabis states is its consumption laws. While public consumption is still prohibited, and smoking indoors was banned in the states in 2008, the Illinois cannabis laws allows on-site consumption at dispensaries, as well as cannabis smoking lounges. While no lounges have yet to open, some dispensaries and growers have applied to have lounges built in their existing facilities or separately attached for consumers.

An issue that will remain prevalent in every state that bans public consumption of cannabis is the impact it has on those in public housing or those living under a landlord that does not permit cannabis consumption. While a private homeowner can do whatever they please in the house they own, a renter is limited by what their landlord allows. This will continue to be problematic, especially for medical patients that need cannabis for serious ailments.

Since repetition is key, like any recreational cannabis state, Illinois has done some stuff well and some other stuff not so well (looking at those 37 dispensaries for the first year). But the trend of starting small and slow isn’t anything new when it comes to cannabis. States want to get their feet wet before diving into the deep end and that typically means more strict regulations that will ease up over time. For now, if you’re in one of the towns with a dispensary, check it out! And if not, plan a New Year’s trip to Chicago and check out a lot more options, and probably cheaper prices.

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