Second Legal Dispensary Set To Open in NYC

Already home to the Empire State’s first and only legal recreational cannabis dispensary, New York City will soon make way for a second. 

Gothamist reports that a new pot dispensary called “Smacked” will open this month in Manhattan’s Greenwich Village after a local community board “voted unanimously” last Wednesday to endorse the store. 

The dispensary “is set for a ‘soft launch’ to members of the press on Wednesday, Jan. 18, and will open to the general public later in the week,” according to Gothamist. 

Regulators in New York approved 36 licenses for recreational marijuana dispensaries in November. 

Those first three dozen licenses were issued under the state’s “Seeding Opportunity Initiative,” which ensures that “New York’s first legal adult-use retail dispensaries will be operated by those most impacted by the enforcement of the prohibition of cannabis or nonprofit organizations whose services include support for the formerly incarcerated.” 

Unveiled last year, the initiative designates the first adult-use cannabis retail licenses for individuals with a prior cannabis conviction, or a family member of an individual with such a conviction.

But despite the approval for those license holders, there is currently only one state-sanctioned recreational cannabis retailer open in New York.

That store, located in Manhattan’s East Village and owned by Housing Works, a nonprofit that provides services to individuals living with HIV and AIDS, opened on December 29. 

“The first legal adult-use cannabis sales mark a historic milestone in New York’s cannabis industry,” New York Gov. Kathy Hochul said in a statement on the day of the opening. “Today is only the beginning, and I look forward to continuing our efforts to solidify New York as a national model for the safe, equitable and inclusive industry we are now building.”

Cannabis Control Board Chairwoman Tremaine Wright, chairwoman of the state’s Cannabis Control Board, said that the opening of the Housing Works-owned shop was “truly a historic day in the history of New York State.”

“For years we fought to make sure New York not only legalized cannabis but did so in a way that ensures this cannabis market is driven and led by social equity. I am proud to say, with non-profit Housing Works making today’s first cannabis retail sale, we are well on our way to achieve that goal and fulfill our commitment to all New Yorkers. I cannot thank Governor Kathy Hochul, the rest of the Cannabis Control Board, or the staff of the Office of Cannabis Management enough for their ongoing work to achieve these goals,” Wright said in a statement at the time.

The opening of the store ensured that Hochul, a Democrat, made good on her pledge to get the adult-use cannabis market up and running before the end of 2022 –– although the state fell well short of her target number.

“We expect the first 20 dispensaries to be open by the end of this year,” Hochul said in October. “And then every month or so, another 20. So, we’re not going to just jam it out there. It’s going to work and be successful.”

Among the 36 licenses awarded by the state, 13 were awarded to businesses based across New York City’s five boroughs: three in the Bronx, four in Queens, four in Manhattan and two in Staten Island. 

Per NY1, there’s a temporary block on licenses awarded to businesses in Brooklyn due to a lawsuit filed by a company that is challenging the state’s requirement for applicants to have a marijuana-related offense in New York in order to be eligible for a license.

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Washington LCB Releases Disproportionately Impacted Area Map for Social Equity Licensees

Yesterday, January 13, 2023, the Washington State Liquor and Cannabis Board (“LCB”) released an interactive mapping tool for determining whether people meet have lived in Disproportionately Impacted Areas (“DIA”)–one of three eligibility criteria for the forthcoming Social Equity in Cannabis (“SEIC”) program licensing. The map can be found by a link on the LCB’s website, or here.

Washington Social Equity in Cannabis Program

As we wrote about here, the SEIC program, slated to be rolled out sometime this year, will re-purpose around 40 retail cannabis dispensary licenses that have been revoked or abandoned and reissue them to qualifying applicants. To qualify, a WA resident must hold at least 51% of each social equity retail license applicant and the person or persons making up the applicant must meet at least two of the following qualifications:

• the applicant has lived in a Disproportionately Impact Area (“DIA”) in WA for a minimum of 5 years between 1980 and 2010;
• the applicant or a family member of the applicant has been arrested or convicted of a cannabis offense; or
• the applicant’s household income in the year prior to submitting the application was less than the median household income within the state of Washington.

What are “Disproportionately Impacted Areas”?

DIA’s were conceptualized and defined by the WA legislature. To qualify as a DIA, an individual census tract must be in the “top 20% on all of the following indicators:

• high poverty rate;
• high rate of participation in income-based federal programs;
• High rate of unemployment; and
• High rate of convictions.”

When using the mapping tool, it is important to keep the eligibility criteria in mind: an applicant must have lived in a DIA for at least five years between 1980 and 2010. The mapping tool tells users whether a selected census tract qualifies as a DIA for the following individual years —1980, 1990, 2000, and 2010. The LCB’s website states “To meet this qualification, you must have resided in the area at the time it was considered a disproportionately impacted area for a minimum of five years.” Unfortunately, the mapping tool does not tell us for how long after one of the provided years any given census tract remained a DIA.

Determining eligibility; issues with the mapping tool

Because it is far from clear, are applicants to infer that if a census tract is shown to have been a DIA in 1980 and 1990, that it remained a DIA for all of the intervening years as well? As noted above, the mapping tool only states whether or not a census tract was a DIA in the individual years listed. This raises several questions about applicant eligibility under different circumstances but all we know at this time is that once applications are submitted, “The third-party contractor will use this map and the information provided by applicants to determine if you lived in a disproportionately impacted area and for how long.”

Consider if an applicant lived in a census tract shown to be a DIA in 1990 by the mapping tool from January 1990 to December 1995, but the mapping tool shows that the census tract was not a DIA in 2000. The five year minimum eligibility period would be clearly established in that case. But, because the mapping tool does not tell us for how long between 1990 and 2000 the census tract was a DIA, we are left not knowing whether the criteria is satisfied with any certainty.

Many applicants relying on DIA eligibility as one of their three eligibility criteria for an SEIC license will not know whether they qualify until the third-party contractor responds to the application. This is just a simple example to show the issues with the mapping tool and the need for guidance from the LCB. People’s lives are rarely as neat and simple as the example above and the mapping tool’s efficacy for helping people determine DIA eligibility is limited at best.

Try it out and contact the LCB

Prospective SEIC applicants should use the tool to at least get a sense for whether they qualify based on where they lived during 1980 and 2010, irrespective of the mapping tool’s issues. If it is not clear whether you qualify, the best course of action would be to contact the LCB with the question and request guidance. We’ll be following developments in Washington’s SEIC program and writing about them here.

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Minnesota Adult-Use Legalization Bill Clears First Hurdle

Democratic lawmakers in Minnesota have begun their push for marijuana legalization, with a bill clearing the first of many legislative hurdles this week. 

The bill “cleared the first of what may be up to a dozen committee hurdles when the House Commerce Finance and Policy Committee approved” the measure “by a voice vote Wednesday and sent it to the House Judiciary Finance and Civil Law Committee,” the Minnesota House of Representatives Public Information Services department reported.

The bill would legalize cannabis for adults 21 and older, and would establish the regulatory framework for legal marijuana sales that would begin within months of the measure’s passage. 

It was introduced by Democrats in the Minnesota House of Representatives last week.

“Cannabis should not be illegal in Minnesota,” Democratic state House Rep. Zack Stephenson, one of the bill’s authors, said at a press conference announcing the legislation at the state capitol last week. “Minnesotans deserve the freedom and respect to make responsible decisions about cannabis themselves. Our current laws are doing more harm than good. State and local governments are spending millions enforcing laws that aren’t helping anyone.”

Stephenson and his fellow Democrats in St. Paul have long been eager to bring cannabis legalization to the Land of 10,000 Lakes, but they have until now been stymied by Republican lawmakers.

But that changed after November’s elections, when Minnesota Democrats regained control of the state Senate and retained their majority in the state House of Representatives. 

The state’s Democratic governor, Tim Walz, also won re-election this past fall, and has been a vocal advocate for marijuana legalization in Minnesota.

“It’s time to legalize adult-use cannabis and expunge cannabis convictions in Minnesota. I’m ready to sign it into law,” Walz said in a tweet after Democrats introduced the legalization bill earlier this month.

At the committee meeting on Wednesday, Stephenson expressed confidence that the bill, buttressed by public support, would ultimately make it to Walz’s desk.

The news service recapped amendments that were considered at the committee meeting on Wednesday:

“The subject of local control — or lack thereof — was the subject of an amendment unsuccessfully offered by Rep. Kurt Daudt (R-Crown). It would have given cities or towns options to enact local ordinances regulating cannabis business licenses that could differ from those proposed statewide. Two other Republican amendments were adopted. One offered by Rep. Anne Neu Brindley (R-North Branch) would add a health warning for pregnant or breastfeeding women on cannabis products. And an amendment from Rep. Jeff Dotseth (R-Kettle River) would require the Office of Cannabis Management to study the health effects of secondhand cannabis smoke. Stephenson said the Dotseth amendment was a good idea, but noted his bill already would prohibit smoking cannabis in places where smoking is not allowed under the Clean Indoor Air Act.”

Polls have shown that Minnesota voters are ready to enter a post-prohibition era. 

The moves by state Democrats were foreshadowed by one of Minnesota’s best-known politicians, former Gov. Jesse Ventura, who said after the November elections that Walz had called him directly to say that legalization would get done.

“The sticking point for cannabis in Minnesota were Republicans in the (Senate),” Ventura said at the time. “Well, they lost it now, and the governor reassured me that one of the first items that will be passed — Minnesota, get ready — cannabis is going to have its prohibition lifted. That’s the news I got today.”

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Connecticut Adult-Use Sales Begin

Connecticut is the latest state to permit the sale of adult-use cannabis. The possession of cannabis by adults has been legal in Connecticut since 2021, following the enactment of Public Act No. 21-1. Impressively, this law also erased 43,754 convictions for cannabis offenses.

In December, the state’s Department of Consumer Protection (DCP) announced that hybrid retailers would be allowed to sell to anyone 21 or over, starting on January 10, 2023. Hybrid retailers are medical cannabis dispensaries that have converted to a license type that permits adult-use sales. So far, a total of nine hybrid retailers have obtained the necessary approvals to sell adult-use cannabis in Connecticut. Given the state’s compact size, most Nutmeggers will not have to travel far to buy cannabis legally.

Connecticut has also established a licensure process for adult-use only retailers, for applicants that aren’t participants in the state’s medical cannabis industry. The first round of applications will see the Constitution State issue up to 12 adult-use only retail licenses, six of them to social equity applicants. Half of the licenses available in other categories, such as cultivator, product manufacturer, and delivery/transport, are reserved for social equity applicants. In 2022, social equity and general lotteries were conducted to whittle down the large number of retail applicants in both categories. According to state records, it appears that licensure process has not yet been completed or any of the adult-use only retailers.

As our interactive map shows, legalization continues to advance in the American Northeast, with most of Connecticut’s neighbors already having legalized adult-use cannabis. Last year, Rhode Island legalized recreational cannabis and, in November, Maryland voted in favor of legalizing recreational use. If Pennsylvania soon follows suit, not only will the entire Acela Corridor have legal adult-use cannabis, but the speed of legalization will have been far more remarkable than that of the Acela trains. Legislative advances on cannabis are welcomed, but it’d be great to see our legislators do see something about our substandard railways …

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Medical Weed Sales Continue To Decline in Arizona

There is a Grand Canyon-sized gulf between medical cannabis and recreational marijuana in Arizona. Sales of medical marijuana continue to decline, while adult-use pot sales are climbing. 

The latest figures to be released by the Arizona Department of Revenue found that taxable medical cannabis sales totaled $31.3 million for October, representing the eighth consecutive month of decline.

Adult-use cannabis sales, on the other hand, amounted to $73.8 million in October, a new high for the state’s recreational pot program. 

Those totals mark the continuation of a trend for the Grand Canyon State’s dual cannabis markets. 

Voters in Arizona legalized medical cannabis in 2010, and sales began two years later. Arizona voters likewise approved a proposal legalizing recreational cannabis in 2020, with sales kicking off in January 2021. 

Medical cannabis sales outpaced recreational sales for the first 11 months of 2021.

In December of that year, adult-use marijuana sales totaled $70,317,105, compared with $57,971,859 in sales for medical marijuana that same month. 

Recreational pot sales have exceeded medical sales every month since. 

As the AZ Mirror noted this week, the “crumbling of the medical program follows a pattern other states have seen with medical markets outpaced by recreational sales in the wake of legalization.”

The outlet has more on the divergent sales trends: 

“The state collects 16% excise tax on recreational sales in addition to the standard sales tax; medical patients pay roughly 6% in state sales tax, levied as a Transaction Privilege Tax on cannabis outlets. Local jurisdictions charge an additional 2% or so for all marijuana sales. One-third of recreational taxes collected are dedicated to community college and provisional community college districts; 31% to public safety — police, fire departments, fire districts, first responders — 25% to the Arizona Highway User Revenue Fund, and 10% to the justice reinvestment fund, dedicated to providing public health services, counseling, job training and other social services for communities that have been adversely affected and disproportionately impacted by marijuana arrests and criminalization. The medical market has continued to bleed both sales and participants, following a trend in some states that have legalized adult-use cannabis years after establishing medical cannabis markets.”

Arizona was one of four states in 2020 where voters approved measures legalizing recreational marijuana sales (Montana, New Jersey and South Dakota were the other three).

The measure, Proposition 207, required the state to “promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws,” a mandate that, among other things, designated the first two dozen dispensary licenses to individuals hailing from communities that have been affected by the War on Drugs.

Arizona’s Department of Health Services required those applicants to participate in classes in order “to ensure that social equity applicants are prepared for the application process and the challenges of running a marijuana business.”

Those classes, per the department, were led by veterans of the cannabis industry, and included “two days of content and education focused on a number of aspects of operating an adult-use marijuana business, including legal requirements, business practices, regulatory compliance, and fundraising, as well as marketing and strategic growth.”

For some prospective marijuana dispensary owners in Arizona, class is now in session. Social equity class, that is. 

It is a provision included in the ballot measure that voters in the state last year legalized recreational pot use for adults. The measure, Proposition 207, called on the state to “promote the ownership and operation of marijuana establishments and marijuana testing facilities by individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.”

What that means in practice: Arizona’s Department of Health Services will award 26 dispensary licenses to individuals from those communities particularly affected by long standing anti-pot laws. 

Per the department: “Social equity license holders will be required to comply with all statutes and rules that govern Adult-Use Marijuana Establishment licenses, including obtaining approval to operate before opening their retail location. Additionally, social equity license holders will be required to develop and implement policies to document how the Marijuana Establishment will provide a benefit to one or more communities disproportionately affected by the enforcement of Arizona’s previous marijuana laws.”

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Connecticut expunged more than 43,000 cannabis convictions

Connecticut is the latest state to legalize recreational cannabis with a focus on equity and social justice. They've expunged nearly 44,000 criminal records so far, but there’s more work to be done.

The post Connecticut expunged more than 43,000 cannabis convictions appeared first on Leafly.

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Google Changes Its CBD Advertising Policies

Cannabis advertising has always been a precarious art. From first amendment commercial speech issues to zealous state marketing and promotion regulations to false claim lawsuits, cannabis advertising can go down some dark rabbit holes. Notoriously, tech giants like Instagram and Facebook would take down cannabis-related ad content for violating site terms and conditions around the promotion of illegal substances and recreational drugs. Google was also on this list, and we all know how critical Google is for online advertising. However, Google recently has decided to relax its advertising policies– at least around hemp and hemp CBD products. But not all cannabis advertising is created equal on Google. You still won’t be able to open advertise your cannabis-related services without the risk of getting shut down.

CBD advertising changes at Google

Last month, Google announced that it’s updating its cannabis advertising rules. On January 20, 2023, the Dangerous Products and Services and Healthcare and Medicines Google Ads policies will allow for the promotion of “FDA-approved pharmaceuticals containing cannabidiol (CBD) and topical, hemp-derived CBD products with THC content of 0.3% or less in California, Colorado, and Puerto Rico”. Additionally, CBD will be removed from Google’s Unapproved Pharmaceuticals and Supplements List.

Google states that in the U.S., only topical CBD products that have been certified by LegitScript can be promoted on Google. LegitScript is an “internet and payments compliance company that provides services for merchant monitoring, platform monitoring, and certification in high-risk industries”. Certification requires that all advertisers must : (1) provide samples of their CBD product to test for compliance with legal THC limits (see below); and (2) provide LegitScript a third-party Certificate of Analysis. FDA-approved CBD pharma products won’t be certified by LegitScript. Applicants will all pay a fee to LegitScript to complete the process. Google will then certify all of the applicants that make it past LegitScript. Sounds pretty easy to engage in cannabis advertising on Google now, right? Think again.

LegitScript CBD certification standards

LegitScript has already released its CBD certification standards for cannabis advertising, and they are comprehensive. See here. Advertisers will, among many other things, need to:

• Demonstrate the product’s compliance with all other (legal and regulatory) standards.
• To the extent that licensure or registration is required in any jurisdiction where the product is manufactured, processed, or sold, demonstrate the product’s compliance with such requirements.
• Provide supply chain documentation for all products. The product should adhere to all supply chain-related regulatory requirements and be manufactured consistent with good manufacturing practices. The applicant must provide a Certificate of Analysis demonstrating the CBD used in the final product complies with federal laws regarding the cultivation and processing of hemp.
• Provide to a testing facility approved by LegitScript, unexpired, random samples of products submitted for certification for testing. Such products must contain the advertised amount of hemp-derived compounds and must comply with legal requirements related to cannabinoid substances and ingredient levels.
• Demonstrate that products submitted for certification were produced in compliance with all USDA and state hemp-cultivation requirements, or are otherwise exempt from such requirements.
• Show that the applicant or product manufacturer, including any associated personnel, businesses, or websites, must not have been subject to significant recent and/or repeated instances of improper legal compliance, disciplinary sanctions, or other regulatory action (e.g., those FDA letters). Prior offenses or other bad acts by the applicant or product manufacturer, including any prior regulatory discipline may be a disqualifying factor, in LegitScript’s sole discretion.
• Submit the applicant’s corporate officers, directors, or those exercising control over significant business decisions  to criminal background checks conducted at LegitScript’s request, and those same persons must disclose any prior criminal, regulatory, or civil violations. Applicant must also disclose any litigation commenced, resolved, or otherwise addressed that involves applicant at any time over the past 10 years. Prior offenses or other bad acts, including any prior regulatory discipline may be a disqualifying factor, in LegitScript’s sole discretion.
• Adehere to Google’s terms of service for advertising in all capacities. If LegitScript discovers that your advertising isn’t kosher in all regards, it may be grounds for certification denial.

Don’t get too excited

Obviously, Google is minding its Ps and Qs regarding compliance with the FDA’s current position on CBD. It does not want to be caught assisting in violations of the Food, Drug & Cosmetic Act and it doesn’t want to inadvertently assist anyone trafficking in cannabis containing more than .3% THC. In turn, all ads promoting other CBD-based products, including supplements, food additives, and inhalants, won’t be allowed. And any product containing more than .3% THC (i.e., cannabis) certainly won’t be allowed on Google unless we see a change in federal law (despite state law to the contrary).

In sum, while Google is opening the door on some cannabis advertising for FDA-approved CBD and CBD topicals, it’s going to be a relatively heavy lift to get through LegitScript’s vetting process. Still, it’s progress.

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