Mind & Matter is a monthly column by Nick Jikomes, PhD, Leafly’s Director of Science and Innovation. Cannabidiol (CBD) is the second most abundant cannabinoid found in cannabis, after THC. It’s commonly believed to be non-psychoactive, a myth arising from the fact that it’s non-intoxicating–it won’t get you high. Based on how it works in the […]
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Get your grass to Mars.
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On April 20, my colleague Hilary Bricken wrote a post entitled, “Cannabis Collections Headaches and What to Do.” In it, she discussed a problem that’s been plaguing California cannabis businesses throughout: distributors and retailers that don’t pay their bills. Towards the end of the article, she mentioned a piece of proposed legislation to address the problem, AB 766, which would allow – and even require – the state to police cannabis contracts. While I’m in favor of coming up with ways to fix the status quo, this isn’t it. If passed, AB 766 would in my view lead to massive problems, both for licensees and the state. Let’s unpack.
AB 766 would apply only to sales made after January 1, 2024. It would require any licensee to pay for goods and services from another licensee within 15 calendar days after the date of the final invoice. The date set forth on the invoice could not be more than 30 days after the date goods or services are transferred. So hypothetically, if a cannabis contract has net 30 payment terms and is paid 46 days after delivery, problems begin.
Licensees that sell goods with a value of at least $5,000 and don’t receive payment on time must report the unpaid invoice to the Department of Cannabis Control (DCC). At that time, the DCC is forced to intervene in the cannabis contract breach. DCC must then notify the non-paying licensee. If they don’t pay within 30 days, the DCC can issue a notice of warning or citation. If this happens multiple times, the DCC must commence a disciplinary action.
Notably, if a licensee is reported, it cannot buy goods on credit from another licensee until it pays the initial unpaid invoice.
AB 766 also does not apply to excise tax collection.
I want to start this section out by noting, in no uncertain terms, that violations of cannabis contracts are bad. There are lots of licensees that simply skip town on invoices for no good reason. It goes without saying that not paying undisputed invoices is a bad thing. But I do not think that AB 766 will make a huge dent in the problem and instead could create even more problems.
First off, AB 766 does much more than tell licensees to pay on time – it instead sets the requirement for what “on time” can even mean. I have seen plenty of cannabis contracts with fully negotiated payment terms that might violate AB 766. If AB 766 becomes law, it will mean that the government dictates commercial contact payment terms.
AB 766 would also force licensees to report other licensees that have not fully paid outstanding invoices. Reporting would be mandatory. It would apply even if the other party was just a few hundred dollars short. It is inevitable that licensees will not report every violation. Would they then be subject to potential discipline? It sure seems like it. I can’t tell you how much harder it will be to settle payment disputes once one side has reported the other to the state. I can entertain an argument that licensees should be free to report each other, but requiring reporting of contract breaches is totally indefensible.
Most egregiously, licensees who are reported would be legally prohibited from buying goods or services on credit from other licensees until they pay the invoices for which they were reported in full. All that has to happen is that a licensee is reported. The person making the report has to give the DCC almost no information in order to make the report. There is no hearing. There does not even seem to be an opportunity to contest the report. The second a report is made, the other side loses its rights to buy goods on credit – presumably even under preexisting contractual arrangements with third parties. This seems like an obvious due process concern and ripe for abuse.
Along those lines, AB 766 doesn’t even really address what happens in the event of a disputed invoice. What if XYZ retailer doesn’t pay ABC because the goods XYZ bought were moldy? Well, it looks like ABC would still have to report it. Again, this makes no sense.
I do not think AB 766 will solve the problem at hand. Instead, it is likely to lead to bigger problems. It seems inevitable that people will be punished for things like failure to report, that licensees will be subject to penalties when they have legitimate grounds to dispute payment, and so on. The bill would also likely bog down the DCC with reports. And given the state’s spotty history with cannabis enforcement, it’s entirely possible that many of those reports would not even be timely addressed.
Rather than create an overly complicated and mandatory reporting system, it would be much simpler if the state could create a statutory right to recover attorneys’ fees in actions between licensees. Many licensees still do “handshake” contracts (still a bad idea!) with limited or no rights to recover attorneys’ fees. Add fees into the mix and you give unpaid licensees a major tool to fight back.
If the state decides to implement a reporting system anyways, then AB 766 should be overhauled so that (1) reporting is optional, (2) licensees can set their own payment terms without the state’s input, and (3) non-paying licensees do not get stripped of any rights until they have an opportunity for some kind of hearing. If the state won’t do that, then there will be problems. Stay tuned to the Canna Law Blog for more updates.
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There are nearly 30,000 registered medical cannabis patients in Georgia, but for years, they have had no option to legally purchase and obtain the product they have been prescribed.
That changed on Friday, when the state’s first medical marijuana dispensaries opened their doors for business.
The medical cannabis company Trulieve is behind each retailer, located in Macon and Marietta.
“We believe that access to medical cannabis improves lives, and Trulieve is proud to be the first to provide that access to the state of Georgia,” said Trulieve CEO Kim Rivers in a press release. “We look forward to providing high quality products and an elite experience.”
Georgia lawmakers legalized medical cannabis treatment in 2015 with the passage of the Haleigh’s Hope Act. The bill made it legal for physicians to prescribe cannabis oil with no more than 5% THC to patients suffering from a host of qualifying conditions. Those conditions, via the state’s Medical Cannabis Commission, are: “Cancer, when such diagnosis is end stage or the treatment produces related wasting illness or recalcitrant nausea and vomiting; Amyotrophic lateral sclerosis, when such diagnosis is severe or end stage; Seizure disorders related to diagnosis of epilepsy or trauma related head injuries; Multiple sclerosis, when such diagnosis is severe or end stage; Crohn’s disease; Mitochondrial disease; Parkinson’s disease, when such diagnosis is severe or end stage; Sickle cell disease, when such diagnosis is severe or end stage; Tourette’s syndrome, when such syndrome is diagnosed as severe; Autism spectrum disorder, when (a) patient is 18 years of age or more, or (b) patient is less than 18 years of age and diagnosed with severe autism; Epidermolysis bullosa; Alzheimer’s disease, when such disease is severe or end stage; AIDS when such syndrome is severe or end stage; Peripheral neuropathy, when symptoms are severe or end stage; Patient is in hospice program, either as inpatient or outpatient; Intractable pain; [and] Post-traumatic stress disorder resulting from direct exposure to or witnessing of a trauma for a patient who is at least 18 years of age.”
But the law’s full implementation has been beset by regulatory delays, even as the number of registered medical cannabis patients in the state has continued to grow. There are currently around 27,000 Georgians registered in the program.
“Today is a new beginning for the over 27,000 registered medical patients Georgia,” Rivers said in Friday’s press release. “Trulieve is equally thrilled and humbled to bring the first two medical cannabis dispensaries in the state serving both Macon and Marietta communities in their health and wellness journey.”
In addition to the dispensaries in Macon and Marietta, Trulieve has plans to open three more in the state this year in Columbus, Newnan and Pooler.
“I’m proud to open two dispensaries in both Macon and Marietta for patients to begin receiving the medicine they need,” Lisa Pinkney, president of Trulieve Georgia, said in Friday’s announcement. “I also want to congratulate the commission along with the whole Trulieve Georgia team on reaching this milestone after the hard work to date and thank both teams for moving expeditiously to approve the dispensary application and conduct the dispensary inspections.”
In March, Georgia lawmakers advanced a bill that would increase the number of available medical cannabis dispensary licenses from six to 15.
According to Axios, medical cannabis customers in the state “sign in and show their photo ID state-issued registry card to the receptionist” at the dispensary, and then “enter a showroom that looks like a cross between a jewelry store and a Gen Z-friendly wealth management firm.”
“The stores carry tinctures ($40-$60) and capsules ($40) in indica, sativa and hybrid varieties and topical ointments ($30),” Axios reported. “Medical cannabis in Georgia is limited to 5% THC, the psychoactive ingredient in marijuana that gives users a high.”
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It’s getting a lot more expensive to grow medical cannabis under a new Oklahoma law.
Two Republican lawmakers in Oklahoma, Sen. Darcy Jech (R-Kingfisher) and Rep. Anthony Moore (R-Clinton), sponsored a bill that would impose a $50,000 bond in order to gain a grow license. Gov. Kevin Still signed the bill on April 20.
The reason for the bill is a pile-up of abandoned properties of grow operations that didn’t make it for one reason or another.
“Our state has had many problems with marijuana grows abandoning land and leaving behind a large mess,” Jech said. “This will set a minimum bond amount of $50,000 that can be used to restore the property in the event it is abandoned, or the operation loses its license. Some grows may be required to have a higher bond depending on their reclamation requirements set by the Oklahoma Medical Marijuana Authority (OMMA). Ultimately, this will help clean up valuable farmland that has been harmed by illegal operations and allows OMMA or any other appropriate state agency to recoup costs associated with the cleanup.”
Senate Bill 913 will force cannabis grow businesses to purchase a $50,000 bond from the state that functions similarly to a security deposit. If a grower abandons their property, violates a law or loses their license, the deposit money will be used to restore the property and correct any environmental damage.
News on 6 reports that growers of all kinds will be forced to pay the deposit under the new law.
Indoor, greenhouse, or light deprivation medical cannabis grow facilities are organized under seven tiers—the largest of which will have to pay an additional $250 per acre on top of the $50,000 deposit. Outdoor medical cannabis grow facilities are organized into eight tiers, and the largest ones will also have to pay an additional $250 per acre. Medical cannabis processor licensees are divided into five tiers.
The bill was introduced on Jan 27. It was amended on March 3. It was approved by both chambers by April 19 before being sent to the governor on April 20.
“The measure sets the bond amount at no less than $50,000.00 for each license, but allows the Oklahoma Medical Marijuana Authority to require a higher bond amount depending upon the reclamation requirements of the approved application,” the engrossed bill summary reads.
“The measure authorizes a commercial growing operation to operate without obtaining a bond if the Authority verifies that the permitted land has been owned by the licensee for at least a 5-year period prior to submission of application,” the summary continues. “The measure also authorizes the appropriate agency to recall the bond if the property is abandoned or if the Authority revokes the license of the owner. In this instance, the measure requires that the bond is used to defray the costs of restoring the property.”
The bill summary notes, “no impact is anticipated,” but growers are unlikely to agree with that assessment. Growers may be forced to pay higher than $50,000 if there are reclamation requirements as well.
“The Authority or the Department of Environmental Quality may require a higher amount depending upon the reclamation requirements of the approved application.”
When an illegal or noncompliant grow operation gets shut down, the deposit money would go to restoring the land.
The Oklahoma Bureau of Narcotics (OBN) says it has shut down more than 800 illegal grow operations in the last two and a half years. The problem is massive: According to the OBN, the bureau investigated roughly half of Oklahoma’s licensed growers.
The bill goes into effect immediately. “… This act shall take effect and be in full force from and after its passage and approval,” the bill reads.
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April showers bring many, many May flowers, and many options for you to embrace your astrological potential
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Stockton University released the results of a new poll of 660 New Jersey residents April 25, 2023, exploring consumer attitudes and actions as the market continues to take shape. Stockton University students texted cell phones with invitations to take the survey online, with Opinion Services supplementing the dialing portion of the field work to cell and landline telephones. Polling took place from April 1-14, 2023.
The poll explored a number of issues surrounding cannabis, including general consumer shopping habits, attitudes and behaviors in the year since the market launched. According to the poll, about one-third of New Jersey adults have used cannabis or cannabis products since recreational cannabis was legalized, and most users said they were happy to patronize a legal weed dispensary.
Among legal cannabis consumers, 47% said they used it for recreational purposes and 39% said they consumed it for both medical and recreational purposes, while just 13% used it strictly for medicinal purposes. Despite boasting some of the highest prices in the country, 69% of users bought products from a licensed cannabis dispensary, and 86% reported that they were either satisfied or very satisfied with the experience.
Expanding upon the widely-reported satisfying dispensary experience, 43% of consumers said they appreciated knowing that products were safe and 23% said they liked the quality. Only 7% of respondents approved of New Jersey’s cannabis prices.
Looking at cannabis big pictures, a majority of respondents (53%) supported having dispensaries in their own town selling recreational cannabis (39% opposed). When asked about the potential for adding cannabis to New Jersey’s hospitality industry, with offerings like cannabis-infused restaurants, consumption lounges and more, it was more evenly split, with 48% in support and 45% opposed.
While in the minority, the poll also explored the habits and attitude of residents and consumers who have yet to embrace the legal market. When asked why they have not visited a legal dispensary yet, the most commonly reported reason among respondents (30%) was that there was no dispensary nearby. Currently, there are 24 retail shops across the state.
Other reasons included preference for products sold elsewhere (13%) and the general cost (11%). Twenty-seven percent of respondents indicated “some other reason.” Additionally, 30% of respondents admitted they had purchased cannabis or cannabis products from unlicensed individual sellers in the past year.
The poll also offers some demographic insights on New Jersey’s cannabis users. Men (37%) were more likely than women (28%) to consume cannabis, and people under 50 were also more likely to have consumed cannabis in the past year. Specifically, 43% of 18- to 29-year-olds and 41% of 30- to 49-year-olds consumed cannabis, while only 17% of senior citizens did the same, with half strictly using cannabis for medicinal purposes.
Black people had the highest cannabis usage (39%), followed by white people (33%) and Hispanic/Latino respondents (29%), and there were no differences in usage between different regions of the state and those with or without a college degree. Democrats were also more likely (38%) to consume cannabis than Republicans (24%) or independents (32%).
While it’s still early, and a year only offers so much information, the findings highlight some of the challenges of New Jersey’s legal cannabis industry so far, along with the demand for cannabis in the state. Even though prices may be high and dispensary accessibility is still an issue, it appears consumers are generally still willing to travel and pay up to have access to safe, high-quality products.
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