During a little advertised Cannabis Control Board (CCB) meeting, the CCB announced and approved a Limited Partnership Agreement for New York’s Social Equity Fund. As a brief refresher, the Social Equity Fund was mandated by the Marijuana Regulation and Taxation Act (MRTA). On January 5, 2022, Governor Kathy Hochul announced that the fund would be, well, funded with $200 million of investments funds, $50 million of which would be invested by New York State from revenue deposited in the Cannabis Revenue Fund (from tax revenue).
As we detailed in our post on the Social Equity Fund, its purpose and mechanics, the Social Equity Fund will finance the Conditional Adult-Use Retail Dispensaries for which the Office of Cannabis Management (OCM) is currently accepting applications.
As was announced in June 2022, the Social Equity Fund will be managed by Social Equity Impact Ventures. So what is the purpose of the Limited Partnership Agreement? It formalizes the legal relationship between the Dormitory Authority of the State of New York (DASNY), which has been responsible for the government portion of the Social Equity Fund, and Social Equity Impact Ventures GP I, LLC.
A few interesting tidbits from the resolution approving the limited partnership agreement:
The resolution specifically references New York’s $50m “investment in a private debt or equity fund,” which only highlights New York’s target goal of itself committing $50m towards funding CAURD licensees.
Social Equity Impact Ventures GP I, LLC is identified as the general partner, which means that Social Equity Impact Ventures GP I, LLC will have operation control over the Social Equity Fund (presumably subject to numerous checks and balances; and
The resolution specifically addresses that the purpose of the Social Equity Fund is to “fund the capital costs associated with establishing” CAURD licenses.
The approval of a limited partnership agreement is noteworthy only in that it is a clear indication that the OCM intends to move quickly upon the CAURD application window closing on September 26, 2022.
For a long time, activists have been waiting for NORML to start a political legalization drive. Years ago, California NORML had a functional organization. However, currently it’s in the hands of a Board of Directors who combine the worst qualities; uncreative amateurs who have only a marginal interest in the issue. Activists such as Dennis Peron, Jack Herer and Dr. Todd Mikuriya are consistently barred from any policy-making role. The president of the local, Dale Gerringer, complains about the Board, but for the most part appreciates their hands-off approach to his administration.
In March and April, several pieces of regressive legislation were proposed to the California State Senate and Assembly. One bill would have made it a separate criminal offense to possess any amount of marijuana in three separate packages suitable for sale. For instance, three joints or three containers of seeds. Another bill would have made it a crime to solicit to buy pot.
The third bill, which had versions in both legislative houses, would have limited diversion to growers captured with ten plants or less. In California, diversion is a judicial process for people caught possessing or cultivating marijuana for their own use. Instead of going through the court process, the charges are waived as long as the person stays out of trouble for two years. The court decides eligibility based on a preponderance of evidence. This law has saved California’s taxpayers millions of dollars since its enactment, and has saved thousands of Californians the heartache of judicial proceedings and their aftermath.
As the Senate bills began coming up for a vote, Dale became desperate. He could not get to the capital because of medical reasons, and the Board members who were suitable for legislative duty were either busy or uninterested. As a result, Dale asked me to see what I could do.
First I called up the legislative analyst of the bill and spoke with him at length. (A legislative analyst describes a bill and guesses at its effects on government and society.)
He asked me to write a statement about the proposals and let me know how to register to speak before the legislature. He also gave me advice on procedure.
The analyst asked me to write a statement about the measure and my opinion of its effects. I sent this out to him promptly. Then, searching the back of my closet, I found a serviceable suit, tie, white shirt, and shoes, and made the drive to Sacramento.
The bills were scheduled to come to committee at 1 P.M. I arrived in the hallowed halls at 9 A.M. and immediately started lobbying. I never got to see any legislators, but talked at length with a number of their aides. The first ones I went to see were those who I thought would be opposed to the bills. They were courteous, concerned about the issues, and very helpful in their comments.
Next I went to see the aides of legislators likely to be in favor of the bills. They too were courteous and engaged in frank discussions of the bills and the marijuana issue in general. I was surprised by their willingness to participate in give-and-take conversations.
The discussions with the aides were good practice for speaking before the Senators. First the proponent of the bill spoke. Then came representatives of the police, attorney general’s office, and the CAMP people. Representatives of the California Criminal Lawyers Association and the ACLU spoke against the bill. A concerned NORML lawyer, Bob Cogan, also opposed them.
The bills were fatally flawed and as the speakers discussed them, it became apparent that they would not make it out of committee. All were withdrawn. Three weeks later, the same thing happened in Assembly.
For the most part, I found the legislators abysmally ignorant about the subject of marijuana. Usually they’re led around by the state attorney general, the police, and “parent’s groups” because nobody else speaks up on the issue. Once legislators become more informed, their attitudes loosen up a bit. With concerted work, their votes can be changed.
These experiences have convinced me that continual lobbying efforts in the state legislatures could change the marijuana laws very rapidly. Prohibition is a model. In the spring of 1932, Roosevelt was opposed to a “wet” plank because he thought it would lose him votes. Within a few months, public opinion had turned. The corruption, killings, and lack of liquor made the public disgusted. Roosevelt won not only on anti-Hoover depression votes, but also because of the promise to repeal the 18th Amendment. If that history is too ancient, remember that in 1980 Reagan won partly on an anti-Commie plank. Now the Russians are our best friends.
The anti-pot groups have had a field day for years. They have faced no opposition in the government and media and have been able to deal in hysterics. Now you can help cut short their non-joyride. We need thousands of people to talk until their throats are dry.
I envision an army of lobbyists first descending on the state governments then the federal government. And I mean YOU. Everyone can do it. Simply by reading High Times, you can be an effective citizen-lobbyist.
In order to approach the government most effectively, you have to sort of play their game. Here are some rules and pointers for talking with elected government officials and their aides.
1) Everyone at the legislature is dressed in business clothes. In most legislatures, this means suits or work dresses. Attempting to approach these people in jeans makes their eyes glaze over. I know that this is going to turn a lot of people off, but dress and grooming are important. It’s a signal to them that you are ready to talk the same language.
On the other hand, legislators usually have office days in their local office. You can go visit them there to voice your concerns. These meetings are usually more informal than the ones in the capital. However, going up to the capital emphasizes the “importance” of the issue.
2) Rehearse your arguments so that you know them by heart, and do not have to think about them when you are talking with the representatives.
3) Listen to what they have to say and do not interrupt. Once they have made their argument or asked their question, then answer it or make your rebuttal.
4) Try to de-polarize the issue by first talking about what you agree on. When I was talking to conservatives, I started the discussion by bringing up some areas on which I knew we’d see eye to eye: “There is a tremendous drug problem that is out of control”; “Cocaine, especially crack, is the most dangerous drug around to both society and the people who use it,” or “The government has limited resources, and they should be used where they will do the most good.”
5) Talk in sound bytes. Legislators have a limited attention span. Instead of hearing the whole build-up of an argument, they would prefer a chunk, preferably no longer than 18 seconds.
6) Don’t make an ass out of yourself by blowing up or getting mad if things don’t go your way. The marijuana laws were not made in a day, and they won’t go away in a day. Fighting marijuana laws is a long-term effort.
7) Any comments made about your style should be taken to heart if they are well-intended.
There are six major reasons why marijuana should be legalized—they are criminal, economic, sociological, constitutional, national security and health. In future issues of the magazine, we will cover each of them thoroughly. We will also make room for comments about your experiences fighting these unjust laws in the legislature.
So get ready and get your suit and tie pressed. We’re going to the capital in September and October.
One last experience. I was walking down the hall with the Special Assistant to the Attorney General. He had just given a talk about drugs. He had been talking about rehabilitating drug users and I said to him, “There is one difference between marijuana and almost any other drug, including the legal ones, alcohol and tobacco. If you ask a nicotine addict, alcoholic, junkie, crack freak, or almost any other drug user, ‘If you could wake up tomorrow unaddicted and without cravings, would you take the option?’, for the most part these people would say yes. However, if you ask a marijuana user the same question, s/he will say no thanks, because marijuana users, for the most part, do not think the substance is hurting them.”
He said, “I never thought of that, but most of my friends who smoke it do feel the same way.” A little bit of progress was made at that moment.
Our litigation team regularly attends mediations both before a lawsuit is filed and while a lawsuit is pending. We’ve covered mediation in the past, but for those who are unfamiliar, mediation is essentially a conference in which parties sit down together, generally with a neutral third party, to see if they can resolve cannabis litigation or a pre-litigation dispute outside of a court.
When reasonable minds prevail, an effective mediator (who is often a seasoned attorney or even a retired judge) can work with the parties to see the strengths and weaknesses of their cases, the cost vs. benefit analysis of filing or continuing a lawsuit, and what settlement options are available. Importantly, a mediator can NOT make the parties settle – it is truly up to the parties to put their best foots forward and participate in their mediation in good faith.
Mediations often take all day (sometimes, even multiple days) and our team has witnessed the gambit of model and no-no behaviors over the years. They are often filed well after cannabis litigation commences. Here are my general tips for how clients should prepare for and conduct themselves at a mediation:
Be prepared. Most mediations begin well ahead of the actual day of – briefs breaking down the facts, legal arguments, and posture of the case are typically required to be submitted (so the mediator is familiar with what’s going on) and attorneys often engage in settlement negotiations beforehand as well. It’s important for clients to review and have knowledge of these things because they are just as much a participant in the mediation as their attorney. It’s also important for clients to make sure they and their attorney are on the same page in terms of what they expect to happen and what their goals are – we unfortunately have all had the situation come up where the client comes in the morning of and decides they want to take a “hard stance” and start by demanding millions of dollars more than what was discussed, or conversely, wanting to insist that they didn’t do anything wrong and shouldn’t have to pay a dime. The more a client is in tune with their legal team, the more efficient and effective a mediation typically will be.
Tell the truth. This is a general rule in litigation (especially in cannabis litigation), but there is a fine line between “puffing” and lying. Of course, focusing on the strengths of a case is important and necessary – mediations are negotiations, after all! However, lying or stretching the truth too much can be counterproductive and cause the mediator to become skeptical of a client’s position. At the end of the day, mediators are humans and their ability to push one side or both sides of a dispute is absolutely affected by how they perceive the case themselves.
Be receptive. It’s a guarantee that clients will hear things they don’t want to hear at mediations. Why? Because the mediator’s goal is to get both sides to a compromise – and they can’t do that unless they bring light to bad facts or weak arguments. This is not to say that clients should run away from any fight. Clients should not let themselves be bullied and question what they’re hearing, but it’s not helpful to anyone for a client to dig in their heels and stop listening to what they’re being told just because they don’t like that the mediator isn’t 100% on their side.
Don’t give up too early. As I mentioned earlier, effective mediations often take all day or multiple days, and there can be several impasses during that time. Feelings of “this will never work” or “we will never reach a middle ground” will inevitably come up. It’s important to remember that negotiations take time and require mental breaks. Again, this is not to say that everyone who goes to mediation must settle – we’ve all attended mediations where everyone is putting their best efforts to settle and it just can’t happen. It’s more to say that mediation is a process (and sometimes, an uncomfortable process), and it’s important to remember that lulls and steps backward are pretty normal.
If you are successful in settling your case, get a settlement document signed before everyone leaves. This is so important because everyone involved in a mediation is often fatigued by the time a settlement happens. I’ve personally had to stay up until 3:00 a.m. to ensure a settlement document was signed before everyone left. But, this is something that cannot be skipped – especially, when the settlement terms are numerous or more complex. Hashing out terms for another day, or leaving questions unanswered, can bring the parties right back to where they started (in a contentious position) and settlements can completely unravel because of it. It’s the worst case scenario to settle, leave, and find out the next day that the cannabis litigation will not end because nobody signed an agreement and the other side had a change of heart. Work with the mediator to hash out and write as much of the settlement as possible so the parties can walk away with closure and a sense of true resolution.
As part of New York Cannabis Control Board’s (CCB) meeting on August 15, 2022, the CCB proposed and approved John Kagia as the Office of Cannabis Management’s Director of Policy. Given the expansive and stratified plans for New York’s adult-use cannabis industry (with the general ban on vertical integration, emphasis on social equity and advanced conditional licenses), the Director of Policy will have a quite a few responsibilities.
From the OCM’s position posting, the Director of Policy’s duties will include (but will not be limited to!):
Overseeing data analysis and evaluation of programs, policies and initiatives of the OCM;
Managing the strategic planning, implementation and evaluation of the OCM’s policy initiatives and serving as a senior advisor to Executive Staff;
Directing the evaluation of the impact of cannabis legalization using key indicators across a variety of sub-populations and metrics;
Researching, interpreting and analyzing pending legislation, laws, policies and administrative guidelines or case law focusing on the effects of legislative enactments, issues, other rules and regulations affecting the administration, programs operations or service delivery; and
Using scientifically and epidemiologically valid methods and standards for policy development.
A few interesting things to note based on the identified duties. First, the OCM clearly was looking for someone with a background in data analytics. Second, there appears to be an ongoing political component in that the Director of Policy appears to be tasked with providing analytic support for the OCM and CCB’s policies.
And it looks like the OCM and CCB found a near perfect fit. Prior to be approved and hired by the OCM, Mr. Kagia was the Chief Knowledge Officer for New Frontier Data. From his bio:
John Kagia is a pioneering thought leader in the cannabis industry. He has developed market leading forecasts for the growth of the industry, uncovered groundbreaking insights into the cannabis consumer, and led the first-of-its-kind analysis of global cannabis demand.
Kagia works with investors, business owners and operators, and industry innovators to understand the fast-evolving industry, capitalize on emerging opportunities, hedge against risks, and predict market-defining trends. Leveraging his years of experience managing research studies for industry-leading clients including Accenture, Boston Consulting Group, IBM, Microsoft, and the U.S. Department of State, Kagia brings a keen understanding of how market insights enable organizations to plan, grow, compete, and measure performance more effectively.
From the OCM’s perspective, the emphasis on data analytics was plainly met in Mr. Kagia. Given everything that is happening in New York’s adult-use cannabis industry, Mr. Kagia will have no choice but to hit the ground running, but it certainly seems like a good match and a step in the right direction.
