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2018...too soon, too soon..

January 1, 2018 marked an important landmark for the cannabis industry in California.  As early as 6 am, legal dispensaries started selling cannabis for adult ("recreational") use.

I woke up early and visited Mankind Coop.  They were bringing in the new year and the new rules with some music, T-shirts, photo booth, and other tokens of appreciation for this moment in time.

Already, we are seeing the positive and negative ramifications of the modernized regulatory paradigm.  Every customer that purchased product in California starting 1/1 received their purchases in child proof packaging.  "Adult Use" customers purchases included additional taxes that their state and local governments will deploy to improve their communities, provide drug education, etc.  

The new regulations bring quite a bit of confusion and uncertainty to the industry as well.  For example, even as local municipalities are still working through their final licensing plans, retail outlets are only allowed to purchase product from licensed producers.  Of course, all of the product now needs to pass lab tests.  In addition, regardless of historical  supply chain relationships, retailers can only purchase from licensed distributors.  Although there are grace periods in place to allow the retailers to adopt some of the new rules, there are going to be huge hurdles and supply chain interruptions.

Has anything else already happened this year?

California had about 72 hours to enjoy this regulatory progress, before the country received notice from Jeff Sessions of the withdrawal of the Cole Memo.  The Cole Memo is an Obama-era policy that protected cannabis operators that work in compliance with their state and local rules, despite their conflict with federal law.  As such, the memo articulated that law-enforcement priorities with respect to state-legal cannabis should be focused only on the following:
  • Preventing the distribution of marijuana to minors;
  • Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels;
  • Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
  • Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
  • Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
  • Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
  • Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
  • Preventing marijuana possession or use on federal property.

Industry sentiment regarding the implications of this announcement vary.  My hope is that this decision, hugely unpopular across party lines, will further alienate our Attorney General, but the jury is still out. 

Of course, I have major philosophical objections to Jeff Session's action.  However, regardless of personal philosophy, I'm hard pressed to come up with an explanation that cannabis should be federally regulated, while things like liquor and firearms are regulated at the state level.  In addition, Session's obvious conflict of interest (ties to the private prison industry and the pharmaceutical industry) make this announcement even more appalling.

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