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California or New York – Which Has The Biggest Marijuana Mess?

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Marijuana legalization shouldn’t be as messy in these two states

Colorado, Illinois, Oregon, Michigan, and seventeen other states have rolled out recreational marijuana.  None with the ongoing drama of California and New York.  The two have provided fodder for industry business media (and mainstream media also), the gnashing of teeth for investors, tears and anguish for legal business owners and confused consumers.

The legal marijuana industry was worth $28 billion in 2022, with an expectation to rise in 2023.  Currently, 23 states have recreational and 40 have medical with over 48 million Americans consuming cannabis annually. It is becoming a big business, and the two most important states are California and New York. Both undercut the industry, feed drama and stymie federal legalization.

California is the original major player and home of the largest legal market in the country, if not the world.  California is estimated to have done $5.3 billion in 2022, and that is just what is reported.  The state is home to MedmenHigh Times, and more players who have blended into the mainstream media.  Medmen has even been mocked by the show South Park.  But what really undercuts the California market is the taxes.  Early on, everyone saw it as a cash cow and everyone wanted a piece of the action. Local, regional and state governments dove deep into the industry, all demanding a chunk.

In California there is an Excise Tax, A State Sales Tax, A Business Tax, and a Local Tax.  The revenue has been good for the state, but they forgot to do one thing.  They haven’t built a system to eliminate the unauthorized (illegal) companies, so customers and businesses have reverted to “old school” black markets around the state.

California’s legal market lost nearly one-quarter of its total growing area after the start of 2022. Legal high priced indoor grow competes with cheap outdoor grow.  Governor Newsom, the state’s legislature and the industry forgot customers care about price.  For the first time, legal sales went backwards in the state as use stayed the same or trended up.

Green Market Report broke the news about California-based Glass House Brands Inc. being charged as “one of the largest, if not the largest, black marketers of cannabis in the State of California, if not the country,”. They have been shipping cannabis across state lines, according to a new lawsuit filed by one of the company’s retail competitors.

Where are they shipping the hot goods?  Some are going to New York State, which has been rolled with its own pandemonium.

New York State converted from medical to fully recreational in 2021, but the rollout happened in 2022 after a chaotic total overhaul of original plan that had mass buy in from existing players.  Currently, New York City has about 1,500 unlicensed retailers operating with the state working to close several a month. These stores sell legal, semi-legal, local illegal and California illegal products each day.

This week, the New York Cannabis Control Board met and managed to avoid significant action. One of the agenda items was the resignation of Reuben McDaniel who  as CEO of the Dormitory Authority of the State of New York (DASNY) was in a unique, if not sticky, situation. McDaniel had not won friends in his helping roll out legalization.

As Green Market Report shared “The members opened the meeting with the unanimous approval of 36 new conditional adult use retail dispensary permits, bringing the total number of retail licensees to 251. The new licensees included seven in the Finger Lakes Region, which had previously been stalled by litigation. But as of Thursday, there are only 13 operational retailers, OCM staff noted, with two more set to open in coming days in the Bronx and Syracuse. Getting even more open as soon as possible is one of the OCM’s top priorities. Chief Equity Officer Damian Fagon told the board his office is sifting through more than 300 dispensary location applications as quickly as possible, with 146 that have already been approved.”

how the costco of cannabis will upend marijuana black market
Photo by Yarygin/Getty Images

That would be 146 legal stores statewide versus 1,500+ illegal stores in NYC who are loose on rules and taxes.  The 1,500+ stores have been doing a solid business to the population.  Unfortunately for the legal growers and product makers, those customers are unreachable thanks to New York Cannabis Control Board.

New York and California are important markets and key to federal approval. In an ever-changing world there seems to be constant, government trend to overlook the vox populi (popular sentiment or opinion).

Source: https://thefreshtoast.com/cannabis/california-or-new-york-which-has-the-biggest-marijuana-mess/

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New Mexico cannabis operator fined, loses license for alleged BioTrack fraud

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New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.

The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.

Golden Roots operates the The Cannabis Revolution Dispensary.

The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.

The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.

Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.

After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.

In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.

The company requested a hearing, which the regulator scheduled for Sept. 1.

At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.

Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.

Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.

The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:

Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.

Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/

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Marijuana companies suing US attorney general in federal prohibition challenge

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Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.

According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”

Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.

The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”

The companies want the case to go before the U.S. Supreme Court.

They hired prominent law firm Boies Schiller Flexner to represent them.

The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.

Similar challenges to the federal Controlled Substances Act (CSA) have failed.

One such challenge led to a landmark Supreme Court decision in 2005.

In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.

In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.

Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.

“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.

“Moreover, the facts on which those precedents are based are no longer true.”

Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”

While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.

“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”

Source: https://mjbizdaily.com/marijuana-companies-suing-us-attorney-general-to-overturn-federal-prohibition/

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Alabama to make another attempt Dec. 1 to award medical cannabis licenses

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Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.

The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).

Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.

Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.

That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.

Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.

Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.

A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.

Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/

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