Business
Medical Weed Sales Continue To Decline in Arizona
Arizona recreational sales are a different story.
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.”
Source: https://hightimes.com/news/medical-weed-sales-continue-to-decline-in-arizona/
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:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
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/
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.”
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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