Business
Washington, D.C. Officials To Begin Inspections of ‘Gifting’ Shops Next Month
Regulators in the nation’s capital announced last week that they will start inspections of unlicensed cannabis businesses to verify compliance with various laws.
The Alcoholic Beverage Regulation Administration said that a “Joint Cannabis Task Force,” which consists of “various [Washington, D.C.] government agencies,” will start visiting the businesses next month following a 30-day grace period.
Although voters in D.C. passed an initiative that legalized recreational cannabis all the way back in 2014, the sale of weed is still technically illegal due to a congressional ban.
Businesses there have found a loophole through the practice of “gifting”: a customer pays for an item like a t-shirt and is in turn “gifted” some cannabis.
The practice has upset many of the medical cannabis operators in Washington, D.C., who have said that the illicit shops are cutting into their business.
In April, the D.C. City Council rejected a proposal, which was backed by the medical marijuana industry, that would have levied harsher fines on businesses that engage in gifting.
The inspections that were announced by the Alcoholic Beverage Regulation Administration will be done to ensure that the unlicensed cannabis businesses “abide by the regulatory requirements of DC Health, the Department of Consumer and Regulatory Affairs (DCRA), the District of Columbia Fire and Emergency Medical Services Department (FEMS), and the Office of Tax and Revenue (OTR).”
The administration detailed those laws:
- “DC Health—Edibles and other manufactured products being offered by businesses to customers must be approved by DC Health; businesses also must be in compliance with DC food safety and hygiene laws.”
- “DCRA—Businesses operating in the District must be registered with DCRA; businesses also must be in compliance with the District’s general business requirements such as having the proper business license and Certificate of Occupancy.”
- “FEMS—Businesses must be in compliance with DC fire code regulations such as having a clear path of egress for customers and having properly working smoke and carbon monoxide detectors.”
- “OTR—Businesses must register with OTR and pay taxes in DC.”
“Joint agency inspections will take place unannounced after the 30-day grace period to verify the compliance of operating businesses with legal requirements. Businesses in violation may be subject to a fine or other enforcement action permitted by the statutory authority of each respective enforcement agency,” the administration said in the announcement last week.
According to The DCist, “many of the gifting businesses say that they are already in compliance with D.C. business regulations and pay taxes on the products they sell.”
Lonny Bramzon, an attorney and owner for one of the gifting shops in D.C., told the website that he doesn’t see the administration’s announcement “as necessarily targeting marijuana, though he thinks it may be an easy way for D.C. to close down operators who haven’t followed city regulations.”
“It seems that ABRA isn’t concerned with the instrumentality of the gifting. It seems like they’re concerned with business licenses and certificates of occupancy,” Bramzon said. “If somebody is going to open a coffee shop, they’re going to get their licenses and do the inspections. But because of the nature of the [marijuana] business, there’s a higher chance people will open without the proper licenses. This might be a backhanded way to shut down some of those shops. I would like to make sure everyone has their licenses and is paying their taxes like everyone else.”
Earlier this year, the D.C. City Council passed a measure that allows medical cannabis patients in the district to “self-certify,” meaning they no longer need a doctor’s recommendation for a card.
The bill, signed into law last month by D.C. Mayor Muriel Bowser, was hailed as an improvement for both patients, and medical cannabis providers who have been outpaced in sales by the gifting shops.
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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