Tag: Cannabis Industry

The U.S. Cannabis Industry Now Employs More than 320,000 People

As too many of us are all-too familiar, the job market is extremely tough these days. One of the few bright spots has been the cannabis industry which now employs more than 320,000 people across the United States, outpacing many other professions. On one hand, it’s rather remarkable that the industry has been able to accelerate hiring during the COVID pandemic while some states irrationally cling to prohibition and the many regulatory roadblocks placed in front of cannabis businesses. On the other hand, it isn’t surprising that more employees are needed to keep up with record-breaking sales across the country as more states and localities move towards legalizing regulated cannabis commerce.

From Leafly which just issued its 2021 jobs report, a collaboration with Whitney Economics:

Cannabis job growth in 2020 represents a doubling of the previous year’s US job growth. In 2019, the cannabis industry added 33,700 new US jobs for a total of 243,700.

Despite a year marked by a global pandemic, spiking unemployment, and economic recession, the legal cannabis industry added 77,300 full-time jobs in the United States in 2020. That represents 32% year-over-year job growth, an astonishing figure in the worst year for US economic growth since World War II.

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When the COVID-19 pandemic hit the United States in March, many in the cannabis industry worried about a potential industry-wide shutdown. Instead, governors in most states declared cannabis an essential product. Dispensaries and retail stores responded by offering online ordering, curbside pickup, and delivery as COVID-safe options for their customers.

I am so proud of relient cannabis entrepreneurs, especially craft cannabis boutiques like Kind Leaf, that give back to the community and provide quality jobs. While those on the outside see the big sales and revenue numbers making headlines, those without an intricate knowledge of the industry aren’t aware of the many headaches that cannabis businesses face. It’s amazing that mom-and-pops and other small to medium retailers are finding ways to overcome a lack of banking services, an exorbitant tax rate, and other regulatory hurdles to compete with multinational companies with shareholders and deep pocketbooks.

Cannabis Can Be a Big Part of an Economic and Jobs Stimulus Plan

The economic situation in the United States is extremely dire for millions of people as our nation recovers from the COVID pandemic. So many industries have been decimated and the American people across demographics need assistance. Some help appears to be on the way as Congress is debating a relief and stimulus package. While our elected officials debate the size of stimulus checks, whether to increase the minimum wage, or several other aspects of their next major economic bill, they should be making plans to assist the cannabis industry, one of our nation’s few bright spots.

As Iris Dorbian writes in Forbes, the cannabis industry is booming on one level, but beneath the surface, you can see major obstacles remain because of federal prohibition:

Unlike other industries that were badly hit by the COVID-19 pandemic and resulting recession, hiring in the legal cannabis industry has been booming. Experts attribute the industry’s designation as “essential” at the start of the outbreak as a key reason for the surge. However, challenges still mount. For instance, the industry may be growing exponentially, it is fragmented thanks to the federal illegality.

Federal law prevents or extremely complicated cannabis businesses’ access to banking accounts and other financial services while taxing companies at a ridiculous rate as normal business expenses cannot be deducted. While legal states announce record-breaking cannabis sales and revenue generation, small businesses, the lifeblood of our country’s economy are hindered while multinational corporations flourish. While it would be great for cannabis regulations to promote smaller operators, at the very least they should provide some type of even playing field. Instead, as usual, the mom-and-pops suffer disproportionately, but it doesn’t have to be this way. Craft cannabis boutique’s like Pendleton, Oregon’s Kind Leaf, are providing jobs, generating millions for important state programs, and give back to their local communities. By embracing the cannabis industry, the United States can improve our economy and improve lives.

Congress Should Pass Cannabis Banking for Economic and Public Safety Benefits

The fight to end federal cannabis prohibition is a multi-step process that sees the cannabis community win one political and cultural battle after another. From decriminalization to medical to legalization to equity, progress across the nation takes twists and turns as each state addresses its needs, with the federal government always playing catch up. One issue where the states need Uncle Sam to step up is banking. (And yes, the 280e IRS code as well.)

State-regulated cannabis businesses are providing an essential service in states, creating jobs and generating record-breaking revenue, but they are hamstrung by a lack of banking services that force too many businesses to conduct transactions in all-cash, without the benefit of potential loans or other financial services that they may need. While some banks will take on cannabis businesses, they often put in place extra fees and restrictions on those accounts, especially hurting smaller, locally-owned companies.

American Banker reported on the potential for Congress to pass the SAFE Banking Act, as well as broader cannabis reform measures in the next two years:

A more welcoming political environment for marijuana banking also raises the odds that financial institutions will need to incorporate new compliance processes. This includes ensuring that any business they do with the legal marijuana sector complies with anti-money-laundering rules, regardless of any legislative reforms.

“The biggest undertaking for a financial institution interested in serving the cannabis industry is detailed compliance protocols and the staffing to implement them,” said Rachel Pross, chief operations officer at the Oregon-based Maps Credit Union, which already provides services to the industry. “At Maps, we maintain a ratio of one full-time employee for every 40 cannabis business accounts.”

The cannabis industry has long been seen as a golden opportunity for financial institutions, particularly community banks and credit unions, to expand revenue via a growing sector. But regulatory concerns about the federal marijuana ban have made many depository institutions nervous, despite continued efforts by states to legalize pot.

While big, multinational corporations can easily handle spending extra and hiring more people to deal with the additional workload, mom-and-pops just get extra hurdles placed in front of their American Dream. When you’re shares are being traded on the stock market, you have the cash reserves to easily hire extra security and oversight staff. If elected officials support small businesses and public safety, then they need to step up. Thankfully, help may be on the horizon.

Cannabis Taxes Help Local Businesses and Residents During Coronavirus Crisis

Cannabis sales and tax revenue numbers are one of the few bright spots within an American economy that is reeling from the impacts of the coronavirus pandemic. When you support craft cannabis boutiques like Kind Leaf, you are helping support your local community in many ways, from providing jobs to your neighbors to helping fund various social programs that benefit your city, county, and state.

Unfortunately, the global health crisis has caused an economic collapse unlike anything that we’ve seen since the Great Depression. While many industries wonder how they are going to survive, cannabis commerce appear poised to remain strong. As government’s look for solutions, utilizing cannabis tax revenue effectively should be a part of any sensible policy proposal. Trinidad, Colorado, implemented a rainy day fund to assist local businesses and residents, a program that should be an example for other governments to follow, as Westword reports:

The southern Colorado town, fewer than fifteen miles from the New Mexico border, has used $100,000 in marijuana tax revenue from Trinidad’s 25 dispensaries to provide utility stipends for residents, as well as $300,000 for rent and utility relief for local businesses and $100,000 for extra funding split between the town’s hospital and the Las Animas County Health Department to fight COVID-19.

Trinidad economic development coordinator Wally Wallace says that one-third of local marijuana tax revenue is set aside for a “rainy-day fund,” which has been flush over the last several years. After COVID-19 spread across Colorado, Trinidad staffers feared that a drop in tax revenue during the first quarter of 2020 was inevitable — but Trinidad dispensaries broke a sales record during that period, putting $853,000 in tax revenue at the city’s disposal right after statewide stay-home orders were implemented.

“We’ve been setting aside money for that rainy-day fund for a while, which has been fantastic. When COVID-19 came in, we were trying to figure out how to react and help our local businesses while the federal and state governments were still trying to do the same,” Wallace says. “We understand this pandemic is still going on, and we still might see some drastic changes. People maybe were panic buying early on, but that being said, we’re still shocked about the lines outside of dispensaries right now.”

Over 100 neighborhood businesses have been assisted by the relief fund and local residents can apply for up to $250 for help making utility payments during these trying times. As circumstances change over time, cities and states should adapt to various needs and be flexible with cannabis tax revenue. Of course, these officials should be doing all that they can to help the cannabis industry thrive, including adding their voices and resources to federal lobbying efforts around fair banking and tax laws.

When you shop at Kind Leaf, you get to select from the biggest and best selection in the Great Northwest AND you’re helping a small business that truly benefits the local community.

Oregon Attorney General Joins Bipartisan Coalition Urging Cannabis Banking Access

It is rather incredible that cannabis businesses keep breaking sales records (two months in a row in Oregon!) with so many regulatory obstacles put in their way. Local, state, and federal laws and rules stifle cannabis entrepreneurs unlike any other industry, yet the hardworking folks keep the Mary Jane train chugging along.

The lack of access to normal banking services is one of the most burdensome prohibitions, hindering not only cannabis businesses, but also everyone that they conduct business with, from their landlord to their insurance company to their attorney. Additionally, forcing businesses to be cash only is a danger to our communities.

Thankfully, common sense banking reform could be on the horizon with the U.S. House passing a coronavirus relief bill that includes the SAFE cannabis banking act. In addition to a majority of federal representatives supporting cannabis banking access, a supermajority of state attorneys general are urging Uncle Sam pass the SAFE Act. Oregon Attorney General Ellen Rosenblum joins 33 other AGs, forming a formidable bipartisan alliance. Marijuana Moment reported:

First, the public safety threat of operating on a largely cash-only basis has been exacerbated amid the crisis. Second, large cash transactions “places law enforcement, tax regulators, consumers, and patients at heightened risk of exposure to the virus.” Third, access to financial institutions would make it easier to collect tax revenue from marijuana sales, which is particularly needed to offset economic shortfalls due to the health crisis.

“The current predicament of a rapidly expanding national marketplace without access to the national banking systems has resulted in an untenable situation,” the officials wrote. “We stress that current legislative models are available to fix this situation.”

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The letter goes on to say that passing the Secure and Fair Enforcement (SAFE) Banking Act as part of coronavirus relief legislation would not represent an endorsement of cannabis legalization by Congress. “Rather, it reflects a recognition of the realities on the ground and an embrace of our federalist system of government that is flexible enough to accommodate divergent state approaches,” they said.

As usual for the cannabis community, passing the SAFE Act won’t be easy as passage in the Senate faces many hurdles. However, the progress that we’ve made among politicans and top law enforcement officers across the nation and political spectrum, bode well for the future of the movement and industry.

You can read the entire letter from the 34 attorneys general here.

Credit Unions Join the Call for Cannabis Industry Coronavirus Assistance

The cannabis industry has become too intertwined within our society and economy to continue this second-class treatment of lacking access to banking and other services that are available to other business sectors, even those not deemed as “essential” to our local economies. Essential cannabis workers are risking their lives like grocery clerks and other crucial employees keeping some semblance of our economy going and it’s past time that they start getting treated with some type of fairness. Of course, cannabis trade groups have been clamoring for some equality, but now, credit unions are joining the fray, in another step forward for the burgeoning industry.

Marijuana Moment reported:

In a letter to congressional leaders on Tuesday, the American Trade Association for Cannabis and Hemp (ATACH), Policy Center for Public Health and Safety and 28 partnering groups and financial institutions noted that the marijuana industry and ancillary businesses that work with state-legal cannabis markets are specifically excluded from loans and lending programs provided for under several packages of COVID-19 legislation that have been approved.

To that end, the coalition made two recommendations: 1) issue pandemic relief block grants for states to decide on their own how to allocate the funds or 2) amend current federal coronavirus aid eligibility requirements to allow cannabis businesses to get funds that are available to other companies.

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“The decision to bar the legal cannabis industry from these relief programs not only harms the longevity of the industry but also the hardworking Americans who rely on the industry for their livelihood,” the groups wrote to congressional leaders. “Cannabis companies are good corporate citizens and readily participate in pandemic-related measures to care for their workforce such as mandatory paid sick leave and working to care for those with the virus.”

This latest push falls on the heels of a bill proposed by Oregon’s Earl Blumenauer and Colorado’s Earl Perlmutter to make cannabis industry participants eligible for relief during the coronavirus pandemic crisis. From the April 23rd press release issued by the representatives:

Reps. Blumenauer and Perlmutter Introduce Legislation to Make Cannabis Businesses Eligible for COVID-19 Relief

Washington D.C. – Today, Reps. Earl Blumenauer (OR-03) and Ed Perlmutter (CO-07) introduced legislation that would make cannabis businesses eligible for Small Businesses Administration (SBA) COVID-19 relief programs.

Currently, state-legal cannabis businesses are being left out of relief that was established to help small businesses weather the COVID-19 pandemic. Most notably, they are unable to access and participation in SBA’s loan programs—financial support that is designed to pay workers, health care benefits, and family or sick leave. This legislation would grant state-legal cannabis businesses eligibility for the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and Economic Injury Disaster Loans emergency advances.

“As Congress seeks to provide relief to small businesses across America, chief among those being left out are state-legal cannabis businesses that are essential to communities and have met the demands of this crisis,” said Rep. Blumenauer, founder and co-chair of the Congressional Cannabis Caucus. “We should include state-legal cannabis in federal COVID-19 response efforts.  Without providing these businesses the relief needed to carry out the recommended public health and worker-focused measures, we are putting these hard-working people – and ourselves – at risk.”

“Cannabis businesses are major employers and significant contributors to local economies in Colorado and across the country,” said Rep. Perlmutter (CO-07). “They should receive the same level of support as other legal, legitimate businesses and be eligible for SBA relief funds during this COVID-19 crisis.”

 Blumenauer also led a bipartisan coalition of nearly three dozen Congressmembers in calling on House leadership to ensure cannabis businesses are included in future relief efforts.

To read the full text of the bill, click here.

Virtually every industry is hurting, and even though cannabis businesses remain open in legal states during this crisis, they are impacted by required safety precautions, massive unemployment, and supply chain disruptions, like any other business sector. The difference is that cannabis companies often don’t have access to bank accounts, loans, grants, insurance, and other services available to businesses, all they while, being taxed at an exorbitant rate because of the 280e tax provision. It’s time that Congress, and our society give our essential workers the protections and tools they need to navigate this frightening phase, and the cannabis industry should be no different.

House Speaker Wisely Supports Cannabis Banking Access in Next Coronavirus Bill

The United States economy is in a freefall because of the coronavirus pandemic that has shut down many sectors of our economy and disrupted our American way of life. With over 17 million more Americans unemployed and retail sales plummeting more in March, than ever before, our nation is facing our greatest economic crisis since the Great Depression. The cannabis industry, considered an essential business sector here in Oregon, and across the nation in medical and legal states, is providing jobs, revenue, and medicinal products, but, thus far, has been locked out of the stimulus benefits available to other businesses.

Fortunately, the exclusion of cannabis businesses may change in the near future as provisions to allow cannabis businesses access to banking services may be included in an upcoming COVID-19 stimulus bill. Representative Ed Perlmutter (D-CO) has stated that  such a provision has the support of top congressional leaders, including House Speaker Nancy Pelosi (D-CA).

Marijuana Moment reported:

“I raised this very question to our caucus, to Speaker Nancy Pelosi directly last week, saying, look this is a major employer in Colorado and elsewhere around the country. They have been deemed essential services in many, many states,” Perlmutter said during the town hall call. “They cannot access any of the relief that we are providing for in any of these three packages that we have passed. She said, as did the other leadership members on the call, said she wanted to see it get passed.”

Perlmutter reiterated that the speaker supports his proposal and said the Democratic caucus will “continue to work on it over the next couple weeks as we put these additional packages together.”

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“I continue to push for the passage and enactment of the SAFE Banking Act to ensure cannabis and cannabis-related businesses can access the banking system, including access to much-needed financial assistance during times of need such as this COVID-19 pandemic,” Perlmutter told Marijuana Moment. “I’m also focused on ensuring any federal funding for state and local governments remains flexible enough so as not to exclude cannabis businesses in states where they are legal, legitimate businesses.”

Only time will tell if the cannabis industry will finally get access to the banking services that they need and deserve. It is downright shameful and hypocritical for cannabis farmers, processors, labs, and retailers to be deemed essential businesses and risk their lives during a global pandemic while being treated as second-class citizens. Banking access won’t be everything that the cannabis industry needs, but it’s a start.

 

 

 

Reform the 280e Tax Code: The Feds Should Stop Profiting off Illegal Cannabis

While the huge sales numbers in legal states make headlines, they don’t tell the real story about the cannabis industry. The macro numbers of gross profits and revenue demonstrate the potential of the industry, but hidden within record-breaking sales reports are the trials and tribulations facing small businesses and entrepreneurs. Regulatory hurdles and over taxation are extremely burdensome to the industry, but the biggest obstacle to unleashing the potential of the cannabis industry (save for prohibition) is the 280E IRS tax code that prohibits cannabis businesses from deducting normal business expenses from their federal taxes.

While giant corporations, especially multinational ones, may be able to weather their tax burden, mom and pops are surviving on very small profit margins after they pay their taxes. Rolling Stone reported on how the 280E tax code allows the United States federal government to reap billions of dollars because of cannabis’ illegality at the federal level:

Because of the discrepancy between state and federal law, legal marijuana businesses are often stuck paying twice as much as normal businesses – effective rates of up to 70 percent – in federal taxes. Exactly how much extra tax revenue makes it to the feds because of marijuana’s illegality is not entirely clear. But last December, the Congressional Joint Committee on Taxation responded to a request from Colorado Senator Cory Gardner with the projected additional amount that will be collected from legal cannabis businesses between 2018 and 2027 if the drug remains federally illegal: $5 billion.

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The federal government’s legal weed windfall can be traced back to a little tax code provision called 280E, which says that anyone trafficking in Schedule I or Schedule II drugs cannot take deductions or receive credits on their taxes. It was written in the 1980s to prevent the Scarfaces of the world from writing off the cost of packaging for methamphetamine. But now that a majority of states have legalized the medical or recreational sale of marijuana, the 280E tax provision has become a key point of contention between the federal government and state-legal businesses.

So where did the Joint Committee on Taxation’s numbers come from? Several marijuana industry groups have done their own estimates of 280E’s impact, but the numbers that seem closest to what the JCT put out were developed by a Washington D.C. economic research firm hired by Tom Rodgers, a Native-American advocate and lobbyist. About 15 years ago, Rodgers was the whistleblower in the infamous Jack Abramoff case, helping authorities to uncover criminal lobbying and bribery activities that ultimately led to convictions for 21 people, including a congressman and two former Bush White House officials. These days, Rodgers has expanded his oeuvre to include some work on behalf of the cannabis industry. In 2016, in conjunction with a chain of Colorado marijuana dispensaries called the Green Solution, Rodgers commissioned the research firm to develop an analysis of 280E in the hopes of ultimately getting the provision repealed.

While we’ve seen cannabis legalization gain popularity, political support has also increased. We’ve seen Congress pass protections from federal arrest and prosecution for medical providers and the House has passed protections for adult-use businesses and banking services (but the Senate needs to catch up). Eventually, we’ll see some movement on the 280E tax code. Hopefully soon, Uncle Sam will stop profiting from keeping cannabis illegal and give the hard-working members of the cannabis industry, the same tax deductions that other businesses enjoy. If the cannabis community will make a point to support locally-owned cannabis boutiques like Kind Leaf, that money will flow back into local communities, where that green can do the most good.

U.S. Treasury Secretary Tells Congress to Deal with Cannabis Banking Issues

As cannabis legalization has moved more mainstream, we have seen more and more progress at the federal level, but much-needed reforms are moving entirely too slowly, especially for those operating businesses that could use normal banking services and tax policies. With support across demographics, it can be extremely frustrating to the cannabis community and industry to see bills stalled, such as the SAFE Banking Act that managed to pass the House, but still awaits a Senate hearing. It appears that you can add Trump Treasury Secretary Steve Mnuchin to the list of those growing irritated with Congress as he told congressional members how the lack of banking services is impacting the IRS, as The Hill reported:

“This creates significant problems for the IRS,” Mnuchin said at a hearing held by a House Appropriations subcommittee.

Many states have legalized medical or recreational marijuana. However, banks have been hesitant to serve marijuana businesses even in states that have legalized use of the drug because they want to avoid violating federal anti-money laundering and illicit finance laws. That has led to cash-only marijuana businesses.

Without taking a stance on how he thinks the federal-state conflict concerning marijuana should be resolved, Mnuchin urged Congress “to deal with this one way or another.”

As The Hill noted, Idaho Republican Senator Mike Crapo is an obstacle to passing sensible cannabis banking legislation in the Senate. Spread the word and make sure that he hears from plenty of people, especially his constituents.

 

 

 

Oregon Creates More Cannabis Jobs While California Suffers Losses

Legalizing and regulating cannabis has many economic and societal benefits as bringing cannabis out of the illegal market creates jobs, generates revenue and decreases harmful arrests, prosecutions, and jailings. It isn’t all happy unicorns and rainbows for the burgeoning industry however as overregulation and over taxation still hinder hard-working entrepreneurs’ ability to fully unleash the potential of the market, especially the federal 280e tax code that prevents the deduction of normal business expenses. The dastardly 280e tax code hits retailers the hardest, especially small businesses, so please support craft cannabis boutiques like Kind Leaf as much as you can.

Cannabis commerce has been implemented in several ways and it is difficult to get all of the details correct, especially while cannabis remains illegal under federal law. Some states have limited licenses while others, namely Oregon, initially set up system with relatively low barriers to entry, to bring in as many people into the regulated market as possible.

Opening up the cannabis industry to as many licensees as possible has been great for consumers, bringing prices down, but the competition has made making profits difficult. Oregon regulators eventually started limiting cultivating licenses, but with so many actors already in the market, the Beaver State still has low cannabis prices.

While Oregon certainly hasn’t gotten everything right, I think that it is safe to say that the state has done a better job than California. Oregon’s Southern Neighbor, unfortunately has been too slow to issue licenses and taxes definitely too damn high. As Jefferson Public Radio reports, the two states’ different methods have led to job markets going in the opposite direction as the Oregon cannabis industry continues to grow while California’s cannabis jobs actually decreased:

Although recreational marijuana has been legal in Oregon for about six years, the industry continues to see job growth. Meanwhile, California’s marijuana job numbers decreased in 2019.

That’s according to a new report by Leafly, a Seattle-based cannabis publication and phone app, which recorded a 20 percent increase in marijuana industry jobs in Oregon last year.

Leafly uses state data and market sizes to estimate the number of full-time equivalent jobs in the legal marijuana industry — including farmers, trimmers, and botanists, as well as administrative staff. It doesn’t include workers who primarily work with hemp or CBD products.

Oregon, with 18,200 industry jobs, experienced a 20% increase while California, with 39,800 jobs, suffered 8,000 job losses. Leafly’s report pointed to local California regulations, especially with 2/3 of localities banning retail businesses as the culprit. Also, compared to Oregon’s maximum 20% tax rate, California’s cannabis taxes, which can range between 45% to 80% depending on your product and locality, is just too damn high.

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