4/20 was an amazing day to celebrate the cannabis industry at the Bisnow National Cannabis Real Estate Summit in Chicago.
Cannabis Facility Construction‘s Founder and CEO Andrew Poticha was a part of an informative panel discussing “The Business Of Cannabis: An Analysis of The Green Behind the Grass,” a state-by-state compare and contrast on investment, technology, and more!
And, you can listen to the audio recording here:
You can watch a video of the event HERE
Here are a few key insights Andy shared at the event:
“Experience is key. You don’t have to break the bank on the costs to build your facility if you think through the experience that you want your client to have in the space. You can be creative with paint and lighting.”
“As more states become adult use, the security aspect is becoming more like a bank experience where there are guards and there are cameras, but they are discreet and don’t interrupt the client experience.”
“When it comes to green design, such as low carbon footprint, it can be as costly because cannabis facilities are dependent on such large amounts of resources like electricity and water. Where we can make a difference is by using efficient components and resources so that we use less. One of the things that is going to come up is using GMP, good manufacturing practice, which will be important going forward.”
“Our function as designers is to get inside our clients’ heads and articulate for them that which they can’t do themselves by asking the right questions and probing the operations discussions that generate the design. Client experience and operation is critical for not only dispensary but also cultivation. You really need to listen to your cultivation team when it comes to their recommendation on operations and be able to scale up or down depending of your cultivation facility.”
“Soon we may see people in consumption lounges sipping on an infused beverage just like you might enjoy a good Scotch. We should all be thinking about what the experience should be in those spaces, and we simply don’t know the answer to that yet.”
“Keep your eye on HVAC no matter what you are considering in your cultivation facilities. The plant is so sensitive that even one degree of temperature and 1% of humidity variation can affect the quality of the harvest. You have to get your HVAC strategy right, and keep your eye on the final product.”
(From left: Ira Singer, Andy Poticha, Margy Sweeney, Morgan Sweeney, Joe Donnelly, Conah Targett-Jones)
2019 has been the year of the cannabis plant in the United States. New states have joined the recreational cannabis club, young medical programs are exploding, mature ones are diversifying, and the Northeast is inching along. Here is the latest on the nation’s most popular cannabis states.
Colorado’s Cannabis Program Adds Versatility
Changes are coming to Colorado’s medical and recreational cannabis programs. House Bill 1230 will allow legal social consumption at businesses like dispensaries, restaurants, hotels, and music venues. Home-delivery of medical cannabis can begin in 2020, followed by recreational in 2021 thanks to the passage of House Bill 1234. In response to the state’s opioid epidemic, Governor Jared Polis signed the MMJ for Opioids Bill, which allows doctors to recommend medical cannabis as an alternative to opioid medications. The medical program also added autism to its list of qualifying conditions. Finally, House Bill 1090 opens Colorado’s cannabis industry to out-of-state investors and capital, including publicly held companies and large venture funds. Per Westword, “The bill would also permit investors to own smaller stakes (less than 10 percent) in a cannabis business.”
Illinois Hits a Snag
According to the Illinois Regulation and Tax Act, the state’s 55 existing medical dispensaries would have first dibs at applying for a recreational sales license at the same site, plus a second license for one at a different location. However, recently, The Illinois Department of Financial & Professional Regulation, the agency in charge of issuing those initial recreational-use licenses, announced a different interpretation: “…if a medical dispensary wishes to relocate for any reason — whether it’s for more space or if a home municipality bans recreational sales — it forfeits its right to also sell recreational marijuana,” per the Chicago Tribune.
This has created chaos for companies like Green Thumb Industries (GTI), which was awarded a retail license by the state in its Naperville location before the city council opted out of the program. “Naperville’s 6-3 vote on Tuesday, September 3 (2019) marks one of the first major roadblocks for Illinois’ marijuana industry as it prepares for recreational sales next year,” the Chicago Tribune added. “Whether GTI, or any other company, can open a store for recreational marijuana, could be reconsidered by the council after a potential non-binding voter referendum.”
Other municipalities in Chicagoland to ban recreational stores include Bolingbrook and Wheaton.
Oklahoma Medical Cannabis is Soaring
Previously, we wrote about the launch of Oklahoma’s medical program, and nothing is halting its trajectory toward a projected value of $250 million per year by 2025.
As of August, 2019, there are 162,273 registered medical cardholders, a number that’s been growing by up to 10,000 per month for the last year. To put those numbers in perspective, that’s 4 percent of the state’s total population.
There’s a pretty easy explanation for this success: patients don’t have to meet qualifying conditions, and instead only need a referral from a physician. There are also no caps on dispensary licenses, which is why the current number is over 1,700. Additionally, the barrier to entry is low. According to the Arkansas Times, “The license to grow on a commercial scale or open a dispensary in Oklahoma is a flat $2,500 and a fare thee well, open to any Oklahoma resident who hasn’t had a felony in the past five years. Their law allows cardholders to possess up to a half pound of marijuana, and grow up to six plants at a time. Their law also made possession of up to 1.5 ounces by non-cardholders a misdemeanor punishable by a maximum $400 fine.”
Additionally, High Times Magazine put Oklahoma’s cannabis culture on the map when it held its renown Cannabis Cups in Oklahoma City in August.
Massachusetts Social Equity
As more recreational cannabis businesses come online in Massachusetts, the push for social equity is taking center stage. Real Action for Cannabis Equity (RACE) started in Boston in September, 2019 to address the dearth of minority-owned operators. Per Marijuana Business Daily, “Organizers say they’re frustrated that all but two of Massachusetts’ 184 marijuana business licenses were issued to white operators…black entrepreneurs in Massachusetts who say people of color are being shut out of the lucrative marijuana industry are joining forces to close the gap.”
New York Decriminalizes Cannabis
Though New York state failed to pass recreational cannabis during the 2019 legislative session, a last-minute compromise was reached on decriminalization. According to The New York Times,”Under the new law, possessing between one and two ounces of marijuana will no longer be considered a Class B misdemeanor. It will now be a violation, with fines up to $200. Those found with less than an ounce of marijuana will now face a $50 fine, compared with $150 previously.” In addition approximately 160,000 people will have cannabis convictions expunged from their records.
New Jersey Still has a Chance to Pass Recreational Cannabis
The Garden State saga to legalize recreational cannabis is back on. The state Legislature came up short on votes to pass a new law earlier in 2019, but the law-making body isn’t giving up, envisioning two scenarios:
- Holding another vote for the bill during the lame duck session at the end of 2019 or the first half of 2020
- Putting it on the ballot for the November, 2020 election
Governor Phil Murphy has voiced his preference of passing recreational cannabis through the Legislature versus relying on the ballot box. According to NJ.com, “Such a move would allow leaders to more easily mold and regulate the new marijuana industry. And waiting until next year’s elections means you likely won’t be able to consume weed legally in New Jersey until early 2021, at the earliest.”
“In the interest of equity and criminal justice reform, I look forward to signing this monumental legislation,” said Illinois Governor, J.B. Pritzker, following the passage of House Bill 1438 on Friday, May 31, 2019. The 66-47 vote made Illinois the 11th state to legalize adult-use cannabis and the first to do so through the state legislature. Vermont’s program was approved through its legislature but does not permit commercial sales. Approval in other states occurred via referendum.
The bill, which passed 38-17 in the state Senate two days earlier, focuses on social equity and addressing Illinois’ financial deficit. Chicago Crain’s Business reports that, “Illinois expects sales to eventually reach $1.5 billion to $2 billion a year, producing $500 million in revenue for the cash-strapped state.”
Following the November, 2018 midterm elections, we commented on what Governor Pritzker’s election victory would portend for the future of cannabis in Illinois. Once he signs the bill, it will be the law of the land.
Here’s what you need to know about the new law:
Growing and Selling
Recreational sales will begin on January 1, 2020, with priority given to businesses with current medical licenses. They will be eligible to start cultivating, producing, and selling cannabis for retail use.
According to the Chicago Tribune, “Only the 20 existing licensed medical marijuana cultivation facilities will be licensed to grow it initially. Next year, craft growers may apply for licenses to cultivate up to 5,000 square feet, with preference given to applicants from minority areas disproportionately affected by the war on drugs, such as the South and West sides of Chicago. Medical marijuana dispensaries and new retail stores will be licensed to sell it.”
The bill allows for Illinois residents 21 and older to possess up to 30 grams or roughly one ounce of cannabis flower or bud. They are also allowed five grams of cannabis concentrate or 500 milligrams of THC in a cannabis-infused product. Adults visiting the state can possess up to 15 grams of cannabis. Growing plants at home will remain illegal except for certified medical patients.
Impact on Convictions
Central to the bill was the expungement of cannabis convictions.
“While the usage of cannabis has been the same across all racial groups, the actual incarceration charges have been shown to be seven times more likely for people of color than Caucasians,” said Illinois State Senator. Heather Steans (D-Chicago), the Senate bill’s main sponsor. “This bill is going to set the model, I believe, the gold standard, for how to approach social equity issues related to cannabis legalization.”
Here’s what’s at stake for convicted felons, according to the Chicago Tribune: “The governor will pardon past convictions for possession of up to 30 grams, with the attorney general going to court to expunge or delete public records of a conviction or arrest. For possession of 30 to 500 grams, an individual or a state’s attorney may petition the court to vacate and expunge the conviction, but prosecutors may object, with a judge to make the decision.”
Per ABC News and the Chicago Tribune, consumers will be taxed in the following way:
- A 10% tax will be levied on cannabis products containing less than 35% THC
- 20% for cannabis-infused products like edibles
- 25% for THC concentrations of more than 35%
Additional state and local taxes apply and can be as high as 9.75%, including:
- 3% municipality
- 3.75% county in unincorporated areas
- 3% in Cook County (Chicago)
Opting In or Out
Similar to other adult use programs, local governments may opt in or out. According the Chicago Tribune, “Municipalities and counties may ban cannabis businesses within their boundaries, but may not ban individual possession. Any person, business or landlord may prohibit use on private property. Colleges and universities may continue to prohibit marijuana use.”
Where You Can and Cannot Consume
Usage at home is permitted as long as it’s out of view of the public. Places where use is strictly prohibited include: public areas, school grounds, in any motor vehicle, in a correctional facility, around someone under 21, while driving a boat or flying a plane, or by a school bus driver, police, fire or corrections officer while on duty.What Else?
Cannabis remains a Schedule 1 illegal drug by the federal government; however, federal law enforcement tends not to prosecute possession of small amounts or businesses complying with state programs.
Medical cannabis was also a winner at the eleventh hour of the legislative session. The House passed the bipartisan SB 2023, which will make the Compassionate Use of Medical Cannabis Pilot Program Act permanent while broadening its scope. Illinois State Representative Bob Morgan’s (D) reauthorization bill removes the program’s July, 2020 sunset and adds more patient qualifying conditions, including chronic pain and autism.
The bill also permits advanced practice nurses and physician assistants to recommend medical cannabis in addition to physicians and increases the number of caregivers that patients can use to access the program. Similar to the adult-use program, the reauthorization bill emphasizes equity standards and will award five dispensary licenses to ensure equal opportunity.
“It is critical for the state that the pilot program be reauthorized and revised,” said Morgan in a press release. “The initial program placed a significant regulatory burden on patients. With the passage of SB2023, the new program will streamline the process and help patients suffering from debilitating medical conditions.”