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Our Perspectives on the Cannabis Industry

2016 Cannabis Reform in a Nutshell

2016 started out with a buzz of promise for the cannabis industry.

It was an election year with the promise of a democratic nominee that was sympathetic to marijuana reform. There were several measures on state ballots across the nation and talk of the DEA rescheduling marijuana by mid-summer.

As we look forward to the potential of 2017 let’s take a moment to look back and reflect on some of the significant happenings of 2016 and how they affected our industry. Victories we celebrated and setbacks we experienced.

dea-sucksRescheduling is by far one of the most disappointing things that did not happen. The beginning of the year brought hope that the DEA would reschedule marijuana, we waited patiently for the time to come when they said they’d be announcing a decision only to find out that they weren’t going to do it at all. The DEA finally announced in August they were leaving marijuana as a schedule 1 drug.

And, as we all know by now, they finished off the year by finalizing a proposal that named CBD extract specifically and gave it its own new drug code (7350) under Schedule 1 of the controlled substance act.

Those will definitely be considered the setbacks of the year but we also made some great strides in our efforts towards cannabis reform. Some big name corporations put their feelers out into the industry. Which might be an indication that they believe it will be the next great thing-or at least that they aren’t gonna be left out if it is…and publicly acknowledged it.

We saw overall perceptions change and a much greater acceptance for cannabis reform across the nation.  

Big name investment firms set out to raise significant amounts of money for investing in canna-business. Firms such as Tuatara, a private equity firm in New York, raised $93 million to invest in the industry.  The fact that even more investment banks, mainstream banks like Cowen & Co., are eyeing the sector indicates that more people in the financial sector are seeing the opportunity and wanting a piece of the pie.  And even reports that Google was looking to dip its toes in the industry. Beverage mogul Constellation Brands wants to create marijuana-infused beverages.

melissa-etheridgeThe publicity for the industry is not just from well known, respected businesses but also well known individuals. Celebrities came out publicly and decided to not only support the industry but jump in with both feet. And not just the obvious suspects like Willie Nelson and Tommy Chong.  We’re talking about professional athletes, like former NFL player Ricky Williams who founded Power Plant Fitness and Wellness, a cannabis-friendly gym in San Francisco, and the Portland Trail Blazers’ basketball star, Cliff Robinson, who is creating a company to produce therapeutic marijuana products for athletes.  There were many musicians who got involved in the industry creating their own unique products, as well as Hollywood actors and producers. Melissa Etheridge, who used cannabis when she was battling breast cancer and receiving chemotherapy, makes her own Private Reserve Cannabis-infused Wine Tincture she sells in California medical dispensaries. Whoopi Goldberg partnered with Maya Elisabeth, the founder of Om Edibles and is considered one of the finest creators of medical cannabis products in California.  Even the creator of the popular legal drama series Law & Order, Dick Wolf, decided to get in on the action and invested $1.5 million in a Las Vegas lab testing and education facility called Digipath. And, of course, Sir Richard Branson who invested in a new on-demand delivery service in San Francisco called Sidecar.

There were important advancements on marijuana as medicine.

medical-marijuana-pain-reliefThis past year saw some notable studies completed on the benefits of marijuana on various illnesses. There were studies done with promising outcomes on diseases such as Alzheimers, Parkinson’s Disease, and Epilepsy.  A groundbreaking study done on breast cancer found that cannabidiolic acid (CBDA) “inhibits migration of the highly invasive MDA-MB-231 human breast cancer cells”. This is incredible news!

Other studies published in the journal Cancer Medicine showed the use of marijuana to be linked to a lower risk of heart failure, cardiac disease, and in-hospital mortality. Studies like this are very important to cannabis reform movement due to the fact that one of the main excuses the Government uses against rescheduling marijuana from a Schedule 1 drug to a lower schedule is that there is no “accepted medical use” and not enough studies showing it.

pink-leafOn top of that a study published in the JAMA concluded that medical cannabis laws are ”associated with significantly lower state-level opioid overdose mortality rates.” They found that in medical marijuana states there was a 24.8% lower annual opioid overdose mortality rate compared with states where no medical cannabis laws exist. Even though these kinds of things don’t get a lot of news they are very important happenings that will eventually have a positive effect on the industry.

Speaking of having a positive effect on the industry, there were also some monumental courtroom wins for cannabis reform.

court-casesSome long drawn out court cases, namely in California, where all 4 four federal cases filed against California dispensaries were defeated. A case that had dragged on for three years against Berkeley Patients Group was dismissed with prejudice. Also in California, a federal appeals court ruled that the U.S. Department of Justice is not allowed spend money to prosecute state law abiding cannabis businesses. And the case where the Rohrabacher-Farr Amendment, adopted by Congress in December 2014, was upheld by the 9th U.S. Circuit Court of Appeals in San Francisco when they ruled that the DOJ must comply with its provisions that prohibit the DOJ from spending federal funds to interfere with state marijuana laws.

cannabis winsFinally, in the fall, the much anticipated election rolled around and we saw a landslide in victories at the polls. 8 of the 9 states with marijuana initiatives on the ballot passed. The outcome brought 4 more states on board with recreational marijuana doubling the current number and added 3 more states to the long list of medical marijuana programs. Montana finally passed legislation making their current programs workable.

A couple states didn’t bother with the ballots and changed their cannabis laws through legislation earlier in the year. Both Pennsylvania and Ohio’s governors readily signed their respective medical marijuana laws.

Bonuses: it is expected these cannabis markets will bring $21.8 billion in legal cannabis sales by the year 2020 according to a recent ArcView report and create hundreds of thousands of jobs across the U.S.

OK people, it’s not all about US! While we enjoyed some great victories on our home turf, the past year also saw some significant changes in marijuana law outside of the U.S. borders too. A few countries passed measures to legalize medical marijuana. Jamaica set up interim regulatory framework designed to help them with the development of legal medical marijuana, hemp and nutraceutical industries. In Australia cultivation for medicinal purposes was legalized by the federal government on Feb 24, 2016 and also in Victoria on April 12, 2016. For patients in the Capitol Territory and South Australia it is legal to grow up to two plants for personal consumption.  Late in the year both Germany and Ireland passed measures for medicinal use that will take effect in 2017. Lastly, Macedonia also legalized medical marijuana in 2016.

cannabis in canadaProbably one of the most significant advances in global cannabis reform happened in Canada.

Canada took some very important steps towards becoming the first G7 nation to legalize in 2016. On april 20th Health Minister, Jane Philpott, announced that new legislation for legal marijuana would go into effect in the spring of 2017. In June they formed the Task Force on Marijuana Legalization and Regulation, in order to seek input and design the system to legalize, strictly regulate and restrict access to marijuana. Canada became the only other country besides Uruguay to approve both legalization and regulation of the drug.

This is important because in order to accomplish this, Canada will have to amend its involvement in three international conventions. The Conventions criminalize possession and production of cannabis and the United States is one of the treaties strongest supporters. Canada could seek exceptions for marijuana or denounces the Single Convention on Narcotic Drugs altogether. Whatever course Canada takes will likely set the precedent for other countries that decide to legalize marijuana in the future making Prime Minister Justin Trudeau a true leader in the fight for cannabis reform.

Another important thing that did NOT happen? Access to banking. Unfortunately, the year ends with no real change where banking is concerned. An uncertain regulatory climate continues to keep many banks frozen in inaction.

trumpObviously it would be crazy to leave out the Trump win when talking about the monumental moments of the past year.  Sure, Trump has voiced an opinion that legalization is a states’ rights issue, and that he is, for the most part, in support of marijuana for medicinal purposes, but he also doesn’t speak fondly of the recreational market and he did appoint known anti-marijuana advocate Senator Jeff Sessions as the Attorney General. But as the inauguration draws near we will be visiting that topic much more exclusively so we’ll leave those predictions for later…..

We close out 2016 saying goodbye to the Obama era. Whatever your political stance is there is no denying that President Obama’s look-the-other-way position on cannabis reform made a historical mark on the cannabis industry. Without it we may not have made the strides that we have. We may not have so many legal medical and recreational marijuana states. We wouldn’t have won the court cases. There might not be more and more research being achieved. His support for states rights, and his appointment of people who would also stand up for the states, led to the series of Justice Department memos that prohibit the feds from interfering with state-legal cannabis programs.

Keith Stroup, founder of NORML may have said it best: “President Obama has given the marijuana legalization movement a historic gift by allowing the various states to experiment with different models of marijuana legalization without federal interference,” which has allowed the industry to demonstrate to the world that legalization can work.

There are pros and cons to all of these changes. The election and changes through legislation show that medical marijuana has become an issue increasingly supported by the public and embraced by politicians. The conglomerates involvement mean that the stoner stigma is waning and business professionals are viewing it as a viable business opportunity. But some of these changes could also mean a change in the way the industry is seen, and ultimately they could mean a change in its culture. Deep pocketed corporations could manage to push out the smaller, more entrepreneurial endeavors.

2017 cannabisAmidst political and regulatory uncertainties this industry is growing rapidly. Moving forward it will be important for cannabis businesses to remain steadfast, continue to build and nurture our relationships with regulators and advocacy groups, adhere to standards of business practice and always, always stay in compliance.  There will be challenges, but with challenge comes opportunity. Whatever happens, we go into 2017 with optimism that the ground we’ve covered and the relationships we’ve built have created a strong foundation for a resilient cannabis industry.

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