Canna Law Blog ™

Canna Law Blog

LEGAL SUPPORT FOR THE CANNABIS BUSINESS COMMUNITY SINCE 2010

Marijuana Taxes: The IRS On Section 280E

Posted in Business Basics, Federal law and policy, Medical Cannabis, Recreational Marijuana, Tax preparation and controversy

Almost everyone in the cannabis industry loathes Section 280E of the Federal Income Tax Code. For more on why this is the case, check out In the Wake of Marijuana Legalization, It’s Time to Repeal Section 280E.  

Section 208E prevents cannabis producers, processors and retailers from deducting expenses from their income, except for those considered a Cost of Goods Sold (COGS).  As a consequence, marijuana businesses are required to determine what expenses are included in COGS and, therefore, what expenses are deductible.  To date, very little guidance was available to help taxpayers make this determination.

On January 23, 2015, the IRS released an internal legal memorandum outlining how Section 280E should be applied in the cannabis industry. Though this memorandum may not be used or cited by taxpayers as precedent it does outline how some IRS officials analyze Section 208E and how to determine COGS.

In the memorandum, marijuana retailers and producers are required to compute COGS under inventory rules that predate the enactment of Section 280E. According to the memorandum, a retailer can include in COGS the invoice price of cannabis, less trade or other discounts, plus transportation and other “necessary charges” incurred in acquisition.

A producer may include in COGS direct material costs (such as seeds) and direct labor costs (such as planting, harvesting, sorting, cultivating).  Indirect costs are included so long as they are “incidental and necessary for production,” such as the following:

  • Repair
  • Maintenance
  • Utilities
  • Indirect labor
  • Indirect material and supplies
  • Cost of Quality control

In addition, certain other indirect costs may be included (such as depreciation, excise taxes, factory administration expenses, and insurance), depending on accounting treatment.

The memorandum outlines a very narrow reading of the cost included in COGS by suggesting that the IRS will not allow cannabis businesses to allocate purchasing, handling, storage and administrative costs to COGS.

The memorandum suggests that a cannabis producer or retailer should be on an accrual basis of accounting unless explicitly allowed to use the cash basis in the tax code (e.g., farmers and certain small businesses). Under the cash basis, a producer generally may deduct costs in the year of payment and includes income in the year cash is received. Under the accrual method, a producer would report income in the year it is earned and deduct costs in the year incurred.  Taxpayers need to look at their specific facts to determine the impact of cash accounting vs accrual accounting, but it is important to note that the tax liability difference between these two accounting methods could end up being substantial.

This post was written by James Hunt. Jim is Managing Member of the Law Office of James G. Hunt PLLC. Jim has more than 25 years’ experience in addressing complex multi-state tax issues, as well as, federal and state tax controversies. Jim is licensed to practice law in Illinois and Washington. Jim guest posts for us from time to time on cannabis tax issues.

Oregon Marijuana Seminar in Six Days: More Tickets Now Available

Posted in Business Basics, Events, Legal Issues, Licensing, Oregon, Recreational Marijuana, States

Oregon has been all the buzz lately due to its marijuana business friendly Measure 91 and because the Oregon Liquor Control Commission (OLCC) is very publicly soliciting the public for its views on what should go into Oregon’s not yet finalized recreational marijuana program. 

What makes Measure 91 so good? A number of things. First, it has a sensible and reasonable tax structure that will allow marijuana businesses to be profitable and to compete favorably with the illegal market. Second , it explicitly allows for marijuana delivery services and some home growing. Third, it prohibits cities and counties from banning marijuana businesses outright. Fourth, it allows for out-of-state participation and investment.

Before Measure 91′s passage, Noelle Crombie (the Oregonian’s pot reporter) and I dished in downtown Portland on what Oregonians should be expecting from its newly legalized recreational cannabis regime. Immediately after Measure 91 passed, I spoke at a terrific Oregon Public Broadcasting town hall meeting in Portland on Oregon’s Oregon’s marijuana economy and what we should be expecting in Salem on marijuana in 2015. Just this past week, I had the pleasure of going on Oregon Public Radio’s Think Out Loud show to discuss the interaction between recreational and medical marijuana in Oregon post-legalization. Rounding it out, Robert McVay (another of our Canna Law Group attorneys) was also last interviewed on Public Radio regarding Oregon’s legalized marijuana regime. In all of these interviews, we stressed how much we like Measure 91.

As many of you know, we will be putting on a seminar in Portland on February 4 to talk about what marijuana businesses should expect from Oregon this year, and how to prepare for that. This seminar will be in downtown Portland at the World Trade Center Conference Center (our Portland office is in this building), 121 SW Salmon Street, #2. Originally, the only room available for this seminar (at least in the building that houses our office) held 150 people. We sold out of all 150 tickets rather quickly and that meant that we told many of you that the only way you could attend would be via webinar, which meant no social hour (and a half) afterwards.

Well a few days ago, our building alerted us to the fact that a larger room had opened up and we immediately grabbed it. This larger room can hold about 210, and we now have about 30 tickets still left. So if you were one of those people unable to buy a ticket earlier, of if you are just deciding now to attend, we urge you to go here and register for this event. We also have an unlimited number of webinar tickets still available.

We look forward to seeing you there.

 

Marijuana Advertising And The First Amendment

Posted in Business Basics, Legal Issues, Litigation, Washington

Our cannabis lawyers been asked several times in the past couple of weeks whether we have any opinion on a Washington Superior Court decision that came out earlier this month that grappled with the interplay of government regulation and commercial free speech. There’s no copy of that Superior Court opinion available online, but in this post we will examine the basics of that case and predict whether it will have much or any impact on existing or proposed restrictions on marijuana advertising in Washington and in other cannabis-legal states.

In Havsy v. Department of Health, Judge Elizabeth Martin of Pierce County Superior Court had to determine whether the Washington Department of Health’s advertising restrictions on health care providers were unconstitutional. The regulation at issue stated that “A healthcare professional shall not: . . .Include any statement or reference, visual or otherwise, on the medical use of cannabis in any advertisements for his or her business or practice.” Plaintiff, Dr. Scott Havsy, had published an advertisement that contained a list of conditions for which medical marijuana could be recommended and included an image of a pot leaf in the ad. The Department of Health decided that the ad violated its rules, and Plaintiff took them to court.

Because we are dealing with commercial speech, the viability of the restriction under both Federal law and Washington law are the same. The court has to determine 1) whether the speech concerns a lawful activity and is not misleading; 2) whether government’s interest is substantial; 3) whether the restriction directly and materially serves the asserted interest; and 4) whether the restriction is no more extensive than necessary.

The main points of contention were on points 1) and 4). The Department of Health argued that medical marijuana was illegal, but the court rightly decided that regardless of the legality of medical marijuana sales, there is nothing illegal about a doctor providing marijuana recommendations as a service. The court relied primarily on the 4th prong, arguing that the speech restrictions were overbroad and not effectively tailored toward the problem the state was trying to solve.

Does this tell us anything about whether current advertising restrictions in Washington (or elsewhere) could fall to a challenge? Probably not. The court relied heavily on the fact that this was a blanket ban. Current advertising restrictions, though limiting, still allow for significant advertising activity. At best, Havsy v. Department of Health will merely serve as a reminder to state officials that full bans on advertising are probably unconstitutional. While it is an interesting decision, I do not expect shockwaves to emanate throughout the  cannabis industry.

First Marijuana Tribal Conference: Tulalip Reservation on February 27

Posted in Alaska, Business Basics, California, Colorado, District of Columbia, Events, Federal law and policy, Florida, Illinois, Legal Issues, Licensing, Medical Cannabis, Minnesota, Nevada, New York, Oregon, Recreational Marijuana, Washington

On October 28, 2014, the United States Department of Justice issued a “Policy Statement Regarding Marijuana Issues in Indian Country.” In this memo, the DOJ stated that its eight enforcement priorities will apply “in the event that sovereign Indian Nations seek to legalize the cultivation or use of marijuana in Indian Country.” At least one Indian tribe in Northern California plans to take advantage of the DOJ’s policy statement to start its own legalized marijuana farm. Other Indian tribal governments are now considering whether to legalize marijuana for medicinal, agricultural, or recreational use on par with state governments.

Nonetheless, social policy relating to substance abuse in Indian Country has long embraced prohibition for non-prescription drug usage and, in some tribal jurisdictions, alcohol usage. The potential legalization of commercial marijuana cultivation, manufacturing, and distribution in Indian tribal jurisdictions raises complex legal questions as well as whether past social policies should be changed in light of rapidly evolving social policy toward marijuana usage in the United States.

In an effort to address the complicated issues relating to legalization on tribal lands, the Canna Law Group, along with co-sponsor Odawi Law, PLLC, will be hosting the first Tribal Marijuana Conference at the Tulalip Resort Casino, from 8:30 a.m.-5:30 p.m. Registration details and the conference agenda can be found here. Speakers include marijuana legal and policy experts, including Ohio State University Professor of Law Douglas Berman, UCLA Professor of Public Policy Mark Kleiman, and Jacob Sullum, senior editor at Reason.com, in addition to tribal authorities from the Tulalip and Lummi Nations.

The goal of the Conference is to educate attendees regarding the federal government’s treatment of marijuana and how to craft regulatory regimes for Indian tribes that will pass muster under the DOJ’s policy statement, all while keeping an eye to the sensitive policy and cultural issues concerning substance abuse on Native lands.

We hope to see you there!

Illinois’ Medical Cannabis Pilot Program: A Look Behind The Scenes

Posted in General, Illinois, Licensing, Medical Cannabis

Documentation released by the Rauner Administration under a Freedom of Information Act request by the Associated Press details the final days and hours of Illinois’ Medical Cannabis Pilot Program under the Quinn Administration. The Illinois agencies entrusted with awarding cultivation and dispensary licenses had completed review of applications, it appears, and believed that the Quinn Administration would announce the recipients of licenses in the hours before Governor-elect Rauner was to be sworn-in to office. 

The Department of Public Health had identified 12 companies to be awarded licenses for the 21 cultivation centers, and 56 companies to be awarded licenses for the 60 dispensaries. It is not clear from the information released whether more than one cultivation license would be issued to a single applicant.

The released documentation illustrates the uncertainty surrounding how the Quinn Administration would handle the Pilot Program in the final hours of office. Several different press releases had been prepared. The first announcement would reveal the recipients of the cultivation-center licenses and the persons to be appointed to the state’s Medical Cannabis Advisory Board. A subsequently prepared announcement would only release the names of the Board appointees. It is not clear why an announcement of the recipients of the dispensary licenses was never contemplated. Ultimately, no announcement was ever issued; at 11:53 a.m. on January 12 a spokesman for the Quinn Administration confirmed the accuracy of an earlier report by the Chicago Sun-Times that no licenses would be issued at all.

Among the documentation released under the Freedom of Information Act request is a scoring sheet for the dispensaries. A review of the scoring sheet raises many issues. Several applicants are marked as “disqualified” on the scoring sheet without any explanation as to what caused their disqualification. A company that retained Quinn’s former chief of staff as a lobbyist was disqualified. Several applicants were marked with the notation “hold” without an explanation as to why. An applicant that otherwise scored high was marked as “hold,” with the name Perry Mandera next to the notation. Perry Mandera owns a strip club in Chicago and was featured in the Chicago press as trying to obtain a license. A large numberof  applicants (none of whom were our clients!) were marked with notations for not following the application instructions. These included applicants that used “pharmacy” in the applicant company’s name, applicants that were not sufficiently capitalized, and applicants with proposed locations that were unacceptable.

So where does the Program go from here?  It is not clear. A spokesman for Governor Rauner said in a statement yesterday: “The governor’s office will conduct a thorough legal review of the process used by the Quinn administration and refer our findings to the Attorney General’s office. No licenses will be granted until this process is thoroughly reviewed.”

Medical Marijuana in Florida: We Like Its Chances In 2016

Posted in Advocacy, Florida, Medical Cannabis

Florida has a troubled relationship with cannabis to say the least. Though the state passed its own limited medical marijuana laws under the Compassionate Medical Cannabis Act of 2014, qualifying patients are still unable to access the medicine they need because the dispensing rules are on hold while under serious legal challenge. In addition, Amendment 2, which would have given Florida a comprehensive medical marijuana system, failed at the polls this past November.

But those in favor of Amendment 2 vow that the fight for a comprehensive medical marijuana regime in Florida is not over. In fact, John Morgan (the main financial backer of Amendment 2) and his team are back with a revised medical marijuana Amendment, shooting for passage in 2016 and assuring Florida voters that the alleged “loopholes” in Amendment 2 have been closed in this new draft.

The opposition to Amendment 2 made some pretty absurd claims about cannabis — remember the “cannabis is the new date rape drug” ads? But the more mainstream complaints against Amendment 2 were the following:

  1. Amendment 2 would have given doctors an unrestricted license to dish out cannabis recommendations;
  2. Any “medical condition” could qualify for a cannabis recommendation thereby proliferating unlawful “recreational use”; and
  3. “Personal caregivers” lacked significant oversight from the state.

From what we can tell, this 2016 Amendment is really just a slight revision of the old one. The revised Amendment still allows for the medical use of marijuana for individuals with debilitating medical conditions, as determined by a licensed Florida physician. Morgan though is asserting that the new proposed Amendment makes the following significant changes from the failed 2014 Amendment:

  1. It mandates that the Florida Department of Health verify parental consent before a doctor can recommend marijuana to a minor.
  2. It clarifies the debilitating conditions eligible for cannabis and it rules out all other conditions.
  3. It clarifies that doctors who recommend marijuana cannot be arrested for their recommendations, but that they are not immune from civil lawsuits for negligence or for malpractice.
  4. It clarifies that the Department of Health must establish quality standards for caregivers.

Morgan filed the 2016 Amendment with the Secretary of State in Tallahassee earlier this month and he and his campaigners are now seeking to gather enough signatures to get the new Amendment on the ballot.

Floridians who favor a more complete medical marijuana regime should be excited for 2016. Amendment 2 garnered 58% of the vote, falling short of passing by only 2%. If Florida can this time substitute earnest and reality-based eduction about how cannabis would actually help people, while at the same time reducing by at least half the massive influx of get rich quick carpetbaggers with their “cannabis colleges” and their quickly formed “industry organizations,” we think the new Amendment’s chances will be quite good.

We still have high hopes for Florida MMJ in 2016. What do you think?

 

 

 

Recreational Marijuana Coming To New York State?

Posted in General, Industrial Hemp, Legal Issues, New York, Recreational Marijuana, States

By Ryan Malkin*

Decades of arresting marijuana users has “failed to prevent” its use, “created a violent, illegal drug market,” and “disproportionately impacted African-American and Latino communities,” notes New York Senate Bill S01747, filed January 14, 2015. The New York “marijuana regulation and taxation act” was introduced by senators Krueger, Dilan, Hoylman, Montgomery, and Rivera. The bill, which seeks to bring recreational marijuana to New York, rightly proclaims that “regulating, controlling, and taxing marihuana like alcohol will save criminal justice resources, reduce violent crime, reduce racial disparities, and generate revenue.”

In addition to marijuana, the bill also permits industrial hemp to be farmed in New York, creating new industries, increasing employment and allowing New York farmers to share in the profits from the hundreds of millions of dollars of industrial hemp products sold in the U.S. each year. The bill proposes that regulatory oversight go to the New York State Liquor Authority (the “SLA”). So staying optimistic, let’s look at just some of the privileges the bill would provide to those in the New York marijuana industry.

There are four main license classes, ranging from manufacturer to retailer:

1. Marijuana Producer. This license will permit the holder to produce, process and sell marijuana and concentrated cannabis at wholesale to marijuana processors, retailers or other producers, but not to customers.

2. Marijuana Processor. This license permits the holder to purchase marijuana and concentrated cannabis from a marijuana producer, to process marijuana, concentrated cannabis and marijuana infused products, to package and label marijuana for sale in retail outlets, and to sell it wholesale to marijuana retailers.

3. Marijuana Retailer: This is the license for what is commonly called a dispensary, and it will permit selling marijuana, infused products and concentrates for use by customers off the premises.

4. Marijuana Retailer For On-Premise Consumption. This unique license permits sales to customers for use on the premises with food being incidental to the sale of marijuana. Think of this as the equivalent to your local “pub” or “coffee shop.” No doubt many would like to sell marijuana and alcohol from the same location, but the bill specifically prohibits this activity.

Transportation is also outlined, mandating the transporting of product only in cars or via a trucking company registered with the SLA. The cars are required to have a sign on each side showing the name and address of the licensee with the inscription: “New York State Marihuana Producer License Number…” and, respectively, “New York State Retail Marihuana Store License Number…” Given these transportation requirements, the ancillary market for armed transport may be ripe for opportunity in New York if this bill passes. I just do not think it a good idea to require someone to drive around advertising that their car may contain massive quantities of marijuana.

If passed, the bill gives the SLA 240 days to create the forms, rules and regulations necessary for implementation. That means outlining the qualifications for licensure; books and records requirements; permissible methods of producing, processing, and packing marijuana, infused products and concentrates; sanitation requirements; identity of products; security protocols; etcetera.

Like alcohol, the license privileges will be subject to city, village or town legislative approval and in cities of more than one million each community board provides authorization. Again, following the SLA’s current rules for alcohol, applicants will be required to notify the local city, village, town, or community board at least 30 days before filing the application, notifying them of the intent to file an application for a marijuana producer, processor or retailer.

The applications themselves will, in all likelihood, be similar to the SLA’s applications and process for alcohol. That means, if you are hoping to vertically integrate and hold both a producer/processor license and retail license, think again. It is prohibited for a producer or processor to hold a direct or indirect interest in a retailer. Similarly, retailers are prohibited from making loans to producers.

Now for the dollars and cents: The excise tax imposed on marijuana sold from a processor to a retailer will be 15% of the price at transfer and $35 per ounce on all marijuana flowers, $10 per ounce on leaves and $5 per immature plant. Taxes on concentrated cannabis will be based on the weight of the product used to create the concentrate. If a person holds a producer and processor license, the tax will be at time of sale to a retailer at the same rates based on content of marijuana or concentrated cannabis contained in the product sold.

The full text of the bill, which also makes several other positive changes to the Penal Law and Public Health Law, can be found here.

* Ryan Malkin is one of the country’s preeminent regulated substance lawyers. He is licensed in New York, New Jersey and Florida, where he represents alcohol distillers, brewers, suppliers, distributors and retailers and where he is finding himself more and more called on to handle cannabis business law and regulatory matters.

 

They Said It On Marijuana, Quotable Saturday, Part XLVII

Posted in Advocacy, General

It has now been a little over a year since Colorado legalized marijuana, and as expected, there have been hundreds of articles written on that milestone. All of those articles can be summed up by the following two sentence response by an unnamed Denver police office to a question regarding legalization’s impact:

 We found there hasn’t been much of a change of anything. Basically, officers aren’t seeing much of a change in how they do police work.

That’s it. And that’s the point.

Proposed Tax Bill Good For Washington Marijuana Industry

Posted in Advocacy, Legal Issues, Recreational Marijuana, Washington

Yesterday, Washington Senators Brian Hatfield and Ann Rivers introduced SB 5467, which would shift and simplify marijuana excise tax rates in Washington. Here is our take on it.

The bill replaces the current multi-tier excise tax (25% of the total value of each wholesale and retail transaction) and replaces it with a single 37% tax at the retail level. This rate is also scheduled to decrease to 33% starting July 1, 2017 and to 25% starting July 1, 2019. The bill also shifts the obligation of the tax, so that instead of it being a direct obligation of the seller, the tax is now an obligation of the buyer that the seller must collect and hold in trust for the buyer.

SB 5467 has a few other provisions of note, but let’s look at the tax shift first, because it’s a biggie. First, understand that this is likely not a tax cut, at least not until the rate falls to 25% in 2019. This may be a surprise to those pushing the notion that Washington’s market had a 50% tax on all sales, but that is really a failing in math, as Washington’s current effective tax rate when discounting sales and B&O tax is in the 30%–35% range, depending on retail markup. For example, here’s how it works if the wholesale price for one gram of marijuana is $4.00. Add 25%, and the total wholesale price is $5.00. Current retail prices are marked up by about 200%–300% of the wholesale prices. If the retailer doubles that price to $10.00, there will be an additional $2.50 of excise tax paid. If the retailer triples to $15.00, there will be an additional $3.75. Do the math and you get an effective tax rate of 35% when the retailer marks up to double the wholesale rate and about 31.7% when the retailer marks up to triple the wholesale rate. So until 2019, we should really see this as basically a revenue-neutral tax.

However, SB 5467 is still worth supporting because of its effect on the federal tax side for marijuana businesses. Under Washington State’s current tax structure for marijuana, excise taxes must be treated as income by the recipients for federal tax purpose, even though the tax is paid almost immediately back to the state. As most of you already know by now, I.R.C. 280e bars marijuana businesses from deducting expenses from their gross profit on their tax returns. So unless the excise tax is considered a Cost of Goods Sold for producers (unlikely) or retailers (definitely not), those businesses have to pay federal taxes on purely phantom income.

This bill changes that. By shifting the tax burden to the buyer and by directing that the tax be held in trust for the state, retailers will no longer have to report the tax as income. It will mirror our state’s general sales tax in that way. Producers and processors won’t need to deal with the tax at all. This simplification should do wonders for the industry and make life easier and cheaper for just about everyone.

One caveat is that SB 5467 also includes liability language similar to what Washington has for unpaid sales taxes. If the retailer does not or cannot pay the sales tax to the state, its employees, owners, or officers in charge of paying the tax to the state can be found personally liable. The tax would not be considered a trust fund tax, and the potential liabilities of a trustee in this case carry a little more weight than other types of business tax liabilities.

All in all, this is definitely a measure to support, so we encourage you to call your local legislators to urge them to push this measure forward.

Medical Marijuana: No Love Lost Between Washington’s Competing MMJ Bills

Posted in Medical Cannabis, Recreational Marijuana, Washington

It’s no secret that Washington State has been struggling lately in trying to harmonize its two marijuana industries, medical and recreational. Washington right now has a vast number of medical marijuana dispensaries that compete against a much smaller number of licensed retail storefronts that, though heavily taxed, are allowed to sell to anyone over 21. Medical marijuana “as is” is undermining Washington’s experimentation with recreational marijuana because medical businesses have virtually no state oversight, pay almost nothing in taxes, and face virtually no barriers to entry. In addition, where Washington’s medical marijuana law allows patients with “intractable pain” to access medical cannabis, there’s no doubt that a good number of illegitimate “patients” are taking advantage of the lower priced cannabis at medical marijuana access points instead of retail storefronts.

Most recently in the state’s capital of Olympia, two bills have emerged to “fix” Washington’s dueling marijuana systems. Whichever bill prevails (and even if neither goes anywhere), one thing is certain, regulation will be coming to Washington’s medical marijuana scene.

Even though both bills will lead to state regulation and oversight for medical marijuana, they do so through very different mechanisms. State Senator Ann Rivers is the author of Senate Bill 5052, which mandates that the state retain a separate medical marijuana system, distinct from I-502. The highlights of that bill are as follows:

  • Medical marijuana dispensaries can sell only edibles, concentrates, oils, and marijuana-infused products to qualifying patients. They will be prohibited from distributing or selling any raw marijuana flower to patients.
  • State licensing of medical marijuana facilities would be required.
  • Quality assurance testing of all products would be mandatory.
  • Medical marijuana products would be sales tax free.
  • The state would create a registry for medical marijuana patients and providers.
  • Restrictions will be imposed on licensed health care providers who authorize the medical use of marijuana.
  • The Department of Health will determine appropriate levels of THC permissible for products sold in medical outlets.
  • Collective gardens as we now know them would be significantly scaled down. These gardens would be limited to four people, one garden per tax parcel. The gardens would have to register their location with the state, and they would not be allowed to be within 25 miles of a medical marijuana store.
  • Patients or their providers could grow up to six plants at home.

Senator Rivers’ proposed bill states that ”growers licensed to produce pot for the recreational market would be allowed to expand their operation to add plants for medical use, and if more medical marijuana production is needed, priority in licensing would be given to applicants who haven’t yet been approved for recreational grows.”

In contrast to Senator Rivers’ bill, State Senator Jeanne Kohl-Welles’ medical marijuana bill contemplates rolling medical marijuana into the existing I-502 regulatory regime. In doing so, it will eliminate collective gardens and medical marijuana access points and it also would make some fixes to I-502′s current structure. Some highlights of Senate Bill 6178 are as follows:

  • Collective gardens would be phased out by August 1, 2016, but medical growers who have business licenses and are paying taxes could apply to grow in the new “single” system.
  • The state’s current limit on the number of recreational stores would be removed so that existing medical marijuana access point managers could apply to own a store.
  • I-502′s excise taxes will be consolidated into one tax paid at the retail point of sale. This is in addition to changing the nature of these taxes so that they become deductible at the Federal level — they currently are not.
  • Patient-focused, high-CBD products would be given a tax break. In special cases, such as those patients seeking high-THC pot for specific medical problems or parents who want access for their kids, patients could get medical exemptions from the Department of Health.
  • Deliveries would be allowed under I-502.
  • The “1,000-foot buffer rule” that disallows marijuana businesses within that distance from schools, parks, and other places kids congregate would be reduced to a more manageable 500-foot buffer.
  • Local governments will be encouraged to allow marijuana businesses by the state sharing marijuana revenues only with those jurisdictions that participate in the industry.

Both of these bills would lead to significant changes to a well-entrenched medical marijuana industry and, for that reason alone, there will be pushback. Whether either or neither of these bills passes, we are certain that by this time next year, Washington will have a brand new, regulated medical marijuana industry.

Stay tuned.