With our email Action Alert this week, AMMA PAC had gotten more than 600 industry leaders to email Governor Ducey to tell him that his statements on 4/20 pushing for total prohibition of Cannabis in Arizona are wrong and do not live up to his Libertarian ideals.
To email Governor Ducey now click here.
Our original Action Alert is below.
Governor Ducey shouted his opposition to cannabis loud and clear on 4/20.
Take ACTION now and email Governor Ducey. Tell him to oppose cannabis prohibition.
Attention: Copy the following and paste it in your email!
Subject: Please Oppose Cannabis Prohibition in Arizona
Dear Governor Ducey,
I am a leader in the cannabis industry in Arizona and at the Marijuana Industry Trade Association (MITA) meeting on Wednesday night, I was told that on 4/20 at the Smart Approaches to Marijuana conference you talked about how you and a well-financed group of opponents were able to defeat Prop. 205.
I thought that you were a libertarian, and therefore I am asking you not to support total prohibition of cannabis and instead support taxation and regulation of it through a legal marketplace. I am asking you to please consider looking at ways that our industry can work with your office to find common ground and to move the cannabis industry forward for a better Arizona.
This legislative session a large group of legislators from both the Democratic and Republican caucuses signed on as co-sponsors to SB1337 with Republican Senator Sonny Borelli, the bill’s primary sponsor in an attempt to create a legal hemp industry in Arizona. This bill passed through the Senate with little opposition and is now in the House of Representatives awaiting a House Rules Committee hearing.
For the proponents of this bill the argument for having a hemp industry in Arizona is simple. In a state with scarce water resources for farming and a large cotton industry, the benefits of growing hemp are dramatic. Unlike cotton, hemp uses far less water when it is being grown for industrial purposes and just like cotton, hemp can be used for basically all of the industrial applications for which cotton is currently farmed. Water savings are not the only reason that hemp is a good investment for Arizona’s farming community. Hemp is a very heat-tolerant plant and it actually reconditions the soil compared to the deplenishing effects of growing cotton. This means that even for farmers of other crops like cotton, hemp can be grown in rotation with the other main crops as a way to make the soil more suitable for additional crops to be grown on that same land in the future.
As the proponents of the bill add, hemp is a variety of the Cannabis plant that can be used to make anything from paper and rope to cosmetics, food and clothing. Hemp is also different from other Cannabis plants because it contains low amounts of the primary psychoactive chemical in Cannabis plants that are used for the production of marijuana. Even with these differences between hemp plants and plants grown for marijuana production, hemp cannot legally be grown industrially in Arizona or most places in the United States because it is still classified as a Schedule 1 drug just like marijuana. This federal classification causes big issues for the growth of this highly beneficial industry in Arizona and other places in the United States and likely is one reason that a small group of legislators are still in opposition to an industrial hemp industry in Arizona.
One such opponent is Republican Senator David Farnsworth. When questioned about his no vote in the Senate on SB1337, Senator Farnsworth stated that he does see hemp’s commercial benefits but that hemp might create challenges for law enforcement to distinguish a small hemp plant from a small marijuana plant and that “[e]nforcement of our marijuana laws would be more difficult if we have a lot of hemp growing”. Finally, Senator Farnsworth has made statements that he is worried that hemp could be used as a backdoor way to legalize marijuana in Arizona, even though no marijuana plants would be able to be grown on hemp fields under the way the bill is written.
Proponents of a hemp industry would likely point out that Senator Farnsworth’s arguments miss the point because the language of SB1337 would set up the process to produce, distribute and sell hemp without changing any of Arizona’s medical marijuana laws and that hemp plants are clearly distinguishable by the naked eye from flowering marijuana plants. Also, SB1337 would create a very stringent program with oversight by the Arizona Department of Agriculture. If passed, SB1337 would require all people employed in the hemp program to pass criminal background checks and all growers and producers would have to keep detailed records about where all hemp is grown. Under this program. all hemp would be inspected and tested by agriculture department. When tested, if any plant is found to have more than 0.3 percent of THC, the crop would be destroyed and the farmer would be banned from growing hemp.
With only a few weeks left in this legislative session, the hope remains that SB1337 will be passed out of the legislature and sent on to the governor for him to sign it into law but until this bill is heard in the Rules Committee it cannot move forward. Check AMMA PAC’s weekly legislative updates for more information on this bill in upcoming weeks.
Source: Cronkite News
by Taylor Swick
During the 2017 Legislative session, multiple Republican sponsored bills were passed and then signed into law by Governor Ducey that will severely stifle, if not end, the ability of voters to initiate their own ballot measures in Arizona and that weaken the Voter Protection Act that protects these ballot measures.
The issue for the Legislators who sponsored and voted in favor of these bills is that voters support the initiative process and the Voter Protection Act. This was demonstrated in a poll that asked voters both about the Voter Protection Act and their support of industries that were started because of successful ballot measures in the past. One such industry that is supported by those questioned in the poll and that came from a voter initiative is Arizona’s medical marijuana industry.
In the Arizona Public Opinion Poll conducted by Remington Research Group on March 7 and March 8, 2017, 1,371 registered voters were surveyed about legislative attempts to repeal or weaken Proposition 105, the Voter Protection Act. (NOTE: This survey was weighted to match the expected turnout demographics for the 2018 General Election. The Margin of Error is +/-3% with a 95% level of confidence and the totals do not always equal 100% due to rounding.)
Some of the questions and answers from this survey that relate to the cannabis industry are listed below:
Q: Arizona’s Voter Protection Act ensures laws passed by Arizona citizens through a ballot measure or referendum cannot be changed. There is a proposal in the State Legislature to submit a ballot measure that would weaken or eliminate Arizona’s Voter Protection Act. Do you support or oppose this proposal?
Strongly support: 8%
Somewhat support: 8%
TOTAL SUPPORT: 16%
Somewhat oppose: 10%
Strongly oppose: 53%
TOTAL OPPOSE: 63%
Prompt: I will now read you a handful of brief statements concerning the proposal to reduce or eliminate Arizona’s Voter Protection Act. Please indicate, after hearing each statement, if it makes you more likely or less likely to support the proposal to reduce or eliminate Arizona’s Voter Protection Act.
Q: Reducing or eliminating the Voter Protection Act will allow politicians to repeal the voter approved law that allows for access to medical marijuana.
More likely to support: 22%
Less likely to support: 60%
No difference: 17%
Q: If a question to reduce or eliminate the Arizona Voter Protection Act were to appear on an election ballot, and the election were held today, would you vote yes to reduce or eliminate the Voter Protection Action, or would you vote no.
Q: If your State Senator or Representative supported the weakening or elimination of the Voter Protection Act, would this make you more likely to support or more likely to oppose their re-election?
More likely to support: 12%
More likely to oppose: 71%
What do the results from this poll signify? One thing that seems to stand out is that the bills passed by the Legislature this session that do harm to voter initiatives and the Voter Protection Act go strongly against what Arizona’s voters feel is right. Potentially that signals that a majority of the Legislature now is out of touch with what their constituents want or that the legislative attempts to harm the Voter Protection Act and initiatives were done to benefit those in power rather than the people who elected them.
One thing we can determine is that Arizona’s cannabis industry will have a much harder time passing anything at the ballot in the future unless these new laws are deemed unconstitutional or challenged at the ballot.
by Taylor Swick
Sue Sisley, a well-known physician in Scottsdale has finally been approved to begin her treatment of 76 military veterans who suffer from chronic of PTSD. This approval comes nearly two years after her group, which is named the Multidisciplinary Association for Psychedelic Studies (MAPS), was awarded a Cannabis study grant. The funding for this program has come from a more than $2 million grant from the Colorado Department of Public Health and Environment (CDPHE). With this money, MAPS is working to evaluate the safety and efficacy of Cannabis for specific FDA regulated medical uses, and specifically for PTSD.
This January, Dr. Sisley and her group were able to finally enroll their first round of participants in the program and as of March, five participants had received Cannabis as a part of Phase 2 of the MAPS clinical trial.
In this program, MAPS is testing four potency levels of smoked Cannabis as a way for patients to control their symptoms of chronic, treatment-resistant PTSD. The reason for using a variety of Cannabis potencies is to provide vital information on the various compounds contained within Cannabis that work in concert with one-another, as well as to determine information on dosing and the potential side effects and benefits of Cannabis as used as a potential treatment for PTSD.
All Cannabis that is used for any clinical trial or study in the United States comes from one Cannabis grow facility. This location is a 12-acre grow at the University of Mississippi, run by the National Institute on Drug Abuse (NIDA). Currently this facility is the only DEA licensed site that can grow Cannabis for clinical research since growing large quantities of Cannabis, even for research, is still prohibited under federal law. For this reason, the demand for Cannabis from this grow facility has spiked in the past year.
Sadly, at the end of 2016 and through the beginning of this year, Dr. Sisley and her group have experienced what they characterized as product that did not look or smell like Cannabis and also that tested at different levels of potency than the product that MAPS had originally asked for. These quality issues and the associated need for multiple rounds of testing this Cannabis for safety brought the MAPS program to a halt for months. Even though no participants in the MAPS program have compromised immune systems, the MAPS team worried about the safety of using the Cannabis that MAPS had received since it was unknown what adverse potential this Cannabis could have on any of the participants when smoked. Upon much testing and consideration, the MAPS team concluded that it was safe to proceed with the study.
Luckily, with MAPS suffering these setbacks, the DEA recently announced some positive information about the future of Cannabis grow facilities in the United States. This summer the DEA stated that it would begin to accept applications for additional Cannabis grow facility licenses and therefore NIDA will no longer be the only facility licensed to grow Cannabis for clinical trials if any of these applications are accepted. Since this time, multiple organizations have submitted the application paperwork. To date, none of the applications had been approved, and the DEA reported that no timeline has been established for the agency to make any determinations or decisions. Dr. Sisley is a part of the Scottsdale Research Institute (SRI), which is one of the organizations that has submitted an application to grow Cannabis. She hopes that SRI will soon be able to grow Cannabis for her own program from tissue cultures of plants rather than seedlings so that a more sterile method of producing Cannabis is used for these clinical trials in the future.
Source: MAPS press release
The voters of Arizona passed the Arizona Medical Marijuana Act in 2010, yet to this day politicians continue to attack the industry and use medical marijuana as a pawn in their political games.
Perhaps, nowhere is this more evident than in the current legislative attacks against the Voter Protection Act (VPA) and the citizen initiative process. The VPA was passed by Arizona voters in 1998 and was intended to prevent legislators from overturning or tampering with voter-passed initiatives. However, every year many legislators attempt to pass legislation which would undermine, overturn, or simply ignore VPA provisions altogether by trying to weaken voter approved initiatives. And, this year the legislature has gone a step further by passing bills which will create significant barriers for citizens to get initiatives on the ballot in the first place. It’s an attack on the constitutional rights of every citizen.
It’s bad enough that these attacks are happening, but even worse is that many legislators have used the Medical Marijuana Act as the basis for their attacks on voter rights. They’ve made wildly inaccurate claims about the impacts of marijuana, vilified many of the tax-paying people of the industry, and attempted to make it harder for certified patients to get access to medical marijuana. These legislators have declared war on medical marijuana and voters’ rights, and it won’t stop without deliberate, professional representation focused on mainstreaming medical marijuana in Arizona’s culture and economy.
That’s why a coalition of patients, providers, dispensaries, growers, and other stakeholders have come together to form the Arizona Medical Marijuana Action PAC. Known as AMMA-PAC, the organization has been working to protect the medical marijuana industry from legislative meddling, while also promoting smart and responsible legislation intended to strengthen the industry, expand public education about marijuana, and foster constructive dialogue to dispel the myths propagated by the opponents of medical marijuana.
Unfortunately, the future of marijuana will always be caught up in political games. Our opponents will use rhetoric, inaccurate information, and outright lies to try and take away our rights and stop any legal use of marijuana in Arizona - either under current law or any future efforts towards expanded legalization of marijuana. AMMA-PAC will continue working to stop these efforts, protect the industry and its patients, and work to support positive public policies that will support the legal and responsible use of marijuana.
The writers of the Article are AMMA PAC Chairman, John Hartsell, Treasurer Taylor Swick, and Former Representative Chad Campbell of Strategies 360. For more on AMMA PAC or to learn more about our work, visit www.ammapac.com.
Toward the end of each legislative session in Arizona there is a flurry of activity to get certain controversial or previously unheard bills heard. This happens through the use of “strike everything” amendments or “strikers”. A striker is used to delete all of the text of a previously existing bill, regardless of topic, and to substitute new, generally totally unrelated, language.
Since this leads to the introduction of a brand new bill, legislators often use strikers to introduce bills after the deadlines for the introduction of new bills in committees, or, in many cases, to reintroduce a controversial bill that had already been killed in committee or one that had never even been heard in committee. Strikers create less transparency in the legislative process and breed distrust by the public when controversial bills “pop up” at the last second, hidden by a completely unrelated bill name in most cases.
During the 2017 legislative session, more than 100 strikers have been proposed. At this point in the 2017 legislative session, the Legislature is voting on two strikers that would undermine the initiative process in Arizona and therefore, the right of every voter in Arizona to be able to pass laws at the ballot. The Arizona Chamber of Commerce is pushing these two bills with one striker moving through the House and one through the Senate.
In the House, Representative Michelle Ugenti-Rita’s striker to SB 1236 is a catch-all from multiple bills that were previously killed in committee, that would have harmed voter’s rights at the ballot. This striker requires the inclusion of a warning on all advertising and fundraising materials for ballot measures that says “NOTICE: PURSUANT TO PROPOSITION 105 (1998), THIS MEASURE CANNOT BE CHANGED IN THE FUTURE IF APPROVED ON THE BALLOT EXCEPT BY A THREE-FOURTHS VOTE OF THE LEGISLATURE AND IF THE CHANGE FURTHERS THE PURPOSE OF THE ORIGINAL BALLOT MEASURE, OR BY REFERRING THE CHANGE TO THE BALLOT" and disqualifies any petitions gathered without a paid circulator’s registration number, even if all signatures on the sheet are valid.
In the Senate, HB 2244 had a striker attached to it by Senator Debbie Lesko which will apply a strict compliance standard to all signatures gathered for voter initiatives. This striker would therefore allow for minor technicalities like the petition being printed with slightly different margins or the collected signature having the zip code written in the wrong box to be reasons to throw the entire petition out and not counted, even when it is clear who the voter is who signed the form. Again the Chamber of Commerce is pushing this bill so that any future ballot measures will have basically no chance of getting the required number of signatures to reach the ballot.
These two strikers are clearly a way for the Arizona Chamber of Commerce and the Republican controlled Legislature to stop future ballot measures that lessen their power. What this signals is a grave problem for Arizona’s Cannabis industry because any future Cannabis initiatives will become much more costly and difficult to get on the ballot.
Section 280E of the Internal Revenue Code forbids businesses from deducting ordinary business expenses from gross income associated with the sale of Schedule I or II substances, as defined by the Controlled Substances Act.
"Because cannabis is federally classified as a Schedule I substance the IRS has applied 280E tax rules to businesses in states where the sale of cannabis is legal. It’s hard to get excited about our best sales days when we know profits will be cut deeply as a result of 280E."
~ John Lord, CEO LivWell Enlightened Health
Weedia®Buzz recently had a conversation with John Lord, Owner and CEO of LivWell Enlightened Health in Colorado where he said, “This inequity is a huge burden on our industry and must be addressed if our business is going to succeed. Not fixing this problem challenges the very ingenuity and creativeness American commerce is built on.”
Section 280E states: No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted. Click here for more.
While cannabis companies are forced to file taxes under §280E rules, they are also bound to comply with additional federal employment regulations. LivWell, for example, is required to pay payroll taxes, and provide health coverage for employees as required by the Affordable Care Act, yet, they are unable to deduct ordinary costs and other expenses related to their employees. LivWell employs 550 people.
Section 280E is creating an impossible position for cannabis company owners each year when they file their taxes. Ken Boiarsky, a tax attorney with the nation’s leading cannabis law firm Hoban & Feola, said, “This is just another example of paradoxical application of tax law by our federal government.” For instance, Boiarsky explains, “If the company doesn’t file taxes using 280E, they’re breaking the law and if they do file their taxes using 280E, they’re admitting to having broken the law,” this, in reference to “trafficking” cannabis material – a Schedule I Controlled Substance.
According to John Lord and his team at LivWell Enlightened Health, the sustainability of the cannabis industry depends on a change to IRS imposed policies. Other businesses are able to deduct normal costs to do business such as rent, utilities and employee related expenses. Since cannabis businesses are required to file its taxes using Code 280E, these deductions are disallowed.
While the IRS continues to trudge along, charging cannabis retailers differently than other retail businesses the cannabis industry continues to pour millions in tax revenue into local and state coffers.
For example, wholesale cannabis distributed to retail stores in Colorado is taxed at a rate of 15% before it ever hits retail shelves. Customers then pay a 12.9% state sales tax, plus an additional 7.15% city tax if located in Denver. The retailer is also required to pay income tax to the state each year.
Assuming a pound of cannabis sold for an average of $1,900 wholesale, which 2015 Colorado data indicates, at a 15% tax rate on wholesale material – before the product is ever sold remember – the state collects $285.
If the average gram sold for $7.00, (there are 454 grams in a pound) the retail value of that pound of cannabis would be $3,178 – $410 of it going to the State and the City receives $227.
Dispensaries in colorado sold nearly 150,000 pounds of cannabis to medical and recreational consumers in 2014 which provided nearly $140 million in tax revenue. This represents nearly $1,000 in taxes for every pound of cannabis sold.
As an American retailer can you imagine paying 53% of your revenues to state and local governments before you’ve even started paying all of the other expenses associated with running a business – and not being able to claim most of these expenses on your tax return?
This past 4/20 (April 20th) – the cannabis community’s annual holiday – LivWell Enlightened Health experienced the highest single-day sales in its history. But because LivWell is compliant with §280E rules, the majority of the profits from these record-breaking sales will be paid in federal and state income taxes.
LivWell’s John Lord said, “It’s hard to get excited about our best sales days when we know profits will be cut deeply as a result of 280E.”
So, with an overview of the problems facing cannabis retailers, what is the solution?
The solution to this inequity, according to both Lord and Boiarsky, is to remove cannabis from the Controlled Substances Act’s list of scheduled substances entirely.
Ken Boiarsky said, “There are legal remedies to this problem and there are several court cases at the federal level addressing this issue,” The first line of one of these pending complaints reads, “This case owes its genesis to the mixed messages the federal government is sending these days about the distribution of marijuana.” (Feinberg vs. the Commissioner of the IRS)
Cases such as the Feinberg’s are being heard in local tax courts and in federal courts across the country, but until the issue is addressed at the IRS and in Congress retail cannabis operations will continue to pay up to 90% of their profits in taxes.
John Lord does not have much confidence that the federal government is working towards a solution, “The government isn’t exactly losing the longer this [lingers] on. There is a vast disincentive for the government to fix this problem. I don’t hold a lot of faith that we’re going to fix this in a short time. Our best option is for cannabis to be descheduled from Schedule I” said Lord.
The tax payment issue is just the tip of the iceberg, as federal laws making the trafficking of cannabis material a crime cause a litany of other problems, business banking being just one.
Most financial institutions are unable to justify the risk in taking on cannabis industry clients making the industry a largely cash business. The industry, now exceeding $8 billion in annual commerce, is likely to double in size over the next few years and is in dire need of viable banking options. But this is another story for another day…