Cannabis – Gumballs Bad Combination is a post that is very likely going to land yours truly in a substantial amount of “hot water”. However after some reflection, to hell with it, the passing of Senator John S. McCain, III who is an American hero and an icon of the values that represent American individualism and of beliefs and values about doing what is right, for a greater good, even if it isn’t in our immediate self-interest makes this an easy one. The success or failure of the legal, commercial cannabis industry depends, in large measure, on four factors. They are:
The creation and development of regulated, legal markets that are perceived as fair, having a reasonable cost without the complexity that so onerous that compliance is impossible [Our view is that California is well on its way to achieving that goal, though there are some significant corrections, notably with respect to compassionate medical use, compliance, and lab testing, and banking to be addressed.]
The development of a significant pool of licensed professionals, particularly attorneys, certified public accountants, enrolled agents [yep, that group that I poke at all the time is critical here assuming that they have the requisite thirty hours or accounting], and scientists [my term for the chemists, healthcare, and others with graduate-level degrees and professional licenses that are critical to demonstrating the integrity of the industry to the regulators.
Competent Skilled Workforce
The workforce that performs substantially all of the labor and services [distinct from Licensed Professionals] that provides skilled, semi-skilled and manual labor for the cannabis industry [akin the enlisted ranks in the military] are critical. The workforce needs to be recognized as performing legal, legitimate services that feed families and contribute to communities, part of the legal immigration, taxation, and healthcare systems [free from the scourges of human trafficking and scourges of discrimination, sexual harassment and abuse]. Cannabis needs to lose its status as “a plant with an attitude” and be recognized for what has become, legal agricultural activity in California and other states. [The larger discussion includes, delisting from DEA Schedule I, acceptance by FinCEN and the banking system and a change in IRC Sec. 280E, possible replacement with an excise tax.].
Industry Self-Governance, Guidelines, and Process
The commercial cannabis industry needs to follow through on the creation of organizations, standards, and procedures to demonstrate its integrity. The process is going to have to include leadership from industry associations that take a long view with respect to lobbying activity, an objective process for the selection and sponsorship of content providers at trade shows and on websites. The abhorrent practices of “pay for play” for platform speakers, and tolerance of incompetence, outright criminal conduct, and the pontification of rubbish, blather, and gibberish as “expert knowledge” needs to cease. Pseudo-scientific claims and self-aggrandizement can NOT be tolerated if the industry is going to have credibility.
Cannabis – Gumballs Bad Combination
Our next several articles are going to dig into the practices and conditions that attention for the four prongs to develop. Specific examples that we will explore include:
“Pay to Play“ – Financial costs, beyond association membership for platform speaking slots at trade shows and conferences.
“Toxic Spew“ – The willingness by the website owners, community and forum managers overlook criminality, incompetence, and the ramblings of soothsayers and “tossers” [collectively “Toxic Spew“] merely because they provide financial recompense. If posted content falls within that definition, it is rubbish and should NOT be published for sake of filling space.
“Whistleblowers“ and anyone else with the requisite expertise that identifies Toxic Spew must be protected, acknowledged and valued by the owners, sponsors, and managers for their role in bringing integrity to the industry. The banning, muzzling, shunning and castigation needs to end immediately, and any one individual or entity that engages in such practices scorned, sanctioned, subject to penalties that include reporting to regulatory authorities and law enforcement.
Respect, Dignity and Safe Environment– Everyone is entitled to expect that their interactions with colleagues, agents, suppliers, and clients will be non-threatening and respectful [that doesn’t preclude spirited disagreement or even argument] on a reciprocal basis. A safe, healthy, and productive work environment is a right, and in many jurisdictions, the law. Everyone needs to commit to eliminating any actions or circumstances that undermine such an environment. Unlawful discrimination, verbal or physical harassment or abuse, or offensive behavior (whether or not sexually related) is unacceptable and requires immediate, clear and consistent consequences.
We have chosen to label the unwillingness or lack of fortitude on the part of anyone with the responsibility to be part of the solution to these issues as Gumballs [which is hereby stipulated to be gender neutral]. We are going to spare everyone the mental images that would come with my effort to elucidate the definition.
We all need to be part of the solution, otherwise, we are part of the problem.
Cannabis Investment Fraud – Illinois – October 21 – Secretary of State Jesse White is cautioning citizens to be aware of schemes and risks associated with potentially fraudulent marijuana-related investments.
With investments in marijuana businesses becoming more common, criminals are attempting to use the increased publicity to convince investors to enter risky or outright fraudulent ventures.
“People should do their homework before investing in any fund or venture,” White said. “Remember if you don’t understand the investment or it sounds too good to be true, then you probably shouldn’t invest in it.”
When considering a marijuana-related investment, White advises the public to look at the investor advisory issued by the North American Securities Administrators Association, which is posted on the office’s Securities Department website www.avoidthescam.net.
Investors should also understand that marijuana start-up companies are risky and investors may not be able to cash out of the investment for many years and may risk losing their initial investment if the company does not succeed.
White urges investors who are victims of marijuana-related investments or any other fraudulent investment schemes to file a complaint with the Securities Department. To contact the Secretary of State Securities Department, call 1-800-628-7937 or visit www.avoidthescam.net.
Midterms – Cannabis Coming Together – As polls show record support for marijuana legalization, advocates say the midterm elections could mark the point of no return for a movement that has been gathering steam for years.
“The train has left the station,” said Rep. Earl Blumenauer, D-Ore., a leading marijuana reform advocate in Congress. “I see all the pieces coming together… It’s the same arc we saw two generations ago with the prohibitions of alcohol.”
Voters in four states will weigh in on ballot initiatives to legalize weed for recreational or medical use next month, while voters everywhere will consider giving more power to Democrats, who have increasingly campaigned on marijuana legalization and are likely to advance legislation on the issue if they win back power in Congress and state capitals.
It’s been just six years since Colorado and Washington became the first states in the country to legalize marijuana, but in that short time span, seven other states and the District of Columbia have followed. Thirty states have legalized medical cannabis. The entire country of Canada legalized the drug last week.
Politically, the issue has gone from a risible sideshow to a mainstream plank with implications for racial justice and billions of dollars in tax revenue. “Politicians embraced it because it’s actually good politics,” said Blumenauer. “They can read the polls.”
Two out of three Americans (66 percent) now support the legalization of marijuana, according to a new Gallup survey, including a majority of Republicans and, for the first time, a majority of voters over the age of 55. Not surprisingly, support is strongest among Democrats (75 percent) and young adults between the ages of 18 and 34 (78 percent).
But opponents say advocates are ignoring the backlash that rapid legalization has created, including from some surprising corners, like the Detroit chapter of the NAACP, which is set to announce Tuesday its opposition to a ballot measure that would legalize marijuana in Michigan, the most significant of this year’s referendums.
Michigan already has a robust medical marijuana industry, but voters could decide to fully legalize the drug for recreational use on Nov. 6. A recent survey commissioned by The Detroit Free Press found 55 percent of voters supported the measure, compared to 41 percent who opposed it.
Meanwhile, North Dakota voters will also have a chance to legalize recreational marijuana in one of the most conservative states in the country, two years after 64 percent of voters approved its medical use during the 2016 election. Advocates are less hopeful about their prospects this year, though a pro-legalization group released a poll this weekend claiming a narrow 51 percent of likely voters approve of the measure.
Utah, a deep red state with some of the strictest alcohol rules in the country, is considering a medical marijuana initiative, which polls suggest is favored to succeed, even though most of the state’s political and religious leaders oppose it.
At the same time, Missouri voters will consider three separate and competing for medical marijuana ballot initiatives. The situation has frustrated advocates and could confuse voters, especially because it’s unclear what will happen if they approve more than one next month.
California moved a step closer Friday to allowing marijuana deliveries in communities that have banned retail sales of the drug as regulators rebuffed cities and police chiefs who are opposed to the rule.
The proposal is a major issue that could ultimately end up in court as the state continues to set myriad rules for how pot is grown, tested, packaged and delivered since recreational sales became legal Jan. 1.
Cities have been able to ban retail sales, but state law says local governments cannot prevent cannabis deliveries on public roads so the state — at this point — rejected the plea from opponents who said it would jeopardize public safety and cause other problems.
However, they did drop a bomb with respect to technology platforms such as Weedmaps and Eaze. Well…here is the new proposed regulation.
§ 5415.1. Deliveries Facilitated by Technology Platforms
(a) A licensed retailer or licensed microbusiness shall not sell or otherwise transfer any cannabis goods to a customer through the use of an unlicensed third party, intermediary business, broker, or any other business or entity.
(b) Notwithstanding subsection (a) of this section, a licensed retailer or licensed microbusiness may contract with a service that provides a technology platform to facilitate the sale and delivery of cannabis goods, in accordance with all of the following:
(1) The licensed retailer or licensed microbusiness does not allow for delivery of cannabis goods by the technology platform service provider.
(2) The licensed retailer or licensed microbusiness does not share in the profits of the sale of cannabis goods with the technology platform service provider, or otherwise, provide for a percentage or portion of the cannabis goods sales to the technology platform service provider.
(3) The licensed retailer or licensed microbusiness shall not advertise or market cannabis goods in conjunction with the technology platform service provider, outside of the technology platform, and shall ensure that the technology platform service provider does not use the licensed retailer’s or licensed microbusiness’s license number or legal business name on any advertisement or marketing that primarily promotes the services of the technology platform
(4) The licensed retailer or licensed microbusiness shall ensure the following information is provided to customers:
(A) Any cannabis goods advertised or offered for sale on or through the technology platform shall disclose, at a minimum, the licensed retailers or licensed microbusiness’s legal business name, and license number.
(B) Customers placing an order for cannabis goods through the technology platform shall be able to easily identify the licensed retailer or licensed microbusiness that each cannabis good is being ordered or purchased from. This information shall be available to the customer prior to the customer placing an order or purchasing the cannabis goods.
(5) All required sales invoices and receipts, including any receipts provided to the customer, shall disclose, at a minimum, the licensed retailer’s or licensed microbusiness’s legal business name and license number.
(6) All other deliveries, marketing, and advertising requirements under this division are complied with.
It will certainly be interesting to see how Weedmaps, Eaze, and other players adapt to this proposal.
CDPH-MCSB Proposed Reg. Update – Manufactured Cannabis Safety Board [“MCSB”] of the California Dept. of Public Health [“CDPH”] made very substantial changes to the Proposed Regulations in its October 19, 2018 revisions. While we have updated our FAQ’s and portions of our website to reflect the changes, we think they are significant enough to warrant a separate post. The full text of the regulations appears at the bottom of this post. If you need to access them in a different way, you can do so here.
Sections Deleted By New Regs
§40232. Requirements for Personnel
§40236. Premises Construction and Design.
§40238. Sanitary Operations.
§40240. Sanitary Facilities and Controls
§40242. Equipment and Utensils.
§40252. Quality of Raw Materials and Ingredients.
§40254. Manufacturing Operations.
§40256. Hazard Analysis.
§40258. Preventive Controls.
The following DO NOT constitute manufacturing:
The preparation of pre-rolls by a licensed distributor in accordance with the requirements of the Bureau specified in Section 5303 of Division 42 of Title 16 of the California Code of Regulations; [§40100 (dd)(2)(B)] or
The addition of cannabinoid content on the labelof a package of cannabis or cannabis product by a distributor in accordance with Section 40409.
The addition of an OSHA training requirement:
For an applicant entity with more than one employee, the applicant employs, or will employ within one year of receiving a license, one supervisor and one employee who have successfully completed a Cal/OSHA 30-hour general industry outreach course offered by a training provider that is authorized by an OSHA Training Institute Education Center to provide the course. [§40128(b)(5)]
§40220. Permissible Extractions is modified to require that CO2 gas used for extraction shall be food grade;
New Sections Added By Proposed Regulations
§40179. Death, Incapacity, or Insolvency of a Licensee.
(a) In the event of the death, incapacity, receivership, assignment for the benefit of creditors or other event rendering one or more owners’ incapable of performing the duties associated with the license, the owner or owners’ successor in interest (e.g., appointed guardian, executor, administrator, receiver, trustee, or assignee) shall notify the Department in writing, within 10 business days.
(b) To continue operations or cancel the existing license, the successor in interest shall submit to the Department the following:
(1) The name of the successor in interest;
(2) The name of the owner(s) for which the successor in interest is succeeding and the license number;
(3) The phone number, mailing address, and email address of the successor in interest; and
(4) Documentation demonstrating that the owner(s) is incapable of performing the duties associated with the license such as a death certificate, or a court order, and documentation demonstrating that the person making the request is the owner or owners’ successor in interest such as a court order appointing guardianship, receivership, or a will or trust agreement.
(c) The Department may give the successor in interest written approval to continue operations on the licensed business premises for a period of time specified by the Department:
(1) If the successor in interest or another person has applied for a license from the Department for the licensed premises and that application is under review; (
2) If the successor in interest needs additional time to destroy or sell cannabis or cannabis products; or
(3) At the discretion of the Department.
(d) The successor in interest is held subject to all terms and conditions under which a state cannabis license is held pursuant to the Act.
(e) The approval pursuant to subsection (c) creates no vested right to the issuance of a state cannabis license.
§40192. Registration to Operate a Shared-Use Facility.
(a) No licensee shall operate as a shared-use facility without prior approval by the Department.
(b) To register as a shared-use facility, a Type 7, Type 6, or Type N licensee shall submit the following to the Department through MCLS:
(1) A copy of the valid license, permit, or other authorization issued by the local jurisdiction that enables the licensee to operate as a shared-use facility. The Department shall contact the applicable local jurisdiction to confirm the validity of the local authorization Upon receipt of the application for registration, the Department shall contact the applicable local jurisdiction to confirm the validity of the authorization. If the local jurisdiction does not respond within 10 calendar days, the Department shall consider the authorization valid.
(2) A registration form prescribed by the Department, which includes the following information:
(A) The proposed occupancy schedule that specifies the days and hours the common-use area will be available for use by Type S licensees and when the common use area will be used by the primary licensee. The occupancy schedule shall allow for adequate maintenance, cleaning, and sanitizing between uses by individual licensees.
(B) A diagram indicating:
(i) Each designated area for Type S licensee(s).
(ii) The common-use area, including identification of any shared equipment.
(c) The Department shall notify the Type 7, Type 6, or Type N licensee upon approval of the registration to operate as a shared-use facility. The notification shall be made through MCLS.
(d) At least one business day prior to a Type S licensee commencing manufacturing operations at a registered shared-use facility, the primary licensee shall provide written notification to the Department. The notification to the Department shall include the Type S licensee’s business name, contact person, contact phone number, and license number. The primary licensee shall also provide an updated occupancy schedule that includes the Type S licensee and an updated diagram that specifies the Type S licensee’s designated area. A notification shall be provided by email or through MCLS.
(e) A primary licensee that wishes to discontinue operation as a shared-use facility may cancel its registration by providing written notice to the Department and each Type S licensee authorized to use the shared-use facility at least 30 calendar days prior to the effective date of the cancellation.
Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26051.5; 26055; and 26130, Business and Professions Code.
Changes to Manufacturing Process Definitions §40230.
DELETED – (a) “Actual yield” means the quantity that is actually produced at any appropriate step of manufacture or packaging of a particular cannabis product. (b) “Adequate” means that which is necessary to accomplish the intended purpose in keeping with good public health practice to ensure cannabis product quality.
ADDED – (d) “Easily cleanable” means a characteristic of a surface that allows effective removal of soil, food residue, or other organic or inorganic materials by normal cleaning methods
DELETED – (i) “In-process material” means any material that is fabricated, compounded, blended, ground, extracted, sifted, sterilized, derived by chemical reaction, or processed in any other way for use in the manufacture of a cannabis product.
ADDED – (l) “Potable” means water that meets the requirements of Health and Safety Code section 113869.
ADDED – (u) “Smooth” means any of the following: (1) A contact surface that is free of pits, pinholes, cracks, crevices, inclusions, rough edges, and other surface imperfections detectable by visual or tactile inspection. (2) A floor, wall, or ceiling having an even or level surface with no roughness or projections that render it difficult to clean.
ADDED – (v) “Utensil” means an implement, tool, or container used in the storage, preparation, manufacture, or processing of cannabis and cannabis products. In addition to kitchenware, examples of utensils include, but are not limited to, gloves, screens, sieves, implements to create pre-rolls, buckets, and scissors.
DELETED – (v) “Theoretical yield” means the quantity of a particular cannabis product that would be produced at any appropriate step of manufacture or packaging, based upon the number of components or packaging to be used, in the absence of any loss or error in actual production
ADDED – (y) “Yield” means the quantity of a particular cannabis product expected to be produced at a given step of manufacture or packaging, as identified in the master manufacturing protocol. The expected yield is based upon the number of components or packaging to be used, in the absence of any loss or error in actual production. “Actual yield” means the quantity of a particular cannabis product that is actually produced at a given step of manufacture or packaging that is recorded in the batch production record.
Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26001; 26120; and 26130, Business and Professions Code.
ADDED -§40235. Quality Control Program
ADDED -§40240. Grounds, Building, and Manufacturing Premises
ADDED – §40243. Equipment and Utensils
ADDED – §40246. Personnel
ADDED – §40248. Cannabis Product Components
ADDED – §40250. General Provisions. Manufacturing Processes and Procedures [SUBSTANTIALLY REVISED]
ADDED – §40253. Product Quality Plan
ADDED – §40255. Master Manufacturing Protocol.
ADDED – §40258. Batch Production Record.
ADDED -§40277. Weights and Measures. – (c) Whenever the licensee is determining the weight, or measurement measure or count of cannabis and cannabis products is determined as for the purposes specified in subsection (a), products the weight, measure, or count shall be weighed determined by a licensed weighmaster, and shall be issued a certificate consistent with the requirements in as required by Chapter 7 (commencing with section 12700) of Division 5 of Business and Professions Code. The weighmaster certificate required under section 12711 of the Business and Professions Code shall not be required when cannabis or cannabis products are weighed for entry into the track-and-trace system.
ADDED – §40401. Release to Distributor as Finished Product – (a) Prior to the release of a cannabis product to a distributor, a licensee shall ensure that the product is in finished form and is labeled and packaged in its final form for sale. (b) For purposes of this section, “final form” does not include: (1) Labeling of cannabinoid content if the cannabinoid content is to be added to the label at the distribution premises after issuance of the Certificate of Analysis in accordance with section 40409; or (2) Placing the cannabis or cannabis product into child-resistant packaging. This provision shall expire on December 31, 2019.
ADDED – §40403. General Provisions – (1) All of the information specified in Sections 40405 and 40406, for For edible cannabis products, topical cannabis products, suppositories, or orally-consumed concentrates, all of the information specified in Sections 40405 and 40406, except for cannabinoid content. (2) The universal symbol as prescribed in Section 40412, for For inhaled products (e.g., as dab, shatter, and wax), the universal symbol as prescribed in Section 40412.
ADDED – §40405. Primary Panel Labeling Requirements: Manufactured Products – (b) Cannabinoid content may be included on the primary panel. Cannabinoid content for manufactured cannabis products shall be labeled as specified in Section 40409. (bc) Nothing in this section prohibits the inclusion of additional information on the primary panel, provided that the label does not violate the requirements of Section 40410.
(a) Beginning January 1, 2020, a package containing cannabis or cannabis products transferred to a distributor for retail sale shall be child-resistant, as follows:
(1) An edible product, an orally-consumed concentrate, or a suppository shall be child-resistant for the life of the product. A package that contains more than a single serving is not required to be child-resistant if each individual serving is packaged in child-resistant packaging.
(2) Cannabis or a cannabis product intended to be inhaled or a cannabis product that is applied topically may utilize packaging that is child-resistant only until first opened, if the package is labeled with the statement “This package is not child-resistant after opening.”
(b) The following packages are considered child-resistant for purposes of this chapter:
(1) Any package that has been certified as child-resistant under the requirements of the Poison Prevention Packaging Act of 1970 Regulations (16 C.F.R. §1700.15(b)(1)) (Rev. July 1995), which is hereby incorporated by reference.
(2) A bottle sealed with a pry-off metal crown cork style bottle cap, provided that the bottle contains only a single serving.
(3) Plastic packaging that is at least 4 mils thick and heat-sealed without an easy-open tab, dimple, corner, or flap, provided that the package contains a cannabis product described in Subsection (a)(2) or is a cannabis product that is only a single serving.
(c) Until the date specified in subsection (a), the child-resistant package requirement specified in section 26120 of the Act may be met through the use of a child-resistant exit package at retail sale.
Authority: Sections 26012; 26013; and 26130, Business and Professions Code. Reference: Sections 26011.5; 26120; and 26121, Business and Professions Code.
ADDED – §40550. Inspections – (g) The Department may collect evidence related to any alleged violation of the Act or the regulations for the purpose of preserving such evidence during the course of an investigation and any subsequent enforcement proceedings. (h) The Department may copy any materials, books, or records of any licensee or their agents pertaining to the commercial cannabis business.
The National Cannabis Industry Association PAC (NCIA) took in $24,000 this quarter, bringing their total to $59,750 in 2018. This continues the NCIA PAC’s upward trend of raising more and spending more over the years.
$1,250 from Kris Krane, president of the cannabis company 4Front. 4Front has cultivation licenses in Illinois and Massachusetts, and also owns the dispensary chain Mission. Mission has one dispensary in Illinois and another in Pennsylvania, with locations forthcoming in Maryland and Massachusetts.
$5,000 from Jay Czarkowski, founding partner ofCanna Advisors, a cannabis business consulting firm in Colorado.
$2,500 from Khurshid Khoja, founder of Greenbridge Corporate Counsel, a law firm representing cannabis businesses in California, Washington and Oregon.
$250 from Aaron Justis, owner of the Los Angeles dispensary Buds & Roses.
$500 from Joseph Pearson, owner of the California dispensary chain SPARC.
$1,000 from Christine Braddock, CEO ofEden Labs, a botanical extraction company in Seattle, Washington.
$1,000 from Michael Minardi, senior partner atMinardi Law, a firm that represents clients charged with cannabis crimes. Minardi is also the campaign manager for Regulate Florida, an organization with the mission of passing legislation that would legalize cannabis for adult use in the state.
This quarter, NCIA spent $14,500 supporting the following candidates and committees:
$1000 each to congressional candidates Jared Golden (D-ME), Denny Heck (D-WA), David Joyce (R-OH),Lou Correa (D-CA), Karen McCormick (D-CO), Steven Horsford (D-NV), and Steve Cohen (D-TN)
$1,000 to Senate candidate Kyrsten Sinema (D-AZ)
$5,000 to the New Democrat Coalition PAC
$1,000 to the Colorado Democratic Party
$500 to Democrat Jena Griswold, who is running for Secretary of State in Colorado
According to newly released lobbying disclosures, NCIA spent $60,000 on lobbying between July 1st and September 30th. The group hired Federal Advocates Inc., to lobby the White House, Senate, House of Representatives, Department of Justice and the Drug Enforcement Administration on issues related to “Potential enforcement activities in regard to the legalized cannabis industry.”
Updated FAQ’s – License Info – New Regs – we have updated and added over 200 FAQ’s and the associated licensing requirement pages. A detailed table of links to the newly released forms from BCC, CDPH – MCSB and CDFA – CalCannabis is also provided.
Brand New FAQs for
What are Manufacturing Processes Procedures?
What are Cannabis Product Components?
What are Manufacturing Practices Definitions
What are Manufacturer video surveillance reqs?
What is a shared-use facility?
What has branded merchandise approval?
What is required legal use of the business name?
What are information req details – Owner Submission?
California Regulators Post Changes 19-October-2018
California Regulators Post Changes 19-October-2018 – This morning, the California Bureau of Cannabis Control [“BCC”],
California Department of Public Health [“CDPH”], and the California Department of Food and Agriculture [“CDFA”] issued 15-day notices of modification to the texts of their respective proposed regulations.
We will provide an update on the implications of these modifications as soon as we can read through them. We have uploaded copies of the actual text of the changes that you can read at:
Changes to Proposed Cannabis Regulations – October 2018 (NEW)
The state’s three cannabis licensing authorities recently announced changes to the proposed cannabis regulations published to the California Regulatory Notice Register on July 13, 2018. These proposed changes mark the next step in the formal rulemaking process toward adopting non-emergency regulations and the beginning of a 15-day public comment period related to the proposed changes. The changes to each licensing authority’s proposed non-emergency regulations and rulemaking documents have been posted in the links below.
Bureau of Cannabis Control Proposed Regulation Documents
CCIA Selects Indiva Advisors – Official CPA Firm – the California Cannabis Industry Association [“CCIA”] which refers to itself as the largest and most influential cannabis industry trade association in California has chosen Indiva Advisors, LLC as its “official CPA firm”.
[We need to make sure that anyone reading this article understands that we don’t fault Indiva Advisors, LLC. In fact, Jessica Velazquez, CPA, their Managing Partner and I had a very cordial conversation this afternoon. We discussed the difficulties for an out of state CPA firm to become licensed and deal with taxes in California, and a number of issues related to CPA’s providing services to the cannabis industry in California. You can read more about those challenges here, here and here. We wish them much success].
We view CCIA’s selection of an “Official CPA Firm” in poor judgment, reflective of an abhorrent business model, and a substantial disservice to both the CPA profession and the cannabis industry. CCIA’s focus should be on improving the overall quality of the professional skills of CPA’s that service the cannabis industry in the entirety, rather than seeking to glorify a particular firm.
Licensed Professionals -The development of a significant pool of licensed professionals, particularly attorneys, certified public accountants, enrolled agents [yep, that group that I poke at all the time is critical here assuming that they have the requisite thirty hours or accounting], and scientists [my term for the chemists, healthcare, and others with graduate-level degrees and professional licenses that are critical to demonstrating the integrity of the industry to the regulators.
Our view is that CCIA has once again, continued with its “pay to play mentality” and while we don’t know the arrangements between CCIA, and the Indiva Advisors, we certainly have our thoughts. We believe that Indiva will learn from this experience. However, we can’t say the same for CCIA, and we find it very difficult to justify supporting a trade organization that undertook deliberate steps NOT to broadly support the CPA profession, perhaps out of ignorance.
Our efforts to support the industry have included –
California Cannabis Chek
Building Confidence in the California Cannabis Industry
We have undertaken a focused effort to leverage the unique skills that certified public accountants possess to facilitate building confidence in the California cannabis industry as CA Cannabis Advisors. We have developed California Cannabis Chek TM which is comprised of a SaaS software application, technical resources, training, and ultimately a certification process for CPA’s. The process is ground in core attest concepts which have been developed by the CPA profession including:
The standards contain a Maturity Framework for the evaluation of internal accounting controls over cash:
Level 1: Unreliable. The unpredictable environment for which controls have not been designed or implemented.
Level 2: Informal. Controls are present but inadequately documented and largely dependent on manual intervention. There are no formal communications or training programs related to the controls.
Level 3: Standardized. Controls are in place and documented, and employees have received formal communications about them. Undetected deviations from controls may occur.
Level 4: Monitored. Standardized controls are in place and undergo periodic testing to evaluate their design and operation; test results are communicated to management. Limited use of automated tools may support controls.
Level 5: Optimized. An integrated internal controls framework with real-time monitoring by management is in place to implement continuous improvement. Automated processes and tools support the controls and enable the organization to quickly change the controls as necessary.
The complexities of evaluating and reporting on internal controls, privacy, and other Agreed Upon Procedures is an attest function. The performance of attest services is specialized and required significant education and training and is RESTRICTED by the California Board of Accountancy [and every other state and territory in the US to CPA’s]. Enrolled Agents are NOT authorized nor capable of performing such work. If you observe an Enrolled Agent representing that they can provide such services, they should be immediately reported to the State Board of Accountancy, and the Internal Revenue Service Office of Professional Responsibility.
CPA’s and Attorneys with proper, verified eduction such and an LLM or MST in taxation are additionally uniquely qualified to address the tax, accounting, and regulatory compliance needs of Cannabis businesses in California. We have begun the discussion with the California industry regulators, tax authorities, and the profession about leveraging the unique skills of CPA’s to assist the industry. Engaging with FinCEN and other regulators is on our short-term roadmap. Let’s improve the skills for the choice of CA Cannabis Advisors.
Welcome Canadian Reefer Madness – The president of the Canadian Association of Chiefs of Police is assuring the public that police departments across the country are prepared for Wednesday when recreational marijuana becomes legal.
“‘I’m here to tell Canadians that police are ready,” said Vancouver Police Chief Adam Palmer at a news conference. Palmer said enforcing new laws around legal weed will be “a work in progress.” However, he reminded people that police have been dealing with drug-impaired driving for decades.
“Police may see an increase in drug-impaired driving once cannabis is legalized, but we have well-established techniques to detect impairment that have successfully passed the courts in Canada for many years now.”
Legislation to legalize recreational cannabis was passed by the House of Commons in November of 2017 and approved by the Senate in June.
The new laws allow adults 18 and over to possess up to 30 grams of legal marijuana and to grow up to four plants for personal use.
Growers and suppliers are required to be federally licensed. Retailers will have to abide by provincial and municipal laws, which could vary widely across the country.
Palmer said organized crime has historically been heavily involved in the illegal marijuana trade but that legalization will help push the gangsters out over time.
“With millions of Canadians using illicit [marijuana] supply for decades and decades, it’s going to be an iterative change,” he said.
Palmer doubts there will be raids on stores currently selling illegal cannabis come Wednesday, pointing out that despite the attention around legalization, cannabis is not a top concern for police when it comes to public safety.
“The marijuana trade is important but it’s not the most important drug issue going on in Canada today,” said Palmer. “Fentanyl kills 11 Canadians a day. Marijuana does not.