MJ News for 03/17/2015

7greeneyes

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http://www.reuters.com/article/2015/03/11/us-usa-marijuana-oregon-idUSKBN0M72BC20150311





Oregon city considers penalizing pot growers for smelly marijuana





The Oregon city of Medford, where officials say residents have long grumbled about the odor of marijuana growing operations, is considering a regulation that would fine pot growers if their marijuana is too smelly, city officials said on Wednesday.

The city's legal staff has drafted an ordinance that would fine both medical and recreational marijuana growers whose operations are too malodorous up to $250 a day and would give the city power to seize plants if growers don’t come into compliance.

In addition to containing odors, marijuana growers would be required to keep their plants locked up and out of sight in Medford, a city of nearly 80,000 people in southern Oregon whose economy is at least partly based on conventional agriculture.

Since Oregon legalized medical marijuana in the late 1990s, Medford citizens have consistently complained about the smell of weed, and council members decided to act on the issue after state voters opted in November to legalize recreational marijuana, Deputy City Attorney Kevin McConnell said.

Council members were expected to study the draft ordinance at a work session on Thursday and vote on the matter before recreational weed officially becomes legal statewide on July 1, McConnell said.

"I think there was a feeling now (that) this is going to become more prevalent, and it’s something that needs to be dealt with,” McConnell said.

Critics say this is just another Oregon town that doesn’t want legalized recreational marijuana.

“Is there a prohibition on all noxious odors or just marijuana, which some people wouldn’t think is a noxious odor? My suspicion is that they don’t and this is nothing more than a veiled attempt to undermine implementation of the ballot measure,” American Civil Liberties Union of Oregon Executive Director David Fidanque said.

The law gives towns the authority to enact reasonable restrictions, and Fidanque said some towns are taking that too far, trying to regulate marijuana out of their backyards.

By contrast, McConnell said it’s simply a matter of what makes sense for Medford.

“My argument would be that it’s more of a general question about what’s the societal norm here in Medford? Is the smell of marijuana a normal smell? That’s up to the council to decide.”
 

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http://www.washingtoncitypaper.com/...ar-blues-release-ipa-with-aromas-of-cannabis/





DC Brau and Oskar Blues Release IPA With “Aromas of Cannabis”





DC Brau is looking to make a political statement with a new beer collaboration with Colorado's Oskar Blues Brewery. They're paying homage to Initiative 71, which legalized marijuana in D.C., with a marijuana-inspired IPA called Smells Like Freedom. While it doesn't contain any actual weed, it does smell like it, and it will be released tonight at Meridian Pint at 5 p.m.

The two breweries have been looking to work together for years since first meeting at the Craft Brewers Conference in D.C. They came up with the idea for Smells Like Freedom before the November election that legalized recreational marijuana in D.C. "We were like, 'Hey, this is something that we're about to have in common with Colorado in addition to beer culture,'" says DC Brau co-founder Brandon Skall.

After the election, when certain members of Congress tried to put an end to the legalization of pot in D.C., DC Brau and Oskar Blues decided to use the beer as an opportunity to remind/educate people about D.C.'s struggle for autonomy. The top of the cans read "votes should count."

"When 70 percent of a voting public steps up and says they want something, and Congress steps in to say that they're going to deny that, I think that should be a big eye-opener for a lot of people about what we deal with all the time related to statehood issues and home rule issues," says Skall. (Technically, Initiative 71 passed with 65 percent of the vote.) DC Brau has been vocal about D.C. statehood since its inception and prints statehood facts on all of its cans.

Smells Like Freedom was brewed in both D.C. and Colorado. The 7 percent alcohol IPA has notes of “resiny, piney, earthy, sticky cannabis and white pepper with aromas of cannabis, tangerine, and sugar-coated ruby red grapefruit." Skall says that making a beer that smells like marijuana wasn't hard given that cannabis and hops are so closely related. "Literally, they're like cousins," he says. "A lot of times if you smell fresh hops, it's just a very similar smell."

There are only 120 barrels of Smells Like Freedom, and Skall expects it to go fast. Cans of the beer will be available exclusively in D.C., but you'll find it on draft at bars and restaurants where DC Brau is usually available.

Despite what you might assume, Skall says there was not a lot of pot smoking involved in the making of the beer. "When we have our work hat on, we have our work hat on," he says.
 

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http://www.thedailychronic.net/2015...ients-substitute-cannabis-prescription-drugs/





(RHODE ISLAND) Most Medical Marijuana Patients Substitute Cannabis for Prescription Drugs





PROVIDENCE, RI — The majority of qualified patients in Rhode Island who obtain cannabis from a state-licensed dispensary report having used it as an alternative to conventional prescription drugs, according to a demographic review of patient characteristics published in The Journal of Psychoactive Drugs.

Investigators Brown University in Providence and the University of Arkansas reported that over two-thirds of respondents (69 percent) used cannabis to treat chronic pain and that the majority (56 percent) indicated that they had used cannabis as a substitute for pharmaceutical drugs, primarily opioids.

Over 90 percent of respondents reported that cannabis was associated with fewer side effects than conventional pain medications.

Most respondents in the study possessed health insurance and had never received treatment for drug or alcohol use. Respondents represented about half of the total number of licensed patients in the state.

The study’s findings support previous research “depicting synergistic effects between cannabis and opioid use for chronic pain, and suggests that many participants … have a desire to reduce their own reliance on opioid medications,” authors concluded.

Full text of the study, “Profiles of medicinal cannabis patients attending Compassion Centers in Rhode Island,” appears in The Journal of Psychoactive Drugs.
 

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http://www.npr.org/blogs/itsallpoli...ers-deal-with-changing-attitudes-on-marijuana





Obama, 2016 Contenders Deal With Changing Attitudes On Marijuana





The divide between Republicans and Democrats on pot politics is narrowing, President Barack Obama said in an interview Monday.

"What I'm encouraged by is you're starting to see not just liberal Democrats, but also some very conservative Republicans recognize this doesn't make sense, including sort of the libertarian wing of the Republican Party," the president said in an interview with VICE News.

During the wide-ranging interview, Obama noted that the American criminal justice system is "heavily skewed toward cracking down on nonviolent drug offenders" and has had a disproportionate impact on communities of color, while at the same time taking a huge financial toll on states. But, Obama added, Republicans are beginning to see that cost.

"So we may be able to make some progress on the decriminalization side," Obama said. "At a certain point, if enough states end up decriminalizing, then Congress may then reschedule marijuana."

Reclassifying marijuana as what's called a Schedule 2 drug, rather than a Schedule 1 drug is part of a bill being pushed by Kentucky Sen. Rand Paul, a Republican weighing a potential White House bid, as well as Democratic Sens. Cory Booker of New Jersey and Kirsten Gillibrand of New York.

Last week the unlikely trio of lawmakers unveiled their bill, which would also remove federal prohibitions on medical marijuana in the more than a quarter of states where it's already legal.

"We, as a society, are changing our opinions on restricting people's choices as far as medical treatments," Paul said last week. He has also been a vocal critic of the war on drugs.

"There is every reason to try and give more ease to people in the states who want this — more freedom for states and individuals," Paul added.

Paul's emphasis on states' rights is in line with the Republican belief that the federal government should keep its hands out of local affairs. But this is also a political sweet spot, as a majority of Americans back more liberal marijuana laws.

In fact, 51 percent of Americans said they favor legalization of marijuana, according to the most recent Gallup survey. That's part of a decadelong trend towards support for legalization. In 2004, nearly two-thirds of Americans were against it.

Americans' Support for LEgalizing the Use of MArijuana -- Recent Trend
http://media.npr.org/assets/img/201...e55dc568cb350b58a0f9f3d5f7334679-s800-c85.jpg

Medical marijuana is currently legal in 23 states and in Washington, D.C., and voters in four states and the District have approved marijuana for recreational use. But it remains illegal at the federal level.

"Members of Congress tend to be between five to 10 years behind the public on this issue," Dan Riffle, the director of federal policies for the Marijuana Policy Project, said in an interview. "Medical marijuana is more popular in this country than baseball and apple pie, and it's certainly more popular than Congress. What this bill means, and what it shows, is Congress is finally catching up to the public on this issue and recognizes that this is a slam dunk."

While it might not drive the voters that tend to make up the vote in early presidential primary states, it came up at last month's Conservative Political Action Conference (CPAC).

At the recent gathering, which typically draws droves of young conservative activists to the Washington area, nearly two-thirds of the 3,000 people who participated in the straw poll said they want to see marijuana legalized for either recreational or medicinal purposes.

At CPAC, Texas Sen. Ted Cruz was asked whether he believed Colorado's recent decision to legalize marijuana was a good idea or bad idea.

Cruz initially responded with a joke.

"I was told Colorado provided the brownies here today," he said.

He added that states have the right to legalize marijuana, despite his personal position on it.

"I actually think this is a great embodiment of what Supreme Court Justice Louis Brandeis called the 'laboratories of democracy,' " Cruz said. "If the citizens of Colorado decide they want to go down that road, that's their prerogative. I don't agree with it, but that's their right."

Former Florida Gov. Jeb Bush, asked the same question, echoed the same argument.

"I thought it was a bad idea," Bush said, "but states ought to have that right to do it. I would have voted no if I was in Colorado."

On the other side of the aisle, Democrat Hillary Clinton — who most observers expect to jump into the presidential race — sounded a lot like Cruz.

"On recreational [marijuana], you know, states are the laboratories of democracy," she told CNN in June. "We have at least two states that are experimenting with that right now. I want to wait and see what the evidence is."

Clinton said she supports medical marijuana for "people who are in extreme medical conditions."
 

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http://www.thedailychronic.net/2015...connecticut-can-be-erased-supreme-court-says/





Past Marijuana Convictions in Connecticut Can Be Erased, Supreme Court Says





HARTFORD, CT — People busted in Connecticut for possessing small amounts of marijuana have the right to get their convictions erased because the state decriminalized misdemeanor possession of pot in 2011, the state Supreme Court ruled on Monday.

The 7-0 ruling came in the case of former Manchester and Bolton resident Nicholas Menditto. A state prosecutor and Menditto’s lawyer said the decision affects thousands of people who have misdemeanor marijuana convictions in Connecticut.

“It’s a topic multiple states will have to be facing,” said Aaron Romano, Menditto’s attorney. “Because marijuana is being decriminalized across the United States, this issue needs to be addressed.”

In 2011, Connecticut Gov. Dannel P. Malloy and legislators changed possession of less than a half ounce of marijuana from a misdemeanor with potential jail time to a violation with a $150 fine for a first offense and fines of $200 to $500 for subsequent offenses.

Menditto, 31, wanted the state to erase his two convictions for marijuana possession in 2009 and a pending possession case. The Supreme Court ruled he could apply to have the two convictions erased, but declined to address the pending case. Romano said he may take the pending case to the U.S. Supreme Court.

The appeal involved the 2011 decriminalization and another state law that allows erasure of convictions of offenses that have been decriminalized.

A three-judge panel of the Appellate Court, the state’s second-highest court, agreed with prosecutors when it ruled in 2013 that convictions before the 2011 law took effect should stand.

The judges said the term “decriminalization,” as used in the state law allowing erasure of convictions for offenses that are decriminalized, means legalization. They concluded the state has not legalized possession of less than a half ounce of marijuana.

The Supreme Court disagreed.

“The legislature has determined that such violations are to be handled in the same manner as civil infractions, such as parking violations,” Justice Carmen Espinosa wrote in the ruling. “The state has failed to suggest any plausible reason why erasure should be denied in such cases.”
 

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http://fox17online.com/2015/03/16/voters-could-decide-on-statewide-marijuana-legalization-in-2016/





(Michigan) Voters could decide on statewide marijuana legalization in 2016





LANSING, Mich. — A recently formed coalition is preparing to collect signatures to get marijuana legalization on the statewide ballot in 2016.

Jeffrey Hank, chairman for the Michigan Comprehensive Cannabis Law Reform Initiative, told FOX 17 the proposal will aim to legalize, tax, and regulate marijuana growth and use for recreational purposes. Hank said the proposal will also preserve the existing policies for medical marijuana use.

“We’re going to end criminal punishment for any sort of marijuana possession or use, except for when someone distributes to a minor,” he told FOX 17 by phone on Monday.

The ballot proposal will mirror Colorado’s marijuana laws — learning from that state’s best practices — and would allow an individual to grow up to 12 plants legally, Hank said.

If passed, the state would treat pot like alcohol, allowing use only for adults 21 years and older. Hank said the committee estimates an additional 25,000 jobs would be created in the state, along with $200 million in new annual tax revenue, if voters approve legalization.

New state revenue could be used for road repairs and education funding, Hank said. The committee also estimates nearly $300 million in annual savings statewide for law enforcement agencies because they would not have to enforce pot prohibitions.

Colorado took in more than $50 million in revenue from taxes and licensing fees on marijuana in 2014.

“The money is just too big now,” Hank said. “The majority of people don’t believe marijuana should be illegal. So, for the legislature or anyone to ignore a potentially half billion dollar windfall, it’s just bound to happen.”

A ballot proposal in 2016 would ride the wave of recent decriminalization efforts in cities across the state. In Michigan more than a dozen cities, including Grand Rapids and Kalamazoo, have decriminalized marijuana use. Those cities treat pot possession as a civil infraction rather than a criminal offense.

Colorado, Washington, Oregon, Alaska and the District of Columbia have legalized marijuana for recreational use.

Michael Tuffelmire, who served as director for DeCriminalizeGR back in 2012, echoed claims that legalization would help free up law enforcement resources.

“I think going in the direction of legalization is a further step in alleviating police officers from petty marijuana crimes,” he said.

Since decriminalization began in Grand Rapids in 2013, the Grand Rapids Police Department has seen a substantial decrease in marijuana related cases.

In 2011, the department dealt with 810 marijuana related cases, with 747 of those resulting in arrests and incarceration, according to Lt. Pat Merrill. The number of similar cases in 2014 was just 98, with all of those cases involving criminal activity beyond the realm of decriminalization, according to Merrill.

“We’re further looking at drug policy and what’s working and what’s not,” Tuffelmire said, “I think a lot of people, including legislators, are seeing that the old laws are sort of archaic and just not working.”

The Michigan Comprehensive Cannabis Law Reform Initiative is working now to finalize the language of the ballot proposal. Hank said the group hopes to begin collecting the 250,000 signatures needed this summer.

“The time is now,” he said. “Our polling shows that more than majority of people support this already.”

Michigan Attorney General Bill Schuette, the state’s top law enforcement official, has consistently opposed the idea of decriminalizing or legalizing marijuana for recreational use.

A spokesperson told FOX 17 on Monday the attorney general’s office remains adamant about keeping drugs out of the hands of kids.
 

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http://www.washingtonpost.com/busin...cb8216-c9b7-11e4-b2a1-bed1aaea2816_story.html





In Wash. state, a 10-person team toils for the government — selling pot






NORTH BONNEVILLE, Wash. — Deep in the Columbia River Gorge, a short drive from the Bridge of the Gods, the nation’s only government-run marijuana shop was running low on weed.

The store had been open for just a few days. Inside, manager Robyn Legun was frantically trying to restock. Outside, five customers stood waiting for the doors to open. Someone cracked a joke about this being a typical government operation, always running late.

But, of course, it’s not. This government store, bearing the cozy name Cannabis Corner, sells dozens of strains of marijuana and in several different forms, from pungent buds to infused cookies and coffee. It sells glass bongs and rolling papers. And it does it all at the direction of the North Bonneville Public Development Authority, making the local government uniquely dependent on this once-illicit drug.

“If I don’t get this order in this morning, we’re going to be out for the weekend,” said Legun, 36, fretting over her inventory list.

Legun used to manage a Bed Bath & Beyond. Now, she leads a team of 10 people trained to sell pot. Her new government job had her placing orders for Blue Magoo, Purple Kush and Pineapple Express.

“I can’t believe this is my life,” she said.

Just two years ago, selling marijuana for nonmedical purposes was a crime everywhere in the country. Pot prohibition was on. Today, four states are setting up legal marketplaces open to anyone 21 or older.

Tightly regulated private stores began popping up in Washington and Colorado in 2014; Alaska and Oregon plan to open stores in 2016. In the District, voters approved legal pot possession in November and the law took effect last month. And in November 2016, marijuana advocates expect to put legalization on the ballot in at least five more states: California, Nevada, Arizona, Massachusetts and Maine.

“I’ve been surprised at how quickly things are moving. It’s just tremendous,” said Bill Piper, national affairs director for the Drug Policy Alliance.

Marijuana clearly has momentum. For the first time, a majority of Americans — 52 percent — favor pot legalization, according to a recent poll by the well-regarded General Social Survey. Last month, former Florida governor Jeb Bush and Sen. Ted Cruz (Tex.) – two likely candidates for the Republican presidential nomination — said legalization should be left to the states. And last week in the Senate, another potential GOP presidential contender, Rand Paul (Ky.), joined Democrats Cory Booker (N.J.) and Kirsten Gillibrand (N.Y.) in introducing a historic bill to end the federal ban on medical marijuana.

“It’s night and day from 2009,” said Dan Riffle, chief lobbyist for the Marijuana Policy Project. He said doors on Capitol Hill once closed to him are now swinging wide.

Still, even Riffle didn’t see the Cannabis Corner coming — a store where pot is not only tolerated by the government but promoted by it, like stamps, or maps, or Smokey Bear tchotchkes.

Maximum Penalties Vary Widely (Map)
https://img.washingtonpost.com/rf/i...ana_penalties.jpg?uuid=k20uMMwqEeSHME9HNBbnWQ

“That’s something that would’ve been anathema six or seven years ago,” Riffle said.

In many places, it still is. In 38 states, possessing an ounce of marijuana continues to carry the threat of jail time. Even in Washington, which in 2012 became one of the first states to legalize pot for recreational use, the drug is not universally embraced.

Of 281 incorporated municipalities, more than 90 have banned the opening of pot shops or enacted moratoriums. Officials in Pierce County are fighting a pot shop that opened last month in the city of Parkland, despite a county ban on the establishments. In Skamania County, home to North Bonneville, county commissioner Chris Brong said he personally doesn’t approve of the town’s decision.

“I don’t think it’s the type of business we want,” Brong said.

Fellow commissioner Doug McKenzie agreed. At the very least, he said, Cannabis Corner should have a private owner. “I don’t like government competing with private enterprise,” McKenzie said.

A town upturned

North Bonneville is no hippie haven. Initial thinking behind the shop was, in fact, defensive: to deter a bad owner. But the town — a drab collection of buildings thrown up in the 1970s when its 1,000 residents were relocated to make way for the expansion of the nearby Bonneville Dam — was struggling financially. The potential economic benefit was hard to resist.

A pot shop would provide a reason for tourists to stop in North Bonneville. Making it government-run would keep the profits local.

Mayor Don Stevens pushed the idea. Stevens is 58, a former Marine with wire-rim glasses, a beard and curly gray hair along the sides of his head. As a teenager in 1970s Oregon, he joined the pro-marijuana group NORML, believing that legalization was just around the corner.

“Forty years later, it’s finally happening,” he said. “It’s been a long, strange trip, as they say.”

The Cannabis Corner sits at the edge of town just off State Highway 14 in a renovated storage barn. Red and white “Grand Opening” banners hang from a chain-link fence topped by barbed wire. State laws limit advertising, so the store can be easy to miss.

Inside, it looks like a cross between a head shop and a gift boutique. It’s clean and spaced out. Classic rock plays quietly in the background. Long glass display cases line two walls, arranged by marijuana breeds, stretching from indica (calming) to sativa (energizing), with hybrids in between.

The marijuana comes by the gram in prepackaged, sealed plastic bags, usually $15 to $18 a pop — significantly less than at nearby private shops. Six days after the store opened, its menu apologized that 13 varieties were already “temporarily sold out!”

As three “bud tenders” helped customers make their selections, Glen Jorgensen, 67, settled on some Sour Diesel. The retired construction worker wore a gray T-shirt with an American flag on it and carried a small brown bag with a Cannabis Corner sticker bearing his purchase.

“There’s a lot of people my age who’ve been getting it under the table for years,” said Jorgensen, a Vietnam veteran who stopped by the store on his way back from the VA hospital. “Now, we don’t have to.”

After lunch, business spiked. In walked Levan Mattson, 23, with his parents, Daniel, 60, and Diana, 56. The family had been hiking nearby when Mom suggested they stop by the pot shop.

The younger Mattson was stunned. He loved pot. But he had never seen his parents get high. Now, his mom was perusing the edible products. She settled on a cookie.

“It’s weird seeing this,” he said. “But it’s also kind of awesome.”

Mayor Stevens dropped by the store in his new “I [pot leaf] Washington” T-shirt. He had just attended a meeting of the county Chamber of Commerce, where the Cannabis Corner was a new member.

Legun filled him in.

“I just placed our next re-up order,” she said. “We’re almost out of weed!”

The mayor beamed.

“How great is that?” he asked.

Will pot pay off?

Initially, some residents opposed the pot shop. But the upset faded during a regulatory approval process that took more than a year. The city could not run the shop directly, so it set up a public development authority, like the one that runs Seattle’s Pike Place Market. The five-member board is responsible for business decisions and doling out store profits. Stevens’s first priority is renovating the town’s dilapidated playground.

But there is no promise of profitability. The marijuana business is competitive. Pot stores have opened 45 minutes away to the east and west. Just across the river gorge, Oregon could add stores of its own next year. And North Bonneville must repay $260,000 in high-interest loans it borrowed to get the store started.

At a meeting last week, development authority board members studied an early sales report. The store was averaging about $2,200 a day — well below initial projections. But board members felt confident that business would pick up with the summer tourist season.

“As we get another month or two under our belts, it’ll loosen up,” said John Spencer, a consultant hired to develop the store’s business plan.

Legun cheered the group with the Cannabis Corner’s first Yelp review: five stars. Then she brought up a potentially controversial topic: the employee discount program.

The bud tenders — all regular government workers with benefits and starting pay of $11 an hour — are a committed bunch. For instance, Kayley Blood, 25, left her job at a medicinal pot shop in Colorado to work at the Cannabis Corner. The Colorado market was already feeling too money-hungry and corporate, she said. She was attracted by the idea of a small store run for the people.

Legun wanted to offer Blood and other employees a steep discount. At the board meeting, she compared the Cannabis Corner to any other retail operation, where it’s important to have informed workers.

“We need to be doing constant trial and testing,” she argued.

One board member did not want to give up the profits. The board’s attorney worried that discounts might be considered gifts of government services. In the end, the board voted to offer the staff marijuana and bongs at a price just above cost.

At the Cannabis Corner, workers take the same drug test the town administers to all new hires. But they’re allowed — expected, actually — to test positive for marijuana.
 

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http://www.ibtimes.com/marijuana-le...kes-first-step-toward-legalizing-weed-1849092





Marijuana Legalization In Ohio: State Takes First Step Toward Legalizing Weed For Recreational Use





Ohio has taken the first step toward legalizing marijuana for recreational use after the state’s attorney general approved paperwork that would allow the issue to be decided by voters. On Friday, Attorney General Mike DeWine, a Republican, certified ResponsibleOhio’s petition to put pot legalization on the ballot and has sent it to the Ohio Ballot Board, which has 10 days to review the language of the petition and approve it for signature gathering, the Columbus Dispatch reported.

"Voters deserve a thoughtful conversation on this important issue, and we are eager to continue this conversation in the coming months," Lydia Bolander, a spokeswoman for ResponsibleOhio, the group behind the petition, said in a statement, according to the Chronicle-Telegram. “With today's certification, we can now move forward with the next step of the campaign -- gaining approval from the Ohio Ballot Board." Once the board certifies the petition, backers can start collecting the over 300,000 signatures required to get it to a vote.

Ohio decriminalized marijuana possession in 2011. Several attempts have been made over the years to legalize cannabis in Ohio for medical use, but backers routinely failed to submit the required number of signatures on time. The state legislature is currently considering a bill, introduced in February, that would legalize certain cannabis-derived drugs, called cannabidiols, for treating people with seizure disorders.

Under the proposed ballot measure, adults 21 and older would be able to grow up to four marijuana plants in their homes. The proposal includes creating a regulatory commission to control marijuana production and sales in Ohio, allowing the state to tax marijuana sales at 5 percent.

DeWine initially rejected the petition when it was first submitted in February because the ballot proposal “omits that the proposed amendment permits the sharing of specified amounts of marijuana between adults 21 years old and older” and “does not accurately reflect the manner in which proposed taxes would be distributed,” according to the Dispatch. ResponsibleOhio revised the proposal to reflect those changes.
 

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http://www.forbes.com/sites/debraborchardt/2015/03/17/tax-time-hits-hard-for-marijuana-businesses/





Tax Time Hits Hard For Marijuana Businesses





It’s tax time and small business owners all over America are digging out their receipts for deductions, except marijuana business owners because most deductions aren’t for them.

Some of the top tax deductions for small businesses include advertising, office supplies, utilities, business entertaining and legal fees. But cannabis businesses face an different issue that marijuana tax expert refer to as the 280 (e) problem. This U.S. tax code addresses expenditures in connection with the illegal sale of drugs. Marijuana is still classified as a Schedule 1 controlled substance and so the Internal Revenue Service must treat it as such, no matter what a state law may say. The code says no deduction or credit shall be allowed for any amount paid in carrying on a business in a controlled substance. The only deduction allowed is cost of goods sold and it’s used to reduce the gross profits.

These businesses found that it is critical to make sure the expenses are properly categorized as their tax returns are sure to be scrutinized. Accurate record keeping is critical not only for the marijuana businesses, but also the state governments that want to make sure they are collecting all the taxes owed to them. This isn’t a small amount of money. For example, Colorado collected $43 million in taxes for the fiscal year of 2014-2015 and local governments received over $547,000 from this kitty.

Steve Janjic, CEO of Amercanex was prompted to build his platform because of the gaps he saw in the system. Amercanex is the American Cannabis Exchange and was established as an electronic marketplace for wholesale and retail cannabis transactions. “In an industry where the majority of it is cash-based, the states are finding they are not able to tax them properly. We built this platform because of the taxation issue,” said Janjic. He says it gives the states the ability to watch every transaction. His company approaches the tax issue from the government’s point of view.

MJ Freeway on the hand tackles the issue from the business owners side. Jessica Billingsley Co-founder of MJ Freeway Business Solutions said, “What you find is most cannabis licensed operators are very well informed of what they can and can’t take in 280 (e). The biggest challenge is in making sure they are categorizing as much to Cost Of Good Sold as possible.” The IRS issued a memorandum in January addressing taxpayers that traffic in controlled substances with regards to calculating COGS and while it sheds some light, it continues to be limited. With such huge profits, these business owners want to minimize the tax pain as much as the next businessman.

The tax obligations also change depending on whether you are a medicinal marijuana business or a recreational marijuana business. Recreational or retail marijuana has additional excise taxes. As defined by the Internal Revenue Service excise taxes are taxes paid when purchases are made on a specific good. These businesses also have to make sure they have a tax professional that is not only well-versed in the particulars of 280 (e), but are also willing to work with a cannabis-based business.

CPA’s have to be aware that some state boards of accounting may not renew their licenses if they believe that working with a cannabis business does not satisfy a good moral character requirement. The American Institute of Certified Public Accountants (AICPA) issued a statement saying that “It’s not yet clear how State Boards of Accountancy will apply “good moral character” requirements or impose discipline when it comes to supporting marijuana-related businesses, or if they will take a position at all.” The CPA’s are warned to proceed with caution because the Federal government can criminalize cannabis at any time. The AICPA suggests that CPA’s get legal advice before undertaking work for these clients.

It seems many accountants are willing to take the risk as eleven firms are listed as providing nationwide accounting services for marijuana businesses. Colorado has 17 firms and California has 15 that specialize in cannabis accounting. Amy Poinsett co-founder of MJ Freeway said, “They’re in an extremely difficult position as a cannabis operator. They are well educated and they make sure they have advisement teams that are well aware of 280(e).” Especially when tax rates for these businesses easily dwarf others. If you think you pay a lot in taxes, these businesses can pay upwards of 50-75% more in taxes than a typical small business.

Congress is attempting to help these taxpayers with a measure that would tweak 280 (e) and make an exception for marijuana sales that are compliant with state law. It’s H.R. 2240 and it was introduced by Oregon Congressman Earl Blumenhauer in June of 2013 where it was bumped to the House Committee on Ways and Means and has collected dust ever since. Rep. Blumenhauer and Rep Jared Polis of Colorado also introduced the Marijuana Tax Equity Act of 2013 or H.R.501. This imposes a 50% tax on the sale of marijuana by the producer and an occupational tax on industry workers. It too was referred to the Ways and Means Committee in 2013 and has sat there ever since.

That’s because ultimately the feeling with most politicians is that if marijuana businesses want to play, they must pay. They hear about the piles of cash and cultivators spending millions on facilities. They have a hard time being convinced that the small business owners in the industry deserve to be treated like any other small business. So for 2014, marijuana businesses will have to continue paying these high taxes, while they search for legal loopholes – just like a regular company.
 

yooper420

AladinSane
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7green,
Thank you for all of your trouble to post the news. I see that my state (Michigan) is trying to get a legalization proposal on the ballot in 2016. About time Michigan.
 
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