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Washington Cannabis: Then and Now

Cannabis has come a long way since the Marihuana Tax Act of 1937, which effectively outlawed the substance. The Controlled Substances Act followed the repeal of the Marihuana Tax in 1971, keeping the drug illegal and making it a Schedule I substance. It wasn’t until 1998 that Washington State made the drug legal for medicinal use to help treat certain conditions. 

Brief history of Cannabis in Washington 

The history of legalization in Washington began in 1998 when voters passed Initiative 692 (I-692), which allowed patients suffering from terminal illness and certain debilitating conditions to possess and consume marijuana. It took almost a decade later, in 2007 for lawmakers to define how much a patient could possess. The decision was that a patient could possess a 60-day supply, which was defined as 24 ounces and no more than 15 plants. Still, for the most part, the sale and commercial cultivation of the plant remained illegal. 

In 2012, voters in Washington decided to legalize the recreational use of cannabis. This provided for the regulation of the product at a state level as well as the taxation of cannabis

Back when it was only legal for medical users, one had to visit a doctor authorized to prescribe the drug. Then, a patient could possess only enough product to last 60 days, as noted above. However, one had to live in the state and have an in-state physician to obtain a medical marijuana card. Possession of the drug without the card was illegal. 

Now, anyone can walk into a dispensary or a dab bar or a cannabis bar and partake in cannabis. A prescription is no longer necessary to possess the drug, however, only those possessing a medical marijuana prescription can grow the drug. 

Another effect of legalizing recreationally is that prices have fallen. In just three years, prices for cannabis fell a staggering 67%, with further decreases in price predicted. 

Ways to Consume Cannabis

Along with legalization, a host of related industries have sprung up to help people consume cannabis in different ways. The most popular way, of course, is rolling the dried flowers into a paper, known as a joint, and smoking it. Rolling papers come in a variety of lengths and now can be made from differing fibers, including CBD hemp papers for that additional medical kick.

Another way to consume cannabis that is growing in popularity is vaporization. One of the most popular vapes for medical use are the Volcano Vaporizers. Volcano Vaporizers can use a whip, which is a long piece of plastic tubing through which the vapor from heating dried buds is drawn. The vaporizer can also be used to fill a plastic bag with the vapor, which is then inhaled. 

Box mod vapes also are a growing way to ingest marijuana. Dry herbs can be placed in a vaporizer specifically created for the purpose. Cannabis concentrates like CBD oils or waxes or THC concentrates can also be placed into the atomizer or tanks of certain box mods to allow the vaporization of oils. 

Edibles are another way to consume cannabis that is popular among medical patients. Edibles are popular for many reasons, one of which is they do not have the negative stigma of smoking joints and people feel that they are healthier overall. Edibles also have a longer period of relief, though they take longer to kick in than smoking or vaporization.

Another way to consume cannabis is via a hookah. With this method, dried herbs are placed into a bowl at the top of the device and then combusted, with the smoke being drawn through small tubes. Some hookahs allow for multiple people to smoke at once by drawing through multiple hoses. 

Legalization in the state has not been a smooth road. Although the 2013 Cole Memo of the Obama Administration provided that Federal law enforcement would not become involved in states that had voted to legalize cannabis. However, in 2018, Attorney General Jeff Sessions overturned the memo, to the dismay of both Republican and Democrat congressmen in states where the drug was legal. 

Cannabis is now legal for recreational purposes in 9 states and Washington, D.C. There is hope that the drug will soon be legalized nationally, following countries like Canada and Uruguay. 

Author

Michael Jacobs is a marketing and creative content specialist at GotVape.com with a primary focus on customer satisfaction. Technology and fitness combined with healthy lifestyle obsession are his main talking points 

 

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Pipe Dreams: Bitcoin Won't Solve Pot Industry's Banking Problem

 Nov 11, 2017 at 14:00

Charles Alovisetti is a senior associate and co-chair of the corporate department at Vicente Sederberg LLC, and works with legal cannabis businesses in the U.S.

In this opinion piece, Alovisetti warns such enterprises to be wary of using bitcoin or other cryptocurrencies as a solution to the pot industry's continued difficulty obtaining or keeping bank accounts (a familiar problem for blockchain startups.)

One of the major challenges facing legal marijuana businesses is lack of consistent access to banking services. Many marijuana businesses do have banking accounts, but the sword of Damocles dangles above them, always threatening an unappealable termination of an account.

Enter digital currencies, which promise an end run around a wary financial system. There is a great deal of excitement in the marijuana industry about the possibilities regarding bitcoin and other cryptocurrencies.

But before the cannabis industry gets carried away with images of marijuana businesses sidestepping hostile federal banking regulators, we need to take a hard look at the future of digital currencies.

Alternative prescriptions

One strategy that's been pushed is for cannabis businesses to take an existing digital currency and simply use it as a method of transacting business to avoid the need to rely on banks.

This way, marijuana companies without bank accounts could eliminate the need to operate in cash, instead accepting payment directly from customers or other businesses in digital currency – although converting digital currency into dollars will still require a bank account.

Another possible use of digital currencies would be to develop a new token, often referred to as an app coin, protocol token, or altcoin, specifically for the marijuana industry. Again, the goal would be to reduce or eliminate the use of cash and integrate blockchain technology into the compliance and other needs of marijuana businesses.

Finally, some business offer bitcoin-based payment processing services. These services allow customers to purchase bitcoin via a credit or debit card and then purchase a marijuana product with the recently acquired bitcoin. The store then converts the bitcoin back into dollars. The idea is to provide an alternative to traditional payment processing services and credit card companies that will not work with marijuana businesses.

Harsh realities

However, regulators present a real and present threat to cryptocurrencies as they currently exist; for example, recent Chinese regulatory restrictions have seen the closure of platforms allowing people to buy or sell tokens.

And these threats become even more important for digital currencies servicing marijuana-related businesses ("MRBs" in the parlance of the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or FinCEN).

As longtime CoinDesk readers will recall, in March 2013, FinCEN published its initial guidance on virtual currencies. The agency defined three categories of participants: users, exchangers and administrators. A user is "a person that obtains virtual currency to purchase goods or services," whereas an exchanger is "a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency" and an administrator is "a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency."

FinCEN concluded that, barring any specific exemption, exchangers and administrators are money service businesses (MSBs) and as such are subject to FinCEN registration and the framework of the Bank Secrecy Act (BSA), which was designed to aid FinCEN's investigations of potential criminal activity.

Subsequent administrative rulings have clarified that FinCEN considers digital currency exchanges, ATM operators, and payment processors to be exchangers within the agency's tripartite framework.

On the marijuana side of the equation, it is important to note that, while marijuana remains illegal federally, the industry in the U.S. exists in its current form because it is tolerated pursuant to federal policy, as set forth in the Cole Memo (put out by the Department of Justice on Aug. 29, 2013).

The Cole Memo states that while marijuana remains illegal federally, federal law enforcement should not consider prosecution of state-legal marijuana businesses if those business do not implicate any of eight enumerated enforcement priorities (e.g. preventing revenue from the sale of marijuana from going to criminal enterprises and preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or illegal activity).

A potent brew

While it is unfair to associate all digital currency use with illicit activity, there is a perception, reinforced by certain bad actors, that digital currencies are being used to launder money, divert revenue to criminal enterprises and traffic illicit drugs. Any risk that a business could be seen as violating the Cole Memo priorities needs to be treated extremely seriously as it could provoke a federal law enforcement action.

While the Cole Memo addressed violations of the Controlled Substances Act (CSA), it was silent as to financial crimes that would inevitably result from the use or banking of proceeds of a federally illegal activity. In response to financial institutions' concerns regarding accepting MRBs as clients, on Feb. 14, 2014, in two memos often referred to as the "Valentine's Day Letters," the Department of Justice and FinCEN each outlined their respective attitudes to money laundering concerns related to the violations of the CSA.

The FinCEN memo contained detailed guidelines on how to provide banking services to an MRB while remaining compliant with the BSA. These guidelines included the obligation to file different types of suspicious activity reports (SARs) in response to activity on the part of an MRB. The new DOJ memo updated the earlier Cole Memo to extend the realm of non-priority violations to include provisions of the money laundering statutes, the unlicensed money remitter statute and the BSA triggered by underlying violations of the CSA.

But the DOJ reiterated that any exercise of discretion regarding its resources was subject to the provision of services to an MRB whose activities do not trigger any of the eight priority factors. The DOJ also noted that following the FinCEN guidance was critical to remaining within the low enforcement priority category of the Cole Memo.

Again, FinCEN has also made it clear BSA compliance obligations also apply to many businesses dealing in digital currencies – exchanges, ATM operators and payment processors are all required to register as MSBs. That means that to comply with the Cole Memo and FinCEN's marijuana policy guidance, any digital currency business that is required to register as an MSB must make the required SAR reports outlined in the Feb. 14, 2014, FinCEN guidance.

Just say no

When it comes to marijuana firms using cryptocurrencies, discretion should remain the better part of valor.

The marijuana industry in the U.S. exists solely due to permissive federal policies that require businesses to follow certain guidelines, including filings SARs with FinCEN. If these guidelines are not being followed to the letter, which is a challenging and sometimes onerous task, a business is no longer within the guidance of the Cole Memo and is at higher risk of facing federal law enforcement action.

And even if these guidelines are religiously adhered to, while FinCEN-compliant use of digital currencies is not explicitly prohibited by federal policy, their use is sometimes linked by law enforcement with money laundering, illicit drug sales and other illegal activities.

As these crimes are listed as prevention priorities in the Cole Memo, digital currency use could potentially provide an excuse for Attorney General Jeff Sessions (no fan of legal marijuana) to crack down on state-legal pot enterprises.

Original Article: https://www.coindesk.com/pipe-dreams-bitcoin-wont-solve-pot-industrys-banking-problem/

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TSX, TSX-V and CSA Clarify Their Positions on Listed Entities with Ties to U.S. Marijuana Market

Canadian Securities Exchange and OTC Markets Group Announce Strategic Alliance to Attract Foreign Issuers to North America

By Sherri Altshuler and Tyler Brent* from Aird Berlis

The Canadian Securities Exchange (“CSE”) and OTC Markets Group recently announced a strategic alliance to offer a new program for issuers looking to go-public in Canada and have cost-effective access to North American investors. Both the CSE and OTC Markets Group hope to utilize the strategic alliance to introduce foreign companies to the North American capital markets.

The alliance pairs the benefits of public company status in Canada with OTC Markets Group’s secondary market network across the United States. Under the alliance, foreign companies would raise capital through an IPO on the CSE and then broaden their reach to U.S. investors through OTC Markets Group’s dealer network. Securities would then be traded on both the CSE and over-the-counter in the United States, allowing for increased liquidity and access to funding.

Both the CSE and OTC Markets Group have publicly announced their excitement over the alliance, and hope to introduce new and compelling investment opportunities to the North American marketplace. “As a result of our relationship with OTC Markets Group, we expect to offer the most efficient access to North America’s public capital markets for foreign issuers,” said Richard Carleton, Chief Executive Officer of the CSE. “At the same time, with our partners at OTC Markets Group, we will present a series of new and interesting investment opportunities to investors in Canada and the United States.”

We expect the alliance between the CSE and OTC Markets Group will provide companies in the cannabis sector with better access to U.S. investors. As of June 30, 2017, one third of companies listed on the CSE were also quoted on one of the OTC Markets, with the bulk of companies quoted on the OTC Pink (65 companies) or the OTCQB (37 companies).

See related blog post: TSX May delist Canadian Companies With US Cannabis Exposure. 

TSX, TSX-V and CSA Clarify Their Positions on Listed Entities with Ties to U.S. Marijuana Market

By Richard Kimel, Daniel Everall and Tyler Brent*

On October 16, 2017, the Toronto Stock Exchange (“TSX”), the TSX Venture Exchange (together with the TSX, the “Exchanges”) and the Canadian Securities Administrators (the “CSA”) released separate guidance clarifying their positions on the regulation of entities with ties to the U.S. marijuana market.

The Exchanges released identical notices confirming that listed entities are not permitted to engage in the U.S. marijuana market. The Exchanges have always required applicants and listed entities to comply with all laws, rules and regulations applicable to their businesses. The Exchanges’ bulletins reminded that, despite the “Cole Memorandum,” marijuana remains a Schedule I drug, prohibited by the U.S. federal Controlled Substances Act. Therefore, entities that cultivate, distribute or possess marijuana in the U.S. (“Subject Entities”) are considered by the Exchanges to be engaging in illegal activity in contravention of the Exchanges’ policies. Further, the Exchanges suggested that financial transactions involving U.S. marijuana businesses may contravene U.S. money laundering rules. Non-compliance with the Exchanges’ requirements could lead to a delisting. Those following the space should not be surprised with this news, given that it is simply a formalization of the Exchanges’ recent informal positions.

The Exchanges also warned that entities that own Subject Entities either directly, indirectly or in substance are considered to be engaged in the business of U.S. marijuana, and therefore at risk of delisting. Similarly, entities that target Subject Entities with their products or services, or have commercial arrangements with such entities, may also be considered to be in breach of the listing requirements.

The Exchanges announced that they expect to complete reviews of all of their listed entities by the end of the year. The Exchanges expect listed entities to take steps to ensure they are in compliance with their rules, meaning that some companies may need to divest certain U.S. interests or transfer their listing to other exchanges.

The Exchanges’ approach comes in contrast to the CSA requirements, which were clarified by Staff Notice 51-352 (the “Staff Notice”). The CSA considers securities regulation to be primarily disclosure-based. Accordingly, the Staff Notice focused on disclosure requirements for listed entities, which require each entity’s disclosure fairly presents all material facts and risks. The Staff Notice emphasized that the CSA’s disclosure-based approach is premised on the entity complying with U.S. laws at the state level.

The CSA recognized that there is uncertainty associated with operating in the U.S. marijuana industry because the federal government’s policy towards non-enforcement of the federal prohibition (i.e. the “Cole Memorandum”) could change at any time. However, the CSA considered this to be largely a business risk, and barring public interest concerns, not a securities law violation provided adequate disclosure is made to investors. Specific disclosure recommendations were included in the Staff Notice as replicated here in Table 1.

CSA_Disclsure

 Cannabis companies applying to be or already listed on the Canadian Securities Exchange (“CSE”) will be relieved by the Staff Notice, as it largely accords with the CSE’s existing position. Consequently, companies with ties to U.S. marijuana can still list publicly in Canada and comply with our securities laws, but should consider friendlier alternatives to the TSX/TSX-V, such as the CSE.

*Tyler Brent is a 2017/2018 articling student at the firm. 

Aird Berlis is a law firm specializing in the cannabis industry.

 

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Canadian Investments In The US

What Can Canadian Companies Expect if They Have Marijuana Stock Interest in the United States

Canadian companies who are on the forefront of the country’s medical and soon-to-be recreational marijuana business have some of the fastest growing stock interests in their home country. As well it should be – Canadian Prime Minister Trudeau and the Canadian government last year announced plans to legalize cannabis for recreational use nationwide come July of 2018. 

However, some of these companies are publicly traded on the Canadian Stock Exchange (CSE). The Toronto Stock Exchange (TSX), has largely shied away from listing companies that have interests in the United States, however it does possess all Canadian equity trades via its clearing house the Canadian Deposit for Securities. 

This means that companies needing to raise money have raced to CSE to do so. Often these funds are being raised to fund U.S. opportunities. These companies are allowed to list on CSE so long as there is adequate disclosure. However, in the case that TMX decides to stop clearing trades, a viable alternative is necessary. And it’s one that CSE executive Richard Carlton is actively seeking. 

It’s Still Challenging for the US Funding and Investing for Marijuana Industry

In comparison to the United States, where funding and investing a marijuana company even in legalized states remains difficult, money is flooding into Canadian-listed stocks. However, a decision to take a tougher line on Canadian capital markets could spell disaster for the possible expansion of Canadian companies looking to invest in U.S. states where marijuana is legal. 

Indeed, many of the companies that investors have fallen in love with are currently increasing their footprint in the United States. If they do not already have interest in the United States, they are planning to do expand. However, there’s a catch. These companies are mandated by TMX to remain in compliance with all relevant laws and regulations in the jurisdictions where they operate. 

Why Aphria Should be Concerned? 

Aphria, one of Canada’s rising investment stars, has reason to be concerned. As part of its investment strategy, it is planning on making a $25 million investment in Florida, where medical marijuana is legal, yet it remains illegal recreationally. In fact, 10 new companies that are cultivating marijuana in preparation for next year’s impending legalization. The entire industry has eyes on a possible large market: The United States. Where marijuana is still federally illegal, putting the stock exchange in a precarious position when it comes to listing marijuana companies that have interests in the United States. 

While TMX is currently allowing Aphria to remain listed, even with its plans for expansion in Florida, it has taken a harder approach for other companies. For example, Canadian Biotechnical Corporation left the TSX Venture Exchange after being told it could not pursue recreational marijuana interests in the United States. Conversely, Ottawa-based CannaRoyalty Corp has the bulk of its assets in the United States and is listed on the Canadian Securities exchange. 

The two rivals are taking different approaches when it comes to listing companies with U.S. interests. Not only is the CSE allowing for tiny, unlicensed companies to list, it is also allowing U.S. based corporations to trade, where they are barred from doing so domestically. 

Summary of the Current Status

While those with U.S. interests are looking to TSX to clarify its rules regarding companies listing on the exchange, some think that Canadian companies should avoid involvement and expansion into the U.S. entirely. They believe that institutional investors in the burgeoning market should feel confident that their investments are not funding illegal activities. 

While the federal government has yet to make a move against states where cannabis is legalized recreationally and medically, it is no secret that many in the Trump administration, including U.S. attorney general Jeff Sessions, are taking a hard line on federal marijuana policy. Unlike modern day vapes , which are a sensitive topic as well but are not banned in both countries, marijuana is illegal on the federal level. This is certainly a cause for some concern for investors and regulators in the Canadian market. 

It’s no better in the United States, where investors looking to take advantage of the boom in Canada and the growth of marijuana stocks there. The United States Drug Enforcement Agency has been tracking U.S. investments in the Canadian marijuana industry. When inquired by Reuters about the DEA’s view of U.S. investments in Canadian marijuana, spokesman for the DEA Robert Payne said that the agency is “most interested in those types of activities.” 

Author

Michael is a marketing and creative content specialist at GotVape.com with a primary focus on customer satisfaction. 

Invest In MJ Editor Notes:

The article above was provided by Michael and are his opinions from his research. The views expressed above are not necessarily the opinions of Invest In MJ and we suggest you conduct your own research and speak to your financial advisor as to the accuracy of the information contained in the article.

We at Invest In MJ are aware that the United States government still has cannabis as an illegal drug and that does bring lots of question and concerns for investor as to the legality of investing in the cannabis sector.  At the state level, cannabis companies are opening up and setting up shop, many of them looking north to Canada for raising capital.  While the DEA may be interested in activities in the cannabis space, they have yet to stop investment in the space. 

Many companies in Canada and the United States have raised capital from all around the world in record numbers; we do not think that trend will change.  The fact that no regulator has stopped the progress of capital raises or companies from trading on the exchanges should be kept in mind.  While some companies may not have business interest or operations in the US, many are moving forwards with their plans to enter the US market in States where cannabis is legal medically or recreational.

Please consult your financial and legal advisor before making any investment decisions.

 

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The support for cannabis legalization by the public is stronger today than over the last few decades.  However, most non-cannabis users still believe the old stereotype about "stoners" — that marijuana smokers are apathetic, unsuccessful, flaky… and the list goes on.

But, contrary to the popular stereotype which is based mostly on miss-information or lack of research, there is a new study which suggests they are in fact among the most satisfied and successful among us.  

As it turns out, cannabis consumers are among the most well-adjusted and successful of American adults, based on results from BDS Analytics’ landmark cannabis consumer research study.

The study surveyed consumers (acceptors) and abstainers (rejecters) across a wide variety of mental, social and financial factors. The survey analysed extensive data from two US states that have voted to legalise the sale of cannabis -California and Colorado.

Among the findings, Cannabis Consumers are: 

Accomplished Personally and Professionally

  • Average annual household income among California Consumers is $93,800, compared to $72,800 for Acceptors and $75,900 for Rejecters.
  • The percentage of people holding master’s degrees among California Consumers is 20 percent, compared to 13 percent for Acceptors and 12 percent for Rejecters.
  • Full-time employment is enjoyed by 64 percent of Colorado Consumers, compared to 51 percent of Acceptors and 54 percent of Rejecters.

Satisfied with Life

  • Nearly five in 10 Colorado Consumers agree they are more satisfied with life today than they were a year ago, compared to about four in 10 among Acceptors and Rejecters.

Parents Raising Families

  • Cannabis Consumers are the most likely segment to be parents in California: 64 percent of Consumers are parents, compared to 60 percent of Acceptors and 55 percent of Rejecters.
  • In addition, Consumers in California are significantly more likely to have children ages 10 years or younger at home — 37 percent of Consumers compared to 23 percent of Acceptors and 11 percent of Rejecters

Active Socially and Creatively

  • Among Colorado Consumers, 36 percent agree they are very social people, compared to 21 percent for Acceptors and 28 percent for Rejecters.
  • Acceptors in Colorado were more likely to enjoy the fine arts and describe themselves as creative.

Enjoy the Outdoors

  • When compared to Rejecters, Consumers in both Colorado and California say they enjoy outdoor recreation at a higher rate — 50 percent for Colorado Consumers compared to 36 percent for Colorado Rejecters, and 57 percent for California Consumers compared to 26 percent for California Rejecters.

Nurturing and Volunteers

  • In California, 60 percent of Consumers agree that they are nurturing people, compared to 41 percent of Rejecters. Also, 38 percent of Consumers say they volunteer their time to help others, compared to 25 percent of Rejecters.

The following is a comment from Linda Gilbert, head of the consumer research division at BDS: “Cannabis consumers are far removed from the caricatures historically used to describe them”.

Public support for cannabis legalization is at an all-time high, the misconception and myths around cannabis users is clearly debunked from this study.  We are thankful that real insight and studies are now being done around cannabis. Over the years we expect this trend to continue and more light will be shed on the benefits of cannabis use.  This will hopefully shatter the misconceptions and false information typically cited by people who are anti-cannabis.  The tides are turning and the truth is being shared, that is a positive step forwards towards the legalization of cannabis.

See full report and details about BDS Analytics. June 6 2017

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