Operational compliance has become paramount to the success of many cannabis businesses following new state regulations that went into effect earlier this year. For others, non-compliance has been a great downfall. Following the legalization of commercial cannabis, the state of California hastily drafted and passed emergency regulations which outlined licensing and operational requirements for cannabis businesses under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). These emergency regulations went into effect in December of 2017 to provide a temporary solution for the lack of cannabis legislation until more thorough regulations could be drafted and adopted by state agencies. Just three months ago, the Office of Administrative Law (OAL) approved new regulations which were immediately adopted by all three state licensing agencies. The new regulations include many significant changes from the previous emergency regulations and introduce more restrictive guidelines for cannabis businesses. Further, the new regulations define serious implications for businesses who violate the new guidelines – from fines up to $250,000 to loss of licensure. In recent months, a rapid number of compliance enforcement agencies have emerged at both the local and state level. Licensed cannabis businesses in California have experienced a peak in random compliance inspection visits, raids from local and state law enforcement, and seizure of cannabis products. With the commercial cannabis industry now in full effect, local and state agencies are beginning to focus less on setting the framework for the industry and more on enforcement of regulations.
A majority of licensed cannabis businesses are in some way in violation of current regulations despite their intentional efforts to comply. This is largely due to the cumbersome location-dependent nature of cannabis regulations. Although cannabis is legal in the state of California, commercial cannabis businesses are still federally illegal, and there is no federal legislation governing the licensing and operational compliance of cannabis businesses. As a result, cannabis regulations vary between states. Further convoluting the concept of cannabis compliance, regulations also vary within-state and are dependent on legislation issued by local authorities. All California cannabis businesses must adhere to statewide regulations enforced by the three state agencies – the Bureau of Cannabis Control (BCC), the California Department of Public Health (CDPH), and the California Department of Food and Agriculture (CDFA) – in addition to guidelines enforced by local agencies. For instance, outdoor cultivation is legal at the state level per the CDFA, but it is prohibited within the City of Los Angeles per the local Department of Cannabis Regulation (DCR). Cannabis businesses must also comply with local Fire Department safety codes which also vary by jurisdiction.
With compliance enforcement on the rise, it is crucial for all cannabis businesses to stay informed about both state and local regulations in order to avoid high penalties or business closure. Our firm offers full-coverage compliance counseling to licensed cannabis businesses. Our team is in regular attendance of local city hall and county government meetings pertaining to commercial cannabis in all areas of California and maintains current knowledge of the ever-changing regulations. We provide counsel in all areas of business compliance for cannabis retailers, distributors, cultivators, and microbusinesses. Our attorneys have a combined 20+ years of experience in the commercial cannabis industry and are active in compliance consulting throughout the state. We are able to provide our clients with expert contractors in building safety code pre-inspection, packaging and labeling compliance, product inventory and storage, advertisement restrictions, etc. We would love to help ensure that your cannabis business is successful and in compliance with all local and state regulations, giving you one less thing to worry about. If you have any questions or would like to speak with our attorneys to further discuss our compliance services, please feel free to reach us via email (email@example.com) or phone (323-253-9700).
Market volatility sent many investors reeling yesterday, with the dow plunging over 1,000 points. Cryptocurrency, a digital asset that is popular with cannabis entrepreneurs, was not spared. As of today, Bitcoin is trading at $7,049 per USD, down from over $18,000 a few weeks ago. Those familiar with cryptocurrency know that Bitcoin is only one type of asset, and that in fact there are multiple currencies available. One in particular, may be a potential solution to the cannabis industry’s banking crisis: PotCoin. Our Los Angeles cannabis attorneys are following developments in cryptocurrency closely and monitoring progress as regulations catch up with technology, and the state works towards a banking solution for cannabis operators. In fact, just this week, the U.S. Senate in conjunction with the SEC and the CFTC held a discussion titled “Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission.” We will cover the results of this discussion in a future post.
One of the first cryptocurrencies to ever enter the market as a cannabis coin, PotCoin, was launched on January 21st, 2014. Back then, cryptocurrencies and their applications were widely regarded by the public as a space that catered to the underground, illicit economy of the world. Potcoin describes itself as “the first digital currency created to facilitate transactions within the legalized cannabis industry.” Established around the same time as cannabis legalization in Colorado, PotCoin positioned itself as an alternative to banking, even going so as far as to installing PotCoin ATM machines at a few locations. Now that the marijuana revolution in our country has garnered more support than ever, these cannabis cryptocurrencies will undoubtedly be brought up for legitimate discussion once again. Currently, PotCoin is valued much lower than Bitcoin at $0.129 USD at the time of publishing this article.
How does PotCoin differ from Bitcoin? PotCoin runs on a “proof of stake” system, as opposed to Bitcoin, which runs on a “proof of work” system. This means that the individual or entity mining for PotCoin does not need an all-powerful computer with intense graphics cards, but a certain stake or ownership of the currency to mine it. This eliminates all the expensive hardware associated with the “proof of work” system, and validates the blockchain more efficiently. Through blockchain technology, PotCoins are verified while still efficiently eliminating the double-spending problem. The largest issue that PotCoin faces is one of network scalability and transaction speeds. These are both issues that the development team for PotCoin are fervently trying to solve. Whether or not PotCoin will make its mark on the economy of cannabis is contingent on how the development team addresses these key issues.
With a multitude of states on the path towards the legalization of cannabis, it will be interesting to see whether or not the cannabis industry will adopt PotCoin as a potential solution to the banking quandary and certainly the development issues above will be determinative of whether PotCoin is up to the challenge.