Thanksgiving — time for gratitude and reflection. Let us start with appreciation for the fact that there are now 36 states in the United States and the District of Columbia that have legalized marijuana, even if only medicinally. Of the remaining 14 states that have not given way to patients’ rights and access to cannabis, nine have at least some limited acceptance of high-CBD/low-THC medical marijuana use. We certainly have come a long way in the past five years.
On the federal side, we see more and more politicians aligning themselves with pro-cannabis ideals. The day is coming when it no longer will be socially acceptable to attach the negative stigma we are used to seeing to marijuana users, recreational or medicinal. We have the bipartisan STATES Act sponsored initially by Elizabeth Warren that affords protections to state-licensed and legally operating commercial cannabis business. Last year Senator Cory Booker introduced the Marijuana Justice Act, co-sponsored by nearly 30 additional senators, which would reschedule marijuana and mandatorily expunge certain marijuana convictions. as well as demands from across the country to de-schedule marijuana altogether.
Beyond gratitude, Thanksgiving reminds us to take care of our neighbors and surrounding community. We are all in this together. We must remember to be patient and understand that we are navigating new and changing waters just as the Pilgrims did in venturing to the New World.
Community support and interaction is imperative if we want to continue to push the legalization movement forward. Be a good neighbor, support local organizations and those less fortunate. One of the best ways to combat the stoner stigma is to engage with the neighborhood. Let people get to know you as a business owner and as a person; give the community a reason to trust you. Be a good steward of your word: If you make a commitment, keep it. Show the community marijuana use does not equate to crime and diminished success. Be environmentally conscious and focus on diversity. It is not easy to gain trust and respect, but based on this author’s experience in the cannabis community, there is a lot to love.
We encourage our clients to go out and engage with the local community, either in the form of supporting local causes or by simply going out and meeting face to face with local organizations and stakeholders. Focusing on local issues confronting the community at large will help frame the community benefits cannabis operators have to offer cash-strapped cities. Taking a page from the real estate developer’s playbook, community relations and neighborhood outreach can prove invaluable for your cannabis business.
For example, if a daycare center is located 1,005 feet down the street from a new dispensary (and the local ordinance says you must be 1,000 feet away), reach out to that center and provide information about how your cannabis business will ensure product does not fall into the hands of children. Having that day care facility as your ally only advances the normalization of cannabis practices.
Socially responsible corporate practices are all the rage today. You cannot attend a cannabis conference without at least one panel discussing the role of corporate responsibility. Local involvement from the outset is key in determining the best practices for your cannabis business. For example, in an urban area, hospitals may be well-funded by the state or federal government or tied to universities that have plenty of money to support indigent services. On the other hand, employment and transportation may be important in an urban community. Focusing on local hiring practices and career development in these communities may be the best approach.
Rural communities face vastly different issues, from underfunded hospitals and schools, to sheriff departments that have not seen a pay increase in more than five years. We first noticed how impactful hospitals can be when one of our clients applied for cultivation and manufacturing licenses in a city where the local hospital was nearing bankruptcy. By researching the public hearings in that city, we came across a public comment from one of the hospital administrators pleading with the City Council to allocate some of the funds received from cannabis operators in the city to assist with covering hospital costs for uninsured patients who are delinquent on their medical bills.
Here in California, and across the country, we are seeing merit-based applications on the rise. In a merit-based application, applicants are given a list of various factors to be considered by the local authority, whereby each component is given a maximum point value. Many cities require applicants to reach a certain threshold, such as 80 percent of all possible points, in order to advance in the selection process. Other cities use merit-based applications to rank applicants when the number of commercial cannabis business licenses issued by the city will be limited or capped.
The application materials are typically reviewed by the city council, a special committee, commission, board, or task force convened for the express purpose of evaluating potential cannabis operations within the city or even third-party consultants delegated authority by the city council. Whoever conducts the evaluation is expected to be objective in scoring the application. Because of the shift toward local governmental transparency over the past decade, applicants are usually able to request their scoring sheet to best understand how or why points were awarded or withheld for any particular section of the application.
We comment that the process should be objective, but we recently came across a city where the content of each application was ranked relative to other applications submitted for the same commercial activity. At first glance, there appears to be nothing wrong with the picture. When applications are scored relative to each other, there is no way for an applicant to know what issues will be important or garner the most points from the evaluator. Perhaps ABC Cannabis Company is well established, looking to expand into a new city. ABC Cannabis Company already has a history of existing cultivation operations and writes in detail about its business expenses and employment needs based on experience.
Newbie Doobie, on the other hand, is a startup but is the product of four generations worth of cultivation experience. Because Newbie can only predict its costs and employment needs, it may receive fewer points than ABC Company in the business experience category because it did not include a statement that 5 trimmers on staff is usually sufficient for the needs of this particular size farm.
All else being equal, ABC Cannabis Company will outrank Newbie Doobie, even though Newbie Doobie may very well produce a superior product and connect with the local community on a deeper level.
Here is an example of typical merit-based criteria:
- Location: zoning compliance and proof of ownership or authorization signed by landlord that the applicant may engage in commercial cannabis activities on the premises (300 points)
- Transportation: raw and finished products (100 points)
- Community Benefits and Involvement (500 points)
- Product Storage and Tracking (200 points)
- Product Complaints (100 points)
- Odor Control (200 points)
- Waste Disposal (100 points)
- Lab Testing and Compliance (200 points)
- Qualifications of Principals (300 points)
- Operating Plan (300 points)
- Security Plan (300 points)
- Fire Safety Plan (200 points)
- Employee Safety (200 Points)
Based on the points assigned to each category under review, it is clear that community benefits and community relations are among the most important issues for licensing authorities. In the example above, the “Community Benefits and Involvement” category outweighs even employee safety and lab testing, combined!
As you sit down to Thanksgiving dinner surrounded by family and friends, remember those in need and that community support is worthy of our humanitarian efforts and points for those highly coveted cannabis licenses throughout the country.
Dana Leigh Cisneros, Esq., focuses on real estate, contract, commercial, business, and corporate law. She uses knowledge and experience acquired over more than a decade to further her clients’ interests and avoid complicated legal issues in the complex cannabis industry. CannabisCorpLaw.com