Agriculture is working on a system of regulations for naming craft cannabis strains. According to a report from Ganjapreneur, this is similar to the way the system of naming works for wines, in which a wine must actually be from the Napa region in order to carry that moniker on its label. CalCannabis Cultivation Licensing, the arm of CDFA that controls marijuana growers, is planning workshops in September to gather feedback and provide more information to cultivators.

The area known as the Emerald Triangle in Northern California has earned its name due to its high rate of cannabis cultivation. In fact, it’s the largest marijuana-producing area in the country. Growers in the region would like to capitalize on their world-renowned status to help give their product recognition and increase its desirability. They pride themselves on creating interesting, high-quality strains and growing in top-notch environments, and they want to make sure that random grow operations from some other region can’t use their regional names on their own labels. As anyone in business knows, sometimes a remarkable product isn’t enough. When a market is saturated with a great deal of product that all appears to be the same, at least on the surface, branding becomes essential to help certain products stand out. Cannabis businesses are no different. This is especially true when you consider the average cannabis consumer is accustomed to just accepting whatever was available to them. In an era of recreational legalization, choices are far more plentiful, and it takes more to stand out among the crowd. Consumers need as much information as they can get about the type of cannabis they are purchasing, the strain, and what makes one product different than another. The right marketing can achieve just that.

Our cannabis business attorneys in Riverside are well-accustomed with the marketing considerations of marijuana businesses. We have experience guiding entrepreneurs and investors in how to best protect their market identity in a cutthroat business environment. Our legal team is well versed in trademark and copyright laws that will give you ownership over your unique brand and help customers distinguish you from the competition. Solid, distinctive branding helps customers establish recognition and trust for your product as they begin to connect your branding with quality experiences.

Many small farms and luxury manufacturers look to branding to help set them apart from mega-farms that have taken root in California, seeking to dominate the market. CDFA is taking a page out of the wine country playbook, looking to its regulatory agencies in how to create an “appellation of origin” system. CalCannabis has been tasked with establishing regulations for regional titles by Jan. 1, 2021. In the meantime, it is important to secure your branding copyrights and trademarks to protect your business immediately. Our skilled attorneys can help you with the necessary steps and considerations to protect your brand under the law. We also can help protect your company in the future from other businesses infringing on your protected branding or intentionally trying to cause customer confusion.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

CDFA’s CalCannabis Appellations Program Survey, July 26, 2018, California Cannabis Portal

More Blog Entries:

Smaller Cannabis Business Operations Need More Support, March 9, 2018, Cannabis Law Group

Fall Festivities There are many ways to market cannabis products for the fall season. GOOD Co-op, a cannabis company based in Oakland, has introduced a “pumpkin spice blondie”. According to Fortune, the cookies are made with real pumpkin, a special blend of spices, and organic cannabis butter. The edibles will be sold exclusively through the Eaze platform in the Oakland area. There are many possibilities for similarly autumn-themed cannabis edibles and products. Apple butter, pumpkin buttercream, and similar autumn scents can be incorporated in many different formats. Edible treats, lotions and salves, bath products, candles, and many other products can carry popular autumn scents. Autumn festivals, carnivals, and other events give cannabis business owners more formats in which to introduce their products to consumers. Thanksgiving also presents many opportunities to integrate cannabis into holiday celebrations. Marijuana leaves can be used in centerpieces and decor. Cannabis candles are available in many scents. Cannabis can be incorporated into many Thanksgiving recipes. Cooks should be extremely careful to separate dishes with cannabis products from more family-friendly fare, so that children do not accidentally ingest marijuana. Thoroughly wash dishes and equipment between dish preparations so that cannabis products are not accidentally transferred between dishes. Gifts Regardless of which specific holidays a person celebrates, the holiday season is a time for giving gifts. Cannabis entrepreneurs have opportunities to make a wide arrange of suitable cannabis products available during this busy retail season. Many existing retail products – such as oils and lotions, bath products, and candles – can be easily adapted to be marketed for the holiday gift season. With consumers beginning their holiday shopping earlier and earlier with each passing year, it is important for business owners to begin planning for the holiday rush early. Delivery regulations can also severely limit the reach of such products. An experienced cannabis business compliance attorney can help business owners deliver retail goods with the parameters of existing legal regulations. Personalized marketing can be more difficult during the holiday season. For most of the year, customers shop for themselves, and their buying habits can be easily analyzed. During the holiday season, however, buying habits are unpredictable, as customers shop for a wide range of recipients. In this regard, it can be helpful to have sales data from prior holiday seasons to make projections for end-of-year inventory needs. Personalization is also important during the ad-heavy holiday season. Customers are inundated with advertising during this time, so it can be easy for one particular message to get lost in the mix. Target your customers early and often to advise them of holiday sales, specials, and other offers. An experienced cannabis business planning attorney can help marijuana entrepreneurs take advantage of increased revenues and business opportunities surrounding the holiday season, while maintaining compliance with all state and local cannabis regulations. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: Stoners Can Now Get in the Fall Mood With Pumpkin Spice Marijuana, October 19, 2017, by Emily Price, Fortune More Blog Entries: “Green Friday” and Marijuana Holiday Shopping, November 17, 2014, by Cannabis Law Group

Nipton is a small historic mining camp located in the remote Mojave Desert. After the camp was abandoned it was left as a ghost town. The Los Angeles Times reports that it cycled through eight private owners before being sold to American Green for five million dollars. American Green, a cannabis company, plans to turn the town into both a retreat for cannabis enthusiasts and a distribution center for larger manufacturing operations. The Cannabis business isn’t the first buyer to believe that Nipton is on the brink of revitalization. Gerald Freeman – who bought the town for $200,000 in 1985 – spent more than one million dollars on solar panels, restoration, shade trees, and organic farm projects. According to CBS News, Freeman’s widow, Roxanne Lang, sold all eighty acres of Nipton to American Green. The company hopes to inspire a “Green Rush” to the historical Gold Rush site. Can a Cannabis Business Succeed Where Others Have Failed? American Green is certainly not the only business looking to corner a piece of the vast cannabis market in California. Stat News reports that startup capital is “pouring into” the industry. The Los Angeles Times reports on one study that estimates the California cannabis market will bring $5 billion per year to California industry. The history of both the Wild West and the Gold Rush are brought to mind in examining the new, untamed, and potentially highly-profitable market that has been created. And yet, cannabis entrepreneurs are business owners. If they expect to succeed, they must have strategic plans for profitable operations. Legal compliance, tax liability, and other considerations must be addressed in order to achieve business success. This is particularly true in a market that could easily become oversaturated. So what will become of Nipton? That depends entirely upon American Green. With successful strategies for marketing, operations, and sales, it could revive the area to levels not seen since the Gold Rush. Of course, there is the equally real possibility that it could languish, as did seven owners prior to Gerald Freeman. Freeman managed to turn a respectable profit of $3.3 million on his $1.2 million investment. American Green could expand that growth exponentially. It is worth noting that Nipton must first incorporate before it begins any cannabis operation. Currently, the land is located in an unincorporated area of San Bernardino County, which prohibits commercial cannabis operations in its unincorporated areas. California’s imminent sales of recreational marijuana can bring all sorts of business opportunities to industries and geographical areas in need of revitalization. Like Nipton, cannabis business ventures must be well-planned in terms of legal compliance, business strategy, and market needs. A marijuana business lawyer can help cannabis entrepreneurs access capital, form strategic plans, and build a profitable business from the ground up. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: A Tiny California Town May Become the Eco-Friendly ‘Epcot of Cannabis’, August 4, 2017 by Janet Burns, Forbes.com More Blog Entries: California Leads U.S. in Cannabis Sales, April 8, 2017, by Cannabis Law Group

Different Types of Cannabis Taxes

• The Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA”) imposes a cultivation tax upon cannabis growers, which is codified in the California Revenue and Taxation Code §34012. This tax is collected on the first sale or transfer of cannabis by the cultivator to the manufacturer. It is therefore the first tax assessed after marijuana is harvested and enters the commercial market.
• Like any other retail sale, cannabis sales in California are subject to an excise tax on the average market price of the product. This is currently set at fifteen percent by the MAUCRSA at the California Revenue and Taxation Code §34011. It is important to note that this percentage is subject to change. The average market price is also a volatile metric which can be determined either by the State Board of Equalization or the California Department of Tax and Fee Administration.
• The MAUCRSA specifically protects the rights of cities and counties to assess other taxes in addition to the state excise tax. California Revenue and Taxation Code §34021.5. While these entities may choose not to do so, business owners are wise to prepare for additional taxes, as it seems unlikely that any government entity would forego an obvious source of revenue.

Medical Marijuana Businesses According to the State of California Franchise Tax Board, medical cannabis businesses should operate as nonprofit cooperatives or collectives in order to comply with the current state of the law. These businesses do not qualify for income tax exemption under the Internal Revenue Code, nor under the California Revenue and Taxation Code. Though medical marijuana businesses can officially organize as a nonprofit mutual benefit corporation or nonprofit mutual benefit cooperative, this still does not grant them tax-exempt status. Regardless of the business entity type, such businesses must file appropriate tax returns. However: despite the fact that medical marijuana businesses are not officially tax-exempt, Proposition 64 did exempt sales of medical cannabis, medical cannabis concentrate, and edible or topical medical cannabis products from sales and use taxes. According to the California Board of Equalization, qualified patients must present their medical marijuana card and government identification at the time of purchase. The medical marijuana retailer does not collect sales tax on the transaction. Retailers should also claim the deduction on their sales and use tax returns and maintain the proper records to document all exempt transactions. California’s imminent sales of recreational marijuana can bring all sorts of business opportunities for the entrepreneurs who are prepared to access them. An experienced cannabis business lawyer can help cannabis entrepreneurs access capital, develop tax strategies, and build a profitable business from the ground up. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: California’s New Marijuana Taxes – An Overview, August 23, 2017 by Jim Hunt, Bloomberg Bureau of National Affairs More Blog Entries: Cash Demanded for California Marijuana Dispensary Taxes, February 24, 2016, by Cannabis Law Group

The dangers of cash transactions cannot be overlooked. Violent crimes surge whenever large amounts of cash are present. In one bizarre case from 2013, the owner of a lucrative marijuana dispensary was kidnapped and tortured in a futile attempt to force him to disclose the location of his cash reserves. The LA Times reports that the assailants removed the victim’s penis, then took it with them so it could not be reattached. While this is a bizarre and extreme example, the fact remains that violent crime is inevitably correlated with cash transactions, and it is a real danger for cannabis business owners. Thinking Outside the Cash Box Some cannabis business owners have explored more creative solutions to this problem. The LA Times reports on two such tactics. One such owner deposits his cash “in drips and drabs” into an account held by a limited liability company. The LLC is represented to the bank as a property management firm, and the bank “doesn’t know what we do”. This process is described as “not far off” from money laundering. Another business owner is reported to send his cash payments directly to the Federal Reserve Bank in Los Angeles. They are deposited into the account of a credit union that is “eager to do business” with the cannabis company. This is a far cry from the dangerous cash transactions and ersatz money laundering of other cannabis businesses. Yet the strategy relies on the participation of a willing financial institution. According to the U.S. Treasury Department, 368 financial institutions in America served the cannabis industry. This is only a small fraction of the twelve thousand financial institutions across the nation. Opening such a bank account can also be cost-prohibitive for many businesses. Initial fees for financial audits and criminal background checks can be as much as $10,000. Monthly fees are also significant due to due diligence and reporting requirements of the Treasury Department. One credit union charged $5000 per month for growers to hold a bank account, and $7,500 per month for dispensaries. While this figure may sound inflated, it is not certain to cover the bank’s expenses associated with IRS audits, DEA investigations, and a host of other regulatory costs not faced by other industries. Cash-based transactions and operating expenses leave cannabis business owners vulnerable to violent crime. An experienced marijuana lawyer can help business owners to find financial solutions which both meet federal regulations, and also protect their personal safety and financial interests. The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: Why pot businesses hide their cash – and others truck it straight to a federal vault, July 7, 2017 by James Rufus Koren, The LA Times More Blog Entries: Local Leaders Ask Feds to Ease Marijuana Banking Rules, January 24, 2017, by Cannabis Law Group

The Craft Strategy

The overhaul of the cannabis industry in California is an expensive proposition, and many owners of smaller cannabis businesses simply do not have the resources to adapt their business model to new regulations. They are addressing this problem in many different ways. Some small farm owners are banding together to form marijuana co-ops, which will help all participants adapt to the changing industry. Others are borrowing the business model of the craft wine industry: by focusing on a specialized product which commands a premium in the marketplace, their profit margins increase dramatically.

Leafly reports on the case study of one Sonoma County grower who has eschewed the mass market strategy with great success. Sam Edwards grows loose, airy buds that have little value on the flower market, but are “absolutely great for extracts”. Indeed, his vape cartridges command a premium of nearly double the price of other cartridges. Edwards himself worked in the wine industry, and it was there that he learned this business strategy. By developing a high-end specialty product with local character, niche wineries were able to compete with large, mass-production wine companies. Edwards does the same to compete with mass market cannabis growers.

Entrepreneurs from both the wine and cannabis industries also recognize the potential of combining these specialty products. National Public Radio interviewed one winery owner, Tom Rodrigues, whose customers frequently ask him about cannabis. Such business owners recognize the potential of combining the two products. NPR also reported on a highly-curated craft meal put on by Sam Edwards. Edwards offered wine and marijuana selections, along with farm-to-table food pairings that had been carefully selected for both delicacies.

Hesitation from the Craft Wine Industry Of course, not everyone is eager to combine craft wine with craft cannabis. Tom Rodrigues, while recognizing his customers’ needs, also found the regulatory obstacles to be insurmountable. Because alcohol and cannabis cannot be sold at the same location, the wine tasting room would have to be removed from the farmland on which he grows both grapes for commercial winemaking and marijuana for personal use.

Other winemakers and Sonoma County residents have different concerns. The smell of marijuana, the security of cannabis farms, and impaired driving are all problems which will affect the area if cannabis makes a widespread takeover of Sonoma County.

In spite of the challenges, both wine producers and cannabis businesses can benefit from the symbiotic potential of craft business integration. Preparing for this integration now can allow craft cultivators to access lucrative business opportunities when licenses are issue in January 2018. Consulting with an experienced marijuana attorney can help you navigate the challenges.

The Los Angeles Cannabis Law Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Pairing Wine and Weed: Is it a California Dream or Nightmare?, July 10, 2017 by John Burnett, National Public Radio

More Blog Entries:

California Vineyards Entering Marijuana Business, June 4, 2017 by Cannabis Law Group

It’s happening at a new gym in San Francisco, founded by a former professional football star who has been a staunch advocate for marijuana use. Ricky Williams, a former running back who scored the Heisman Trophy in college and played in the National Football League for the Saints, Ravens and Dolphins, teamed up with snowboard company executive Jim McAlpine. The company, Power Plant Fitness, allows members to smoke marijuana before or after working out, and also has edibles and topical gels for those who want to avoid actual smoke. It will officially open in May.

Many users say marijuana helps them to focus during or relax after workout sessions. The goal, according to the company’s website, is to promote “optimal states of wellness and peak performance.” As Alpine told Outside magazine last year, cannabis brings you in the “eye of the tiger mode.”

Although founders said last year members would need a medical marijuana prescription to join, that’s no longer likely to be the case given that California became the fifth state to legalize recreational marijuana in November with Proposition 64.

Other states that now allow recreational marijuana include:

• Colorado
• Washington state
• Oregon
• Alaska
• Nevada
• Massachusetts
• Maine
• Washington, D.C.

Still, as our cannabis business lawyers know, it’s not as simple as opening up a company and welcoming users to imbibe on site. One must consider not only the legalities of state law, but also local permitting, particularly when allowing users to smoke or consume cannabis on site.

Plans are underway for this company to expand. Once the San Francisco site is up-and-running, there are plans in the works for locations in Los Angeles, San Jose, Seattle, Denver and Portland.

McAlpine noted this was not an opportunity for people to simply “get high and just screw around.” He said the focus of the gym is on the athleticism. He was a founder of the series 420 Games, which hosts a series of sporting and athletic events for those who use marijuana. Those events are not for the faint of heart – or lungs or legs. They include triathlons, obstacle courses, mountain bike races, golf courses and a 4.20-mile run. That event has been held annually in San Francisco since 2014.

Part of the gym’s purpose is to reverse the stereotypes about “lazy stoners” or those who are only gravely ill. In fact, people who are physically fit and prioritize optimal health routinely use the drug as part of their fitness routine. When cannabis is used as a tool for focus and recovery, it can help to bolster workout performance.

New members will begin with a cannabis performance assessment by staffers, who will help determine and supervise the best way for a person to consume marijuana while training.

This level of supervision may also lend itself to a degree of liability, and marijuana businesses like this need to take these factors seriously. Consider that marijuana use can be dehydrating and may also lead novices to symptoms ranging from mild dizziness to panic. Physical exercise could exacerbate these symptoms, so careful structuring of the monitoring process will be important.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

A “cannabis gym” is opening in San Francisco, March 2, 2017, By William Hughes, A.V. Club

More Blog Entries:

Marijuana Legalization Should Be Accompanied by Justice System Reforms, March 23, 2017, L.A. Marijuana Lawyer Blog