US REGULATORS' PERCEPTION OF CANNABIS INVOLVEMENT IN FINANCE

• An increase can be seen in the number of banks willing to work together with marijuana-related businesses.
• Many states in the US are going to allow cannabis for recreational or medical use; however, federal prohibition remains the same for now. Due to federal prohibition, the banks that accept the money from the marijuana industry run a huge risk from money laundering and other laws of the US.
• In many places in the US, where the businesses related to cannabis don't have any bank access, the challenges are more difficult. In such places, it is more difficult for law enforcers and regulators to conduct investigations and enforce the rules and regulation.
•  Bank regulators can play a bigger role in the marijuana industry by offering their guidance and support to banks that choose to be associated with marijuana-related companies.
• The Kansas City Regional Bank has tried to stop a new credit union from being associated with cannabis businesses by going to court. However, the San Francisco arm of the Federal Reserve has been more devoted towards providing guidance and support to banks being associated with cannabis businesses.
• According to an article on Forbes, "under the approved bill, federal banking regulators would not be able to punish financial institutions just because they work with marijuana businesses that are legal under state or local laws, or those of an Indian tribe."

CALIFORNIA

• Before the finalized regulations for the transportation of cannabis in California, there were concerns that all delivery vehicles would need to be licensed to transport cannabis.
• All vehicles used for commercial purposes had to make a declaration to the federal Department of Transportation, outlining the use.
• A permit from the Bureau of Cannabis Control had to be acquired for persons who owned or leased vehicles intended to deliver/transport cannabis.
• Vehicles had to be equipped with GPS to be a part of the track-and-trace system. If the digital track-and-trace system metric fails, cannabis delivery would have needed to be halted until it is functioning again.
• In California, companies involved in the delivery of cannabis for companies other than their own had to get a Motor Carrier Permit and they were also required to get a federal DOT number.
• This regulation inhibited cannabis companies that wanted to make a profitable business from delivering cannabis.
• However, acquiring a preexisting transport company could combat this.
• The finalized regulations allow delivery in all of California but there are concerns that the League of California Cities will contest this.
• There are possible complications involved in getting the California license "if a separate company has an ownership stake in a licensed cannabis company". Unfortunately, all parties may need to do an application.

ARKANSAS

• In Arkansas, there are concerns about the storage, dispensary, and transportation of medical marijuana during bad weather or an accident.
• To be granted a license to transport marijuana, transporters should have a strong cash flow, financial stability, no history of bankruptcy and can show proof.
• Top executives in transportation companies are subjected to background checks. Additionally, they must agree to a $100,000 performance bond and an annual renewal/license fee of $5,000.

MICHIGAN

• Michigan has strict guidelines for transportation companies to adhere to make delivery of cannabis.
• Assets and currency relating to cannabis must be transported in secure vehicles with GPS tracking and surveillance.
• One such company that adheres to the guidelines is OnTheGoMichigan.

GEORGIA

• In Georgia, it is against the law to transport, buy, or sell medical marijuana oil even though the state legalized the use of medical marijuana in 2015.

OKLAHOMA

• In Oklahoma, a transportation license is only granted if there is an already "approved grower, processor, or dispensary license."
•  Licensed transporters that must adhere to "Title 63 O.S. § 420 et seq. and the Oklahoma Administrative Code (OAC) 310:681."
• They can only transport medical marijuana from one licensed company to another licensed company.

MAINE

• Maine's Legislature requires that cannabis being transported from one facility to another must be labeled "For Testing Purposes Only."
• It must be transported securely to avoid theft or loss.
• If the plants are to be transported or harvested, they must adhere to 2017, c. 452, §4.

COLORADO

• Colorado state will allow medical marijuana retailers and retail cannabis sellers to make deliveries to customers effective January 2, 2021.

DIFFICULTY IN OBTAINING INSURANCE OR BANKING SERVICES

• Hardcar Security company which transports cannabis in California was unable to get insurance for its fleet for 8 months to because banks and insurance companies are not willing to enter the market.
• Banks and insurers are concerned about the possibility of being charged with "aiding and abetting a federal crime and money laundering."
• These transportation companies are operating at a high risk. They not only transport cannabis but also the cash, making the transportation companies the targets for criminals.
• Since cannabis is illegal at the federal level, Hardcar ensures that its fleet does not travel on routes that cross federally-regulated lands or federal checkpoints.

COMPLIANCE WITH TRANSPORTATION/CANNABIS LAWS ACROSS STATES

• There are interstate commerce concerns regarding cannabis especially because there are several variations that are permissible to different states at varying degrees.
• An example of this issue arises in the case of law enforcement checks, which are done on carriers who may be transporting hemp (cannabis used for legal purposes as defined by the 2018 Farm Bill) in large quantities. Hemp is legal in 41 states, but officers of the law may not have the ability to distinguish this from cannabis that is used for personal consumption. Therefore, workers making legitimate deliveries may be charged for trafficking.
• This was the experience of a carrier who was charged by Idaho police offers for transporting hemp from Oregon to Colorado.
• American Trucking Associations have cautioned transportation companies to be mindful of individual state requirements/ laws to avoid legal implications once they enter another state.

US REGULATORS: MONITORS ANY CANNABIS VENTURE INVOLVEMENT BY GAMBLING COMPANIES

• The gambling regulators in Nevada made it clear that marijuana doesn’t belong in casinos.
• According to the Nevada Gaming Commission as long as the consumption and possession of marijuana are considered a felony by federal authorities, it has no place in the casinos at Nevada.
• Additionally, the gambling licensees, including landlord-tenant arrangements, should not have any business relationships with the marijuana sector.
• It is also noted that the Colorado Limited Gaming Control Commission cancels a gaming license if the company is found to be associated with the marijuana industry.
• According to the US Treasury’s Financial Crimes Enforcement Network, the casinos need to report large sums of cash if suspected to be connected with the marijuana industry.
• The American Bankers Association and the American Gaming Association asked the US Department of Treasury to provide additional guidance to the casino industry, when dealing with businesses, individuals, and entities associated with the marijuana sector.
• The Nevada Gaming Commission's Chairman, Tony Alamo, said that the gaming industry and the marijuana industry should not meet.
• Las Vegas casino regulators have prohibited the casino industry's involvement in the marijuana sectors.

EVIDENCE SUGGESTING CONCERNS OF REGULATORS ABOUT GAMBLING INDUSTRY'S INTEREST IN MARIJUANA SECTOR

•  Commissioners in Nevada states that gaming licensees should not receive financing or provide financing from an individual, entity, or establishment that sells, cultivates or distributes marijuana.
• The Colorado Limited Gaming Control Commission proposed new resolutions that will prohibit anyone involved in the cannabis industry from obtaining a Colorado gaming license. Additionally, casinos violate the law if they accept bets from anyone working in the marijuana industry.
• Alternatively, many casinos are facing the issue to allow individuals associated with marijuana businesses to engage in casino gaming or not.
• Gaming licenses and marijuana pose a conflict for casinos, even in a state where recreational pot is legalized.
• Casino owners are seeking advice from the US treasury department on how to handle high-rollers who are gambling with money they made in the cannabis industry.
• The gaming industry makes an appeal to the US treasury department on clearly defining how to deal with the cannabis sector.
•  Licensed marijuana businesses are still facing complexities and challenges dealing with companies involved in the financial sector, including casinos.

HOW REGULATORS IN THE US LOOK AT THE INVOLVEMENT OF CANNABIS IN THE HEALTHCARE SECTOR

• The regulatory status of cannabis, especially CBD in the US is still convoluted. Over the last three years, there have been several changes to the regulations and definitions of marijuana, and the regulatory disparities are presenting challenges to health care providers.
• The 2018 Farmer Bill stressed the FDA's authority over drug approvals and interstate commerce of medications related to cannabis. It also made it clear that CBD products were not allowed to claim therapeutic benefit unless approved by the FDA. The agency warned that it would take action against violators.
• That said, the Consolidated Appropriations Act of 2019, Division C Section 537, contains provisions that prohibit the Department of Justice from "using federal funds to prosecute any legal medical-marijuana businesses in states that have passed laws permitting medicinal marijuana."
• The contradictions in the laws and regulations created several compliance issues for health care entities, like the required submission of dispensing data to the PDMP (Prescription Drug Monitoring Program).
• These contractions get even more complicated when state laws come into consideration. Although state laws which permit the use of medical marijuana have been passed, these laws are still in direct conflict with the CSA, which listed marijuana as a Schedule I drug.

FDA

• The FDA's stand regarding the use of cannabis in the healthcare sector is yet to be fully defined. So far, only three drugs have received FDA approval, including Epidiolex (for Lennox-Gasutat and Dravet syndrome), Marinol, and Syndros (for the treatment of anorexia in patients with AIDS).
• They have indicated interest in having open discussions regarding cannabis. In May 2019, the FDA held a public hearing, asking stakeholders to share their knowledge with products containing cannabis to help inform the FDA, as they consider the "important policy options related to the regulation of products containing cannabis or cannabis-derived compounds."
• They also encouraged stakeholders to give their input regarding the agency's regulatory strategy relating to the existing products, especially considering the recent changes in the federal scheduling of cannabis.
• The 2018 Farm Bill removed hemp (cannabis or derivatives of cannabis with a very low THC content, below 0.3% by dry weight) from the Controlled Substance Act's definition of marijuana. Therefore, hemp is no longer a controlled substance under Federal Law, and now the FDA is in charge of regulating its use.
• The FDA guaranteed that they will treat cannabis like other substances, and will subject it to the same authorities and regulation. This statement indicates that FDA requirements vary depending on the type of product. For drugs, it generally cannot be sold without FDA approval. For instance, under the current law, CBD and THC cannot be marketed lawfully as a dietary supplement.
• They also stated that they support and encourage those in the medical community who intend to study marijuana, to develop safe and effective products to treat medical conditions, as long as it meets federal and scientific standards.
• That is not to say they don't have concerns regarding the use of cannabis in health-related products. Their main concern is with products that claim to provide results with serious diseases, such as cancer, without the required approval in violation of the law and putting patients at risk. They fear consumers will be "influenced not to use approved therapies to treat serious and even fatal diseases."
• The FDA also expressed their concerns about companies marketing products containing cannabis in unlawful ways and have issued warning letters to companies selling unapproved CBD products.
• In general, the FDA seems to take a careful approach to the use of cannabis, especially CBD, because they feel there is still a lot they don't know about it, despite the explosion of interest in products containing CBD.
• One study examined FDA behavior to predict how it would approach the sale and marketing of hemp-derived CBD products.
• The report concluded that the FDA would likely "restrict products that are enriched with CBD, but not products that contain naturally occurring concentrations of CDB."

VIEW OF REGULATORS: ALCOHOL AND CANNABIS DON'T MIX

• Responding to concerns on companies that have interests/associations (perhaps through joint shareholding or commercial partnership) with the cannabis industry, the California Alcohol Beverage Control (ABC) recently released a statement.
• A recent statement from the California Alcohol Beverage Control (ABC) revealed that the Alcoholic Beverage Control Act does not yet prohibit licensed alcohol manufacturers, dealers, or associations from seeking and obtaining any license in the cannabis sector under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”)
• However, the California Alcohol Beverage Control (ABC) has concerns and advises that "alcohol and cannabis don't mix."
• The Department of Alcoholic Beverage Control is an agency tasked to administer the provisions of the Alcoholic Beverage Control Act to foster and protect the health, safety, welfare, and economic wellness of the residents of California, United States.
• The Department of Public Health’s emergency regulations prohibits the combination of alcoholic beverages with cannabis. The department notably excludes “tinctures.” Strangely, it does not define the term tincture.

VIEW OF REGULATORS: LICENSED ALCOHOL OPERATORS SHOULD NOT OWN CANNABIS LICENSES

• According to Beveragelaw web, legislative efforts are underway and aim at preventing alcohol retailers from obtaining cannabis licenses. This suggests that proposed legislative regulations oppose the involvement of cannabis venture in the alcohol licensing sector.
• Several reasons exist to indicate that wine or beer blended with cannabis won't be available soon. The state of Michigan already has legislation that bans marijuana infusion in alcoholic drinks.
• Cannabis ventures seeking involvement by companies in the alcohol licensing sector should note that as of February 2019, FDA had limited enforcement actions against CBD-infused drinks. FDA has sent out warning letters to that effect. State agencies have started confiscating CBD-infused products, in line with FDA regulations that have categorized CBD as "unsafe food additives." Experts say they remain unaware of any CBD-infused alcoholic drink that has been approved.

METHODOLOGY

CANNABIS DISCONNECT — FEDERAL VS. STATE

• According to federal law, parts of the cannabis plant have been listed as a controlled substance under Schedule 1 of the Controlled Substances Act. Substances containing no more than 0.3% THC on a dry weight basis were removed from Schedule 1 in the Agriculture Improvement Act 2018.
• Despite being prohibited at federal level, at state level, 11 states have legalized recreational use and 22 states, along with US territories Puerto Rico and Guam, that allow its use for medicinal purposes.
• With 66% of Americans supporting the legalization of marijuana, the political environment has improved. In the 2018 midterm elections three states voted for legalization and there is legislation under debate regarding removing the substance from the Controlled Substance Act and to allow financial institutions to work without fear of penalties with companies operating in the cannabis space.
• Firms involved in the growth and handling of the cannabis product are subject to higher specific regulations whereas those involved in providing ancillary services, such as services and e-commerce platforms are subject to a more dispersed regulatory framework.

MOBILE TELECOM INDUSTRY REGULATION

• Federal regulation of the mobile telecom industry in the United States of America (USA) is divided between the Federal Communications Commission (FCC), the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC).
• The FCC regulates interstate and international radio, television, wireless, satellite and cable communications.
• The FDA oversees hazardous levels of radio frequency emissions in addition to regulating products containing cannabis or cannabis-derived compounds.
• Consumer interests and competition is safeguarded by the FTC by monitoring anti competitive, deceptive, and unfair business practices and taking action via law enforcement, advocacy, and education where indiscretions are determined.
• Warning letters have been sent by the FDA and FTC to three companies regarding the scientific veracity of claims made in advertising cannabis and cannabis derived products.
• There are no explicit regulations or guidelines pertaining to the involvement of cannabis in the mobile telecoms industry on the FCC, FDA or FTC websites.

VENTURE CAPITAL FOR CANNABIS AND MOBILE TELECOMS

• Investments in the cannabis industry for 2018 totaled $881 million.
• The top ten deals ranged from $100 million for the largest to $22 million for the tenth largest.
• In a deal valued $46 million New York based Tiger Global Management was one of the major investors in the Metrc compliance software developed by Florida based Franwell to monitor and verify cannabis inventories for all cannabis licensed inventories. There was no publicly available information regarding regulator concerns about this specific investment.

RESEARCH STRATEGY

1. DISH NETWORK

• Dish Network LLC is a mobile telecom operator operating in the 5G spectrum.
• Coats is a quadriplegic (suffers from a type of paralysis) and had been confined to a wheelchair from teenage hood. He started working with Dish Networks in 2007 with the telephone customer service unit as a representative.
• On June 7, 2010, after a failed marijuana test, Dish Networks LLC fired Brandon Coats. A random drug test revealed that Coats was consuming marijuana.
• Trouble started for Dish Network LLC after Coats decided to file a wrongful termination case against Dish referencing Colorado's "Lawful Activities Statute."
• The statue stated that it would amount to a "discriminatory or unfair employment practice" if an employer terminates the employment of "any employee due to that employee's engagement in any lawful activity" outside the working environment of the employer at periods which are nonworking hours.
• Prior thee time he was fired (in 2009), Coats had obtained a state-issued permit/license to consume medical marijuana.
• Coats had informed Dish Network of the plan to consume medical marijuana even before he started taking it as a patient.
• It was apparent that Coats was a model staff in all aspects and that firing him had nothing connection with his performance and was all about his medical usage of cannabis. Lawyers are always made to understand that there are no “perfect plaintiffs.” It was easy to argue that in the case of Coats, he was the best description of a perfect plaintiff.
• Despite the overwhelming evidence and support, Coats benefited from Colorado laws, but Dish Network LLC did not give up. The company insisted and followed up the case by stating that Coats had violated the company’s drug policy.
• Dish Network eventually won its case for firing workers whenever they tested positive for marijuana. Dish Networks won, although it was evident that the employees consumed cannabis in a manner that was in tune with state law.
• Eventually, the Colorado Supreme Court reviewed the issue of whether medical marijuana usage already prohibited by federal law remained a "lawful activity" for purposes of the statute.
• The court concluded that the definition of "lawful" was not limited just to what was indeed lawful under state law. The court also stated that marijuana usage remained unequivocally illegal under federal laws, and it couldn't recognize an exception for medical marijuana under federal laws.
• The supreme court disclosed that because Coats' medical marijuana usage was unlawful under federal law, it remains an illegal activity.

2. RAGINGWIRE TELECOMMUNICATIONS, INC

• RagingWire Telecommunication, Inc, is a telecom company operating in the United States.
• RagingWire Telecommunications, Inc offers carrier-neutral data center services for multiple mobile telecommunication partners.
• Gary Ross is a systems administrator and a resident of California. He suffered from a severe impairment (a debilitating back pain) consequent to injuries he had sustained while in the United States military.
• Based on a doctor’s recommendation, Ross commenced the treatment of his pain with medical marijuana, which happens to be legal if used for medical and recreational purpose in California.
• Trouble started when Ross reapplied with RaginWire Telecommunication as a systems' administrator. Before getting the new position Ross expected, RagingWire Telecommunication required a drug test, which Ross failed, and his CEO fired him.
• In 2001, Ross initiated a legal battle with RagingWire Telecommunication for discriminating against him based on his disability.
• The company did not give up despite the obvious challenge and risks that come with such legal battles (it is always challenging because supreme court judgments cannot be predicted accurately). RagingWire Telecommunication followed the case through to the end, just as Ross did.
• However, in 2008, the California court revealed that firing Ross was legal. Although California's medical marijuana law ensures that Ross is exempted from criminal prosecution, it does not prevent the company from firing him.
• In the case of Ross v. RagingWire Telecommunications, Inc., the California Supreme Court eventually refused to mandate employers to accommodate the use of marijuana.
• Going by the fact that under federal laws, marijuana is still a Schedule I drug, and it is prohibited under the Controlled Substances Act. The California Supreme Court upheld in 2008 (Ross v. RagingWire Telecommunications, Inc.) that employers may lawfully enforce a policy to refuse to hire any applicant who fails a marijuana test.

METHODOLOGY

1. FLOW KANA

• Flow Kana is a cannabis venture that seeks to provide its customers with cannabis products that are grown using organic methods.
• The company engages itself in fundraising activities and just recently partnered with Gotham Green Partners and other firms to raise $22 million to build a sustainable supply chain.

Case Study

Regulatory Obstacles Encountered

•  Federal prohibition is one of the main challenges that cannabis ventures have to deal with, especially in states where cannabis is considered illegal.
• In the countries where marijuana is still prohibited, the operating companies are denied banking. Therefore, end up operating as cash businesses.

Solutions to the Regulatory Obstacles Encountered

• Continued funding in the hopes of the legalization of marijuana.

2. GOTHAM GREEN PARTNERS

• A private finance firm that focuses on disposing cash into cannabis ventures worldwide.

Case Study

Regulatory Obstacles Encountered

•  Federal prohibition is still a considerable problem hindering faster and extensive ventures into new markets.

Solutions to the Regulatory Obstacles Encountered

• Continued financing to cannabis enterprises that need the cash to produce more and safe cannabis for medicinal or recreational purposes.

3. 4FRONT HOLDINGS

• 4Front Holdings is one among the outstanding cannabis producers as well as a finance company in the United States.

Case Study

Regulatory Obstacles Encountered

• Denial of banking practices that lead the companies to operate as cash businesses, making them susceptible to robberies and money laundering.
• The expectation of huge tax returns from companies that produce and fund cannabis firms.

Solutions to the Regulatory Obstacles Encountered

•  SAFE Secure and Fair Banking Act that operates optimally in states where cannabis ventures are legal.

US INDUSTRY REGULATORS: CANNABIS CASE STUDIES — TRANSPORTATION

CASE STUDY #1: HARDCAR

DETAILS AROUND THE CANNABIS VENTURE:

• Hardcar is the largest armored carrier in the California cannabis space.
• The top 20 growers and distributors are Hardcar's clients, and the company plans to build a business with the next tier in the coming years.
• The company leads the cannabis industry in the distribution of long-haul products and product storage.
• Hardcar has established viable banking services for cannabis companies all across the United States.
• Hardcar covers cannabis distribution, cannabis banking, cannabis financing, secured cannabis storage, and cannabis transport while reinforcing compliance and public safety in the growing industry.
• Hardcar operates under a distribution license in California and has built partnerships with other distribution companies since many distribution companies don't employ a fleet of armored vehicles and security guards.
• Hardcar Distribution also has a strategic partnership with Highroad Consulting Group, which aims to increase it's potential for success when it enters the market and to sustain success throughout its growth.

REGULATORY TROUBLES IT ENCOUNTERED:

TROUBLE #1:

• In general, the trucks that service banks weigh over "10,000 lbs, the threshold at which federal law requires registration as a commercial vehicle with the US Department of Transportation (DOT)." However, DOT-licensed vehicles are prohibited by the feds from hauling marijuana.
• In California, moving cannabis using "aircraft, watercraft, drone, rail, human-powered vehicles, and unmanned vehicles is prohibited."

TROUBLE #2:

• "Transporting Schedule I substances like cannabis across federal lands is verboten, and mixing cannabis with firearms could lead to felony charges."

WAYS THE COMPANY DEALT WITH THE REGULATORY HURDLE:

SOLUTION #1:

• Hardcar largely uses Ford Transits and similar models like Dodge Sprinter, that weigh under five tons, thereby avoiding federal oversight so long as they do not cross state lines.
• To transport both cannabis and cash, a new niche of the armored car industry has emerged, led by Hardcar.
• Hardcar's fleet of ten Ford Transit vans is equipped with GPS trackers as per the California state requirement that enforces kill switches to cut the engine remotely, blast-proof doors, and an alert system that notifies Hardcar and the police in case of emergency.
• Hardcar's system also routes drivers away from internal border checkpoints operated by federal authorities.
• To disguise themselves as any other order delivery vehicle, Hardcar's are heavily-customized armored vans are white, mid-sized cargo vans.

SOLUTION #2:

• Routes have been mapped with great care to avoid federal lands, which cover 15 million acres in California, or 15% of the state's total landmass.

CASE STUDY #2: NABIS

DETAILS AROUND THE CANNABIS VENTURE:

• Nabis, an Oakland-based cannabis distributor, handles logistics, software programming, and sales, also runs a fleet of 15 vans — a mix of Mercedes Sprinters and compact Nissan NV200 models.
• The Sprinters are used for intercity runs, while the NV200s are used to deliver smaller quantities to retailers in metropolitan areas.
• The company averages 350 deliveries a month.
• Nabis delivers to approximately 90% of the retail dispensaries in California, capturing about 3-5% of the state's total value of goods.
• To create a national presence in the cannabis industry, Nabis acquired Desert's Finest, a dispensary located in Desert Hot Springs, California, because of its convenient location in the Palm Springs region and an extensive list of registered patients.
• Nabis also plans to expand "into Michigan, Arizona, and Washington State over the near-term with binding letters of intent to acquire operations in each."

REGULATORY TROUBLES IT ENCOUNTERED:

• In general, the trucks that service banks weigh over "10,000 lbs, the threshold at which federal law requires registration as a commercial vehicle with the US Department of Transportation (DOT)." However, DOT-licensed vehicles are prohibited by the feds from hauling marijuana.

WAYS THE COMPANY DEALT WITH THE REGULATORY HURDLE:

• Nabis uses the larger Mercedes Sprinters in its 15-unit distribution fleet to transfer product from suppliers to, and on point-to-point hauls between its warehouses in the Los Angeles area and Oakland.
• Then from these sites, the NV200s, upfitted according to California Bureau of Cannabis Control requirements, take over the product and distribute them.
• The upfit necessitates "secure caging for the product" as per the bureau's regulations and also requires "a drop-only safe secured to the frame for cash." This is because cash underpins a significant part of the legal-cannabis economy due to the continued federal illegality of cannabis."
• Nabis also envisions a "tech-first" expansion strategy to use its software to help existing distributors scale.

HELPFUL FINDINGS

• The policy on gambling-while-intoxicated laid down by the US Gaming Commission prohibits casinos from allowing the super stoned to place bets.
• Tony Alamo, chairman of the Nevada Gaming Commission, stated, "It's not smart to allow impaired people to gamble. Previously, we used the words 'intoxication,' and intoxication sometimes gives the feeling of just alcohol ... We want to make it crystal clear across the board under all regulations that 'impairment' is not just alcohol; it's being impaired by drugs."
• Nevada has approved the consumption of cannabis in "social use venues" in the downtown and urban core of Nevada's casino playground. However, these lounges can't be near casinos, schools, and churches.
• In July 2019, the city of West Hollywood approved its first space within its city limits for a first-of-its-kind cannabis cafe. Lowell Farms offers cannabis-infused cuisine and a smoking area. However, the restaurant will be alcohol-free since state law prohibits the consumption of cannabis and alcohol at the same site. It has been stated that this will be the first site in the US to allow consumption of cannabis for recreational purposes, which further implies that no company in the gambling sector allow cannabis.

RESEARCH STRATEGY

PHARMEX AND OREGON

• In 2014, Oregon legalized cannabis for recreational use, with the Oregon Liquor Control Commission (OLCC) being put in charge of the recreational industry in 2015.
• Many medical marijuana providers turned to the recreational marijuana industry after its legalization in Oregon, putting sick individuals at risk in the process, according to the Guardian. 
• Companies like PharmEx, a medical marijuana processing business, have felt the impact of the shift of focus towards recreational marijuana in the state. It is now one of three medical processors left in Oregon, and only one medical dispensary in the state carries its products.
• Since PharmEx is only medically licensed, recreational dispensaries can't sell or carry its products. The recreational dispensaries are bound by legal requirements that mean the products they sell must be from companies with OLCC licenses. However, the OLCC isn't accepting new applications to obtain licenses, which is a problem for PharmEx and patients that use their products.
• The regulation of THC content by the Oregon Health Authority is also an issue for companies like PharmEx. The maximum amount of THC in medical edibles (100mg) isn't enough for very ill patients, according to PharmEx's owner. 
• Karla Kay, PharmEx's chief of operations, says that a few patients are buying higher dose medical marijuana products illegally because of the effects of Oregon's regulations. Another factor contributing to the black market growth is that Oregon is producing an excess of cannabis flower, which is leaving the regulated market.
• As stated in a Guardian article, PharmEx's owner believes the way to address the current regulatory issues with medical marijuana in Oregon is to get rid of dispensaries. Instead, patient-grower networks should be the focus to make sure patients get the medical marijuana they need.

FLORIDA MEDICAL MARIJUANA DISPENSARIES

• Medical marijuana was approved in Florida in 2016, even though it is still illegal at the federal level. By late 2018, they had issued 150,000 medical marijuana cards to patients and 14 licenses for firms.
• State laws only allow 12 licenses to be issued per 100,000 registered patients, which is why only 14 licenses have been issued so far. It has made firms like Liberty Health Sciences rush to secure one of the licenses since medical marijuana was legalized in Florida.
• According to BisNow, each firm or vendor is in charge of everything from cultivation to sales in Florida, making it expensive to start a medical marijuana dispensary. The CEO of Liberty Health Sciences, one of the 14 licensed firms in the state, believes capital is one of the obstacles in the industry.
• Another obstacle Florida medical marijuana firms have faced are municipal bans on dispensaries in Florida cities, even though each firm can operate a maximum of 30 dispensaries. Due to this, Liberty Health Sciences' team had to research municipalities that allow dispensaries when deciding where to place their locations.
• Landlords have also been hesitant to rent to dispensary firms in Florida for reasons related to cannabis regulations, according to BisNow. Liberty Health Sciences was only able to rent after showing their commitment to security, since dispensaries are cash only due to the illegality of marijuana at the federal level. Curraleaf had to address landlord concerns as well that municipalities might change their laws and then the dispensary locations would be deemed illegal.
• Another related regulatory issue for dispensaries and medical marijuana firms in Florida is maintaining patient privacy. Medical information is protected in Florida under a state breach notification statute, which means dispensaries will have to make sure patient information is secure.
• Furthermore, if marijuana is legalized at the federal level, Florida dispensaries may have to comply with the Health Insurance and Portability and Accountability Act (HIPAA). The agency that enforces HIPAA believes dispensaries should be classified as healthcare providers of medical marijuana, which means they would have to protect patient privacy under HIPAA regulations as well.

HEALTH INSURANCE PROVIDERS AND WORKERS' COMPENSATION

• Marijuana is classified as a Schedule 1 controlled substance and is illegal at the federal level. Since health insurance companies tend to operate in multiple states or on a national level, they don't want to risk prosecution by covering medical marijuana costs.
• Additionally, the FDA hasn't approved medical marijuana, which makes health insurance companies less likely to cover it.
• Health insurance companies like Humana have stated that an FDA approved medical marijuana products could be covered based on a person's drug coverage in the future. Until then, they will not offer a prescription drug benefit.
• To work around the fact that health insurance companies will not cover the costs of medical marijuana due to federal regulations, workers' compensation in some states covers it as part of treatments for workplace injuries.
• An example of how workers' compensation has circumvented the effects of federal regulations on health insurance providers was in the case of Greg Vialpando in New Mexico.
• Vialpando injured his back in 2000 while working for Ben's Automotive Services, and then used medical marijuana as part of his treatment. He was able to get the costs of the marijuana reimbursed to him by the company he worked for through workers' compensation, rather than health insurance.
• Vialpando credits marijuana for improving his life in a New York Times article. The opioids he initially used for his injury caused him to withdraw to spend time by himself and lose interest in food.
• Vialpando's testimony about his experience with medical marijuana helped a bill fail in New Mexico. The bill would have exempted workers' compensation insurers from covering medical marijuana costs.

RESEARCH STRATEGY

RED COAST WINERY AND LAGUNITAS BREWING COMPANY

• According to the North Bay Business Journal, "the Alcohol and Tobacco Tax and Trade Bureau gave the red light to drinks containing the non-mind-altering compound cannabidiol, or CBD, derived from hemp. After consulting with the U.S. Food and Drug Administration, the bureau said it would reject 'any applications for formulas containing ‘hemp’ ingredients (other than ingredients derived from hemp seeds or hemp seed oil),' despite the plant no longer being listed under the federal Controlled Substances Act. "
• California law prohibits "a cannabis licensee from selling, offering, or providing a cannabis product that is an alcoholic beverage, including, but not limited to, an infusion of cannabis or cannabinoids derived from industrial hemp into an alcoholic beverage."
• This law similarly "prohibits manufacturers from infusing the mind-altering chemical THC found in marijuana into alcoholic drinks."

RED COAST WINERY

• The company has produced the first legal cannabis-infused, alcohol-removed wine.
• The company removes the wine’s alcohol and infuses each bottle of its premium Sauvignon Blanc with 16 milligrams of organic tetrahydrocannabinol (THC), the active ingredient found in cannabis responsible for a euphoric high. The infusion incorporates essential fragrant oils called terpenes to give the wine a pleasant marijuana aroma.

• As a means of working around the prohibition, "the company currently offers a nonalcoholic cannabis California blanc and is launching a rosé with cannabis and no alcohol, albeit under a different company and created at a separate facility to comply with state cannabis laws."

LAGUNITAS BREWING COMPANY

• According to Forbes, Lagunitas "plans to distribute a cannabis-infused sparkling water, called Hi-Fi Hops."

• Like Red Coast Winery, Lagunitas states that their product, Hi-Fi Hops, is a non-alcoholic beverage, though it is infused with THC.