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Guest Blog Post: A Local Government’s Guide to Successful Marijuana Regulation & Licensing

Posted By Administration, Tuesday, July 24, 2018
Updated: Monday, July 23, 2018

This article was originally published by ViewPoint Cloud, a NACCED Platinum Associate member. 

ViewPoint Cloud is the industry’s leading software platform for permitting, licensing, inspections, & code enforcement operations. Built with the idea that local and state governments deserve the same design and technology standards as the private sector, ViewPoint Cloud offers a seamless, user-friendly experience for public applicants, fully integrated with powerful workflow automation for department staff. Serving 150+ municipalities and 7 million+ citizens nationwide. 

A Local Government’s Guide to Successful Marijuana Regulation & Licensing

Marijuana regulation remains a controversial subject across all levels of government, but there’s no denying the fact that the tides are changing in favor of legalization. The 2016 election season—where a historic number of states passed ballot initiatives legalizing marijuana—seems to have been a tipping point, and the pro-legalization movement is showing no signs of slowing down.

Marijuana: A Growing Industry

According to BDS Analytics, the cannabis industry generated nearly $9 billion in sales in the US last year, equivalent to the entire snack-bar industry. More than 121,000 people work in cannabis-related jobs, and there are at least 9,397 active licenses for marijuana businesses, according to Cannabiz Media. Most importantly, public opinion is fueling this shift. As a recent Gallup survey shows, support for legalization rose from 31% in 2000 to 64% in 2017.

While marijuana has been listed as a Schedule 1 drug at the federal level since the Controlled Substances Act in 1970, individual states have passed their own laws legalizing the production and sale of marijuana in various forms, uses, and under the umbrella of different business types. 

Growing evidence of the medical benefits of marijuana may lead to the federal government changing its Schedule 1 drug classification. However, even if this does’t happen in the near future, industry pressure and international legalization efforts (like Canada’s recent legislationare paving the way for more cannabis-friendly regulation. There’s even a bipartisan bill currently facing the Senate that would explicitly allow states to pass their own marijuana laws without interference from the federal government.

So the question now is, how are local governments going to respond? While legalization is first enacted at a state level, individual municipalities define the lines of how cannabis businesses can operate within their borders.

In California, for example, cannabis businesses must prove they have permission to operate from their local government before they can get a license to operate from the state.  Permitting, local fee collections, and enforcement also fall to the municipality, making proactive and intentional regulations all the more important.

There Is No One Solution: Local Context is Key

Regulating cannabis businesses isn’t just a question of legality—the minutia of what types of businesses, what types of products, and other regulatory limits have to be established by both state and local governments. These decisions aren’t black and white, and there is no standard blueprint. Reviewing best practices within the local context of your individual community is the best plan for creating an effective, sustainable regulatory environment.

In cases where state legalization has already occurred, local governments have responded to varying degrees. Some outright ban all marijuana-related businesses, some allow medical dispensaries but not recreational, some only allow home growers, and others open their doors to all components of the marijuana industry.

When considering incorporating cannabis businesses into the local tax base and economy, it’s also crucial to think about how to structure licensing in a way that can scale with a rapidly growing market. This process should be accessible and user-friendly, so business owners are encouraged to register correctly and in a timely manner. This ensures the city or town collects all possible tax revenue, has an accurate picture of the spread of new businesses, and can oversee a smooth rollout with minimal complications.

If you’re thinking, this research is jumping the gun because legalization hasn’t occurred in my state (yet)— understanding these details before the market opens sets you lightyears ahead. The more organized and structured you can be ahead of time, the more success you’ll find in practice and be able to see the industry evolve in the ways you planned.

Understanding the Full Scope: Cannabis Business Types

In figuring out where to begin, it’s important to understand the full scope of marijuana-related establishments as approaches to licensing, planning and zoning, and taxation will differ accordingly.

State laws recognize three main categories of marijuana use:

  • Medical marijuana: prescribed or recommended by a doctor to treat a medical condition
  • Recreational marijuana: for use by anyone over the age of 21
  • High CBD/Low THC: marijuana plant or products with no or low THC (psychoactive ingredient) and high amounts of CBD (non-psychoactive ingredient), typically useful for medical treatments without the associated ‘high’.

Regulating commercial businesses is most commonly the primary focus, but even within ‘commercial’ types, municipalities need to decide what types of operations are appropriate for their community. For example, some communities may not allow cooperatives or delivery businesses because they are harder to regulate, while others will be more concerned with odors coming from manufacturing sites.

Permitting and licensing is the most important consideration when it comes to how municipalities regulate marijuana. What requirements and guidelines each business type entails has to be determined by what fits for your unique community.

Read More

To view this guide in full, including Cannabis Permitting and Licensing Considerations, click here.

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