Municipal divestments are a trap for cannabis



Editor’s Note: This editorial was written by Frederika McClary Easley, Director of Strategic Initiatives at The People’s Ecosystem, with market research assistance from Alec Estevez.

When states regulate the use of cannabis for adult use, many feel that the job is done and the floodgates to cannabis will be opened. There are ideas and dreams of being able to buy medicinal plants with the same ease as one can buy a cup of coffee or tea. The reality is that in many places this dream has not and will not come true, and ease of purchase will remain an aspiration. In many states there are deserts that require consumers to drive in some cases two to three hours from home to acquire cannabis. Why is this the case, you ask? Well, you have opt-outs to thank for that.

These cards of CannDev show opt-in vs opt-out in California, New Jersey, New York, Michigan and Mississippi. Red indicates denials and green indicates areas that have engaged.

What is an opt-out?

Opt-out options are the ability of a municipality or county to choose not to allow adult (recreational) cannabis businesses to operate in their jurisdiction. The opt-out requires official action declaring that cannabis businesses will not be allowed to operate. This action must be taken within the time limits set by regulatory bodies. Failure to do so means automatic inclusion. Now, it’s important to note that these decisions are often made in direct opposition to voters’ sentiments and voting tendencies, and thankfully withdrawal does not preclude consumption.

The reasons for withdrawing are often centered on fear of the unknown. How will these businesses, especially retail and consumer shows (if applicable), impact the community? There may also be a need for additional time to flesh out zoning and other governance issues. Whatever the reasons, the option is often taken and data shows opt-out options are biased towards being the preference of rural areas, those outside of major cities and urban environments.

Take the example of California, where adult cannabis use has been regulated since late 2016. Six years later and after many lessons learned, as of May 2022, only 38% of counties/cities in the state allow retailers. And that’s with the flexibility of being able to register at your leisure, without penalty. And nearly 20 years after the first state-regulated adult cannabis use, we are seeing similar trends. In February 2021, New Jersey passed legislation to regulate adult use and a super majority, over 70% of municipalities chose not to allow businesses to operate.

What does this mean for communities and entrepreneurs?

An additional “cannabis tax” was one of the first things mentioned by Keith Mosley when asked about opt-out options. Keith is an entrepreneur working to operate in Michigan and New Jersey grow space. “Opt-outs have a huge impact on real estate. We are dealing here with supply and demand. When you combine them with zoning restrictions, the spaces available are limited and the owners know it. lets charge high prices that they know you pretty much have to pay because what else are you going to do.They know they have influence.

The reality is that in some areas real estate costs have already skyrocketed. Think California and New York. Adding cannabis, a substance that is still federally illegal, to the table adds complexity. Asked about the claim that higher prices are attached to spaces, Keith said: “It’s easy. When you walk into a space and see its status relative to what’s requested, sometimes it just doesn’t make sense. When you do your research and look at the comps in the area and the difference between which ones are in green areas and which ones are not, you will see.

“And the added challenge will be securing funding,” he said. “If you can get a bank to bite, they’ll get an appraisal done, and often the number will be drastically different from the asking price and banks usually lend up to 70% of the appraised value. So now you need to find out where the rest of the money is coming from.

For Michael Diaz-Rivera, owner of Better Days Delivery, being away from his family is a big part of his story. Originally from Colorado Springs, where he faced a cannabis felony charge, Michael first moved to Denver to reinvent himself, but ended up staying to engage in an industry and with the factory he was for. criminalized. Sadly, Colorado Springs, an area known to be religious and military-centric, has retreated from the adult industry and Denver is the only city that has not only chosen to participate, but created a pathway for the social equity with exclusivity. Michael wants the scope of the opt-out to be fully recognised: “What does it mean overall, who is really affected? I know people who need this drug in their homes and I can’t I can’t bring it to them… I can’t deliver in this region. And maybe they don’t have a vehicle or the means to get around. They are technically able to consume but they are denied access.

Cornell Fairley, Founder and CEO of Lazy Pistolz, is a resident of Rochester Hills, Michigan, and gives an extreme account of the damage caused by medical and adult use denials. Being both a patient and aspiring entrepreneur, he faces the impact on multiple fronts. As a patient, “I am doubly taxed. I have to drive almost an hour from home to reach a clinic and my favorite medical clinic has been without medicine for almost six months. This has led me to purchase adult-only retail options that do not honor the medical discounts I am eligible for as a card-carrying patient.” As you can imagine, as an industry candidate, he may need to travel out of his area to do business or relocate.

Solutions

It is not enough to talk about the problem. We have to come up with solutions. Here are the possibilities that interviewees and I would like to see considered.

  • Set opt-out periods once the regulations are fully drafted, or at least a substantial part of them.
  • States should encourage early accessions with tax revenue and/or other necessary support.
  • Give citizens the opportunity to vote.
  • Ensure that town meetings are held at times that make mass participation more feasible.
  • Institute a system in which decision-makers must report to voters on progress made on the reasons given for withdrawing.

Disclaimers, after nearly a decade of regulating adult cannabis use across the country, are as much of a problem now as they were then. And contrary to what many believed in terms of temporary disclaimers and based on industry uncertainties, many municipalities have yet to reverse their original decisions and embrace the adult use industry. One has to ask why not allow voters to be educated without bias and with data on where things stand, and create opportunities for them to weigh in on what comes next? If not, we will continue to have a thriving legacy industry and end up doing a disservice to those in need.

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