The Coalition for Cannabis Policy, Education, and Regulation, a new report that examines the illicit marijuana market in the United States, makes a series of policy recommendations aimed at reducing unlicensed marijuana sale. The group also calls for a nationwide, centralized track-and trace system and marijuana tax stamps that would help distinguish “regulated cannabis products” from illicit products.
The membership of the group includes such tobacco and alcohol giants as Altria Client Services and Reynolds American. Molson Coors Beverage Company, Constellation Brands, and Molson Coors Beverage Company.
In a 35-page report published on Tuesday, the CPEAR estimates that U.S. consumer will obtain more than 10 billion gram of cannabis in 2023 (about 353 millions ounces or 22 million pounds). About half of this number is expected to come from states where marijuana remains illegal, and the other 23 will be a quarter. The illicit market accounts for about half of the total demand, according to the report, which cites Cannabis Public Policy Consulting’s research.
Andrew Freedman is the executive director of CPEAR. He said that it was time for the U.S. Government to step in.
Freedman stated that “despite maintaining a position of non-interference with state-level marijuana policies, the federal Government has remained unwavering” in its longstanding criminalization. This inaction has cost a lot, leading to the emergence of a thriving, underground cannabis market.
RESEARCH: CPEAR has just released a study that provides Congress with a number of policy recommendations for reducing the illegal #cannabis markets.
Dive in here: https://t.co/BSuTPXb3kN pic.twitter.com/5vQfravjnq
— Cannabis Policy, Education, and Regulation 19 September 2023
CPEAR encourages the creation of a federal cannabis tax stamp, a re-creation of programs used in the early 1900s when the government started a crackdown on the cannabis trade. The federal government would stamp marijuana products with tax stamps.
CPEAR stated that in today’s regulatory climate, a marijuana stamp can be used to prove payment of a cannabis tax. It also helps reduce tax evasion, supply chain diversion, and inversion.
When legally produced goods are diverted to the illegal market, this is called diversion. Inversion occurs when illicit products appear on the shelves of legal retailers.
The CPEAR report states that a centralized program of track-and trace would help to avoid the interplay between legal markets and illegal ones. It also insists on the need for a “national inventory control mechanism” or a similar system.
It says that a standardized inventory control system would help law enforcement, other stakeholders and the supply chain to identify inversions and diversion. This will prevent cannabis being sold in states where cannabis is prohibited.
CPEAR states that certain surveillance methods and data sources could be used to combat illegal cannabis sales. For example, monitoring water and electric usage, aerial images, and soil composition, CPEAR suggests, can help detect illicit cannabis activity. Two monitoring systems are cited in the report as examples. The Detection and Interdiction of Marijuana to Aid Enforcement and Conservation system (DIMEC), a computer algorithm that can learn to detect patterns on satellite and aerial imagery, and environmental DNA (eDNA), a highly sensitive way to detect low concentrations of substances within a water sample.
CPEAR recommends that the federal government set guidelines to “address inconsistent state regulations” in addition to track-and trace programs, surveillance, and tax stamps. The group is particularly interested in minimum standards for laboratory testing, packaging, labeling, and manufacturing.
The group wants federal authorities to communicate clearly about enforcement priorities. They want “frequent and current guidance to local and State law enforcement agencies on the enforcement priorities of illicit cannabis markets and related illegal activities.”
The CPEAR report states that to pay for this new approach “the adoption or any federal cannabis tax must ensure that a part of all revenues is allocated towards comprehensive illicit market enforcement.”
The report does not urge the federal government to legalize marijuana. However, it asserts that “a new paradigm is inevitable in cannabis reform” and that policy changes at the federal levels will mark a “new era in cannabis legality.”
The new report from CPEAR has not been well received by everyone who is involved in cannabis regulation.
Kaliko Castille is the president of Minority Cannabis Business Association. She told Marijuana Moment the paper seemed to focus less on how to transition to the legal market, and more on stepping up enforcement against non-licensed actors.
He said: “It is clear that big tobacco and big cannabis are joining forces.” “And based on the discussion about enforcement against illegal cannabis in this newspaper, it’s obvious that their priority for cannabis prohibition 2.0. We know from documented history that it is disproportionately Black and Brown people who are affected.
Castille, after an initial reading of the report said that he had found “no mention” about how to help illicit operators transition to the regulated market. The paper, in a section on the licensed marijuana businesses of California struggling to compete with the illicit market, omits, for instance, that “half the state” still does not allow legal distribution of cannabis for adult use.
Castille said that the answer to the problem is to make it easier to enter the industry by keeping tax rates and regulations low. This will help to compete better with the illicit market. If prohibition worked, more than half of the states would not be defying federal law.
Shaleen Title is another advocate. She’s a former Massachusetts marijuana regulator and now the director of the Parabola Center for Law and Policy. She suggested that, given the history of the tobacco industry and the representation it has in CPEAR, this group should not be considered a leader for reform.
“If you go to a drugstore this year, you’ll see signs explaining that Philip Morris and Reynolds America intentionally designed cigarettes to be addictive–court-mandated signage specifically shaming them for their behavior,” Title told Marijuana Moment. Title told Marijuana Moment that the tax stamp idea was ridiculous. But even more absurd is to think that these companies, or their front groups, should be considered serious policy players.
Title mocked CPEAR’s tax stamp concept on social media by spelling “marihuana”, archaically, to refer to the 1937 Marihuana Tax Act which introduced tax stamps to discourage cannabis usage.
In its latest publication, CPEAR (the front group of Big Tobacco) calls for a marihuana stamp that will be used to combat the illegal market. It’s for this reason that I have warned you to not legitimize them. pic.twitter.com/9qM4Nbgk9D
Shaleen Title 20 September 2023 HTML0
When asked for comment about the pushback by advocates, CPEAR sent Marijuana Moment a written statement attributed Shanita Penny. She is a senior adviser to the group.
Penny stated that the illicit market was a concern in meetings with federal legislators, public safety officials and small businesses trying to gain traction, as well as the general public. This could be one of the main reasons why many people are not fully supportive of cannabis policy reform. Penny said that policymakers are searching for solutions to the illicit cannabis market. Those who want to see the movement advance should promote ideas which bring transparency, accountability and fairness into the system.
A CPEAR rep also mentioned that on Wednesday, the group hosted a marijuana panel during the Congressional Black Caucus Foundation’s annual legislation conference, in Washington, D.C., which was one of three panels, if not more, that were cannabis-focused at the event.
It’s over! Thank you to all who watched and our expert panel! #Cannabis #ALC52 pic.twitter.com/eJJsh19Jkn
— Cannabis Policy, Education, and Regulation 20 September 2023
Illicit marijuana cultivation, processing, and sales have persisted in states that are legal. This is an uncomfortable truth for those who thought legalization would eliminate all unregulated cannabis activities. This activity is primarily to supply cannabis to consumers in states where it remains illegal or to undercut licensed businesses on legal markets, where taxes and regulations keep prices high. In legal states, enforcement is increasingly focused on combating unlicensed distribution and facilities, even if it’s at a slower rate.
Unregulated activities shrink cannabis revenues for governments and in some cases help fund criminal activity. Unlicensed operators are able to outbid legal businesses who have to pay high licensing fees and adhere to strict regulations. Even those who are benefiting from the lower prices could be at risk. In a recent report from Canada, it was found that nine out of ten samples of illegal marijuana confiscated by law enforcement contained multiple pesticides compared to just six percent of products purchased legally.
Last month, California’s Attorney General called for a two-pronged approach to the problem. Rob Bonta, a Democrat, said that the barriers to entry were too high. The costs of operating are too high. We should also lower taxes, at least temporarily. The state is giving out millions in grants to localities in order to license more businesses where legal marijuana is hard to find. The grants are not available to localities who have chosen to opt out of licensing marijuana retailers and do not plan on doing so in the future.
As part of its efforts to combat the illegal market, the state passed a law last year that eliminated the state’s tax on cannabis cultivation.
The state of New York is still struggling with the delays in opening shops across the entire state. To alleviate the bottleneck the state is permitting direct grower to consumer sales at farmers market style events. The state legislature has also passed a bill that would allow farmers to sell their products to tribal retailers within the state.
At least one state requires marijuana tax stamps for illicit activities. Louisiana lawmakers voted against a bill in April that would have repealed a state law requiring illegal cannabis sellers to buy stamps for each parcel of marijuana they sell. The stamps cost $3.50 each, and according to the law, one stamp is required for every gram of marijuana that’s sold. That amounts to about $100 in tax per ounce.
Local reports claim that the Department of Revenue is still using the first printing of marijuana tax stamps from 1990. Rep. Joe Marino, who sponsored the bill, said that Louisiana received $1900 in revenue last year. The market for stamps is also a large part of the marijuana tax stamps. “I’m not sure that they have even recovered the cost of printing the stamps.”
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The post Group funded by Alcohol and Tobacco Companies Presses Feds To Issuance Marijuana Stamps To Counter Illicit Market first appeared on Marijuana Moment.
