How can small businesses navigate the changing and sometimes contradictory laws governing the budding cannabis industry?

Opening Bell

David Holland on Small Businesses & Cannabis

Welcome back to Cheddar is opening bill, the new york cannabis insider is hosting its first in person conference in Albany today. Now the event features panel discussions led by industry experts, networking opportunities and lightning round business consultations. Meanwhile, new york's cannabis control board approved another 58 growers to cultivate marijuana under conditional licenses. This brings the total number of licensed cultivators to 146 So here to discuss is David Holland, attorney and partner of business litigation and cannabis practice groups at Prince Lobel and tie. Thank you so much for being with us. Good morning and thank you for the opportunity to be here. So can you start off by sort of giving us your overview of the cannabis landscape as you see it? Well, new york is really an exciting crossroads right now. It has been the world's largest and most successful and sophisticated marketplace, even though it was unregulated. And now we're watching the rollout of what is called the marijuana regulation taxation act and that's the legislation that legalized adult use cannabis in new york. And we're seeing that take place including what's gonna be the cannabis advisory board meeting today to try to help give some ideas and concerns that need to be taken under consideration while this rollout takes place. So I guess now that it's happening here, how can small businesses in new york navigate the discrepancy if you will, of cannabis between state and federal cannabis laws? Well, it's a complicated landscape, but what you're seeing across the nation now in 37 states, it has been legalized and the federal government has really taken not only a hands off approach, but they've actually taken affirmative steps to try to mitigate or restrain the use of federal prosecutorial investigation resources to go after medical marijuana providers and patients as well as they've taken a hands off approach to the adult use states like new york, colorado California Oregon, where as long as people are acting in compliance with those state laws and the federal government is going to tolerate them and not interfere with those programs at this time. So in your opinion, what would you say are like the best ways for states to set up a successful and ethical cannabis initiatives? Well, there are two fold because you have to consider who should be the prioritized people to have that industry take off. Um, and there's a lot of arguments out there for legalizing the existing operators, the people that, despite threats of life imprisonment and other, uh, civil and criminal penalties have been the source of the marketplace for decades. Now. In light of prohibition And balancing that against those people that are aspiring to come in that have no background or experience in the space, but should have equal opportunity to get in. So, New York has actually taken a very good progressive approach where 50% of all license will go to what they call social equity applicants. People that come from a background in cannabis or communities that have been impacted by the war on drugs And then 50% are gonna be available to other applicants. They're coming in with different experiences, but are they also offsetting the cost that that would take to get in? Because that's the, the, I guess the trouble, a lot of people who want to get into business that costs hundreds of $1,000 just to apply for the license. That's correct. And so new york has done two things. They put together a cannabis fund that will actually be there to assist social equity applicants, not only in the costs and fees of application process, but establishing incubators, which would give them business foundational grounding to be able to be a successful operation from day one when they open and new york is also through the dormitory or what's called Disney, the dormitory authority of State of new york are actually building out a significant number of spaces that will be turnkey operations so that those applicants that would have a hard time obtaining credit or other financial backing can have an opportunity to go directly into the marketplace into one of those established facilities that have been built out by the state, thereby relieving them hundreds of thousands dollars in the actual construction costs. So that is a significant part where the state is playing a part in the market and I have great respect for that aspiration. Yeah, that's huge. So what other legal headwinds are you seeing when consulting like new startups that want to get into the cannabis industry? Well, the biggest one is really banking and credit. Um, lots of people. This is a still federally prohibited space. So therefore things like mortgages have clauses in them to prevent landlords or property owners from establishing anything that violates federal law, the banking facilities, even though there has been tremendous efforts by the federal government, um, and particularly proposed legislation by Congress to to open up the ability of cannabis banking. It's still an issue for those banks that are F. D. I. C. Insured and are having hesitation. So finding those resources is tough and finding the ability for people to say, look, I will be a successful operator. Please give me the license is a delicate balance because they are incriminating themselves at times saying, I actually have been in this space for a long period of time. I've just never shown it on the books and records that most people would look at to decide whether you're credit worthy. You're going to be successful. Yeah, well, we're definitely gonna be keeping an eye on this and see how it all develops. Tom holland with Prince Lobel and tie. Thank you so much for your time. All right,