Cannabis & Crypto

Blockchain goes mainstream with the introduction of Facebook's LIBRA, Bitcoin as surged past $10k, then quickly $11k achieving levels not seen in over a year. LIBRA is not without it critics however, as the Financial Times commenced introduction of its series "Breaking the Zuck Buck", by proclaiming the  introduction of a new currency to be "nonsensical" and "badly thought out". Criticism was made of interest income generation from the holdings, without being shared with the individual participants. Congressional hearings were scheduled; already Facebook is under investigation by the FTC for having potential monopolistic powers over consumer information.

The FDA has historically come under criticism as being overly beholden to pharmaceutical lobbyists, and Big Pharma is known to be threatened by the specter of lower cost cannabis capturing market share.  In its only statement on the medicinal value of cannabis the FDA declared in April 2006, that "no sound scientific studies" support the medical use of marijuana. As hopes emerge that marijuana can achieve legalization, the Detroit CannaCon was addressed by a former FDA adviser, who had once guided an application of methadone through the approval process.

The political director – an African American woman – of the newly formed Michigan Cannabis Industry Association, was profiled on the front page of the Sunday Free Press.  Ms. Bruner initially sought out registration as a licensed transporter, but then confronted a challenge she could not overcome, that of meeting a minimum threshold of holding $200k in capital assets, a problem described as one shared by others in the minority community. The executive director of the Michigan Regulatory Agency, Andrew Brisbo, one of the featured speakers at CannaCon, was appointed to oversee implementation of the new legalization...whose purposes include encouraging participation by people from communities that have been disproportionally impacted by marijuana enforcement . Also discussed was the possibility of introducing legislation to expunge previous convictions based on marijuana offenses no longer considered crimes,   action already taken by several other States...

CannaCon is the biggest marijuana business-to-business trade show in the nation. It first started in Seattle in 2014, has since spread, and is now being held in Detroit’s Cobo Hall, on June 20 & June 21.  Seminar speakers include CPAs and attorneys; topics addressed include tax planning strategies, licensing requirements, countering the threat of Big Pharma, and obstacles to banking. As is known in the industry, IRC Section 280E prohibits the deduction of expenses, when in the business of trafficking in controlled substances.   The most recent Tax Court ruling, that of Harborside Health Center vs Commissioner of Internal Revenue, was an unfavorable one for the taxpayers.

     Last week, Michigan, the first State in the Midwest to legalize medical marijuana, had its newly created Marijuana Regulatory Agency hold its first public meeting.    The first speaker was a patient with MD, who complained of not being able to get her medicine.  The fourth speaker, owner of a Jackson provisioning center, echoed her complaint and warned of possibly laying off 20 people, because “there is no flower in the system.”