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Not-so-high Anxiety: States Move Fast to Protect Pot Industry

By May 24, 2017 No Comments

View original publication on  LATimes.com.

If a whiff of uneasiness hung over the trade show that drew thousands of marijuana entrepreneurs here last week, it wasn’t because they were just around the corner from a White House that has threatened to shut them down.

After an initial period of post-election anxiety, pot businesses are increasingly confident that states where they are setting up shop have their backs, despite Justice Department warnings meant to rattle marijuana enthusiasts.

State leaders are proving themselves nimble at responding to the threat, moving to inoculate local marijuana industries that are fast becoming too important to state economies to leave vulnerable to the whims of Washington.

Some of the more than 200 marijuana entrepreneurs who walked the halls of the Capitol this month during the industry’s annual lobby day — an event that has grown exponentially in size — were surprised by how many Republican congressional offices were eager to engage.

“People here are treating this more seriously,” said Morgan Paxhia, a San Francisco marijuana investor who was among those lobbying.

But states say they can’t afford to wait to see how federal policy plays out.

“You have to have blinders on to not understand how large this industry can become,” said California State Treasurer John Chiang. He has been taking a lead in California’s efforts to move the industry into legitimacy, holding lengthy hearings aimed at helping banks step around the federal rules that make them reluctant to work with pot firms.

The easier it is for companies to get out of the shadows and operate like other normal businesses, Chiang says, the quicker they can start paying taxes to the state — and the harder it will be for the Justice Department to undermine the industry.

In several states, lawmakers are scrambling to find creative ways to keep federal agents out. California lawmakers are debating giving pot businesses the same kinds of protections as it has extended to immigrants in the country illegally, prohibiting local law enforcement from helping federal agents target them.

Colorado is mulling a law that would let pot sellers instantly reclassify all their recreational pot as medical in the event of a federal crackdown. (The White House condones medical pot.) Oregon lawmakers passed a bill aimed at protecting the privacy of pot users from federal intrusions by requiring cannabis shops to destroy records of what consumers purchase.

Not that some states aren’t tapping the brakes. Amid the federal uncertainty — and to the deep disappointment of marijuana advocates — Massachusetts lawmakers voted in December for a six-month delay in opening the state’s first recreational marijuana shops, pushing it back to mid-2018.

Colorado lawmakers eager to allow clubs where pot connoisseurs could consume the product opted to hold off, worried their efforts could antagonize the Justice Department. Gov. John Hickenlooper warned legislators off plans to allow medical marijuana deliveries in Colorado, saying they would send the wrong message to Washington and put the state at risk.

Hickenlooper, who opposed the ballot measure legalizing recreational pot in his state but has embraced the industry it created, has taken a diplomatic approach to keeping Washington at bay. He and Sessions had an hourlong meeting in Washington a few weeks ago, from which the governor emerged mildly optimistic.

“At one point he said, ‘You haven’t seen us cracking down, have you?’ ” Hickenlooper recalled to MSNBC. “I interpreted that as: He’s got his hands full.”

Other state officials are more antagonistic, as in California. California Atty. Gen. Xavier Becerra recently mocked the warnings from Sessions, suggesting he just try to disrupt legalization in California.

Portland, Ore., congressman and longtime legalization crusader Earl Blumenauer suggested the administration is too scandal-consumed to do much damage to the vibrant legalization movement. “These people are like one dumpster fire after another,” he said.

“In some ways, this potential threat could be a blessing,” he said. “It could ultimately create an industry that takes compliance with the rules more seriously.”

Is business threatened by this administration?

“Who knows?” said Alan Bloom, chief executive of Zeon, the sign company. “We are dealing with politicians. I never underestimate the stupidity of politicians. But there is a lot of tax revenue on the line, and this industry has been growing like crazy since the election.”