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Advocating for Better Cannabis Business Regulations

Written by on June 29, 2022

Complying with cannabis business regulations presents a challenge for start-ups and smaller firms. Corporate and regulatory attorneys often help clients understand and comply with complex regulations. This is especially true in the cannabis industry.

In the United States, many industries lack well thought out regulatory policy. Some industries, like cannabis, suffer from over-regulation, overwhelming smaller businesses with the legal costs of compliance. Others suffer from under-regulation, leading to a lack of consumer and employee protection, as well as confusion and chaos. Under-regulation of our financial market was part of what led to the Great Recession in 2008.

Attorneys are usually the ones best positioned to critique bad business regulations and advocate for better policy. Well-resourced corporations often hire attorney-lobbyists to do just that. Most small or medium-sized cannabis businesses cannot afford to lobby, and so they instead join trade organizations or the like to advocate together as a group. But collective bargaining comes with its downsides. For example, one person’s business interests may diverge from their peers’. Plus, industries include countless different business types, and what’s good for the goose may not be good for the gander.

So the question becomes: How does one advocate for better cannabis business regulations? Here’s an answer in two parts:

1. What counts as “good” cannabis business regulation?

Good cannabis regulatory policy seeks to address three main concerns: (1) economic and social cost; (2) effectiveness; and (3) sustainability.

The first two concerns pose a core question: is a specific cannabis business regulation necessary?

In other words, do the benefits justify the costs? The costs of regulation for both a regulator and the industry shouldn’t exceed the social costs that would result in the absence of regulation. So, the costliest types of regulations (known as command and control or “hard law”) should be reserved for scenarios where a lack of regulation leads to significant social harm. Is the method of regulation even effective at achieving those benefits? If it’s not, then it’s definitely not necessary. And perhaps another method would cost less or at least be more effective.

In the cannabis industry, many regulations cause inordinate costs for businesses but don’t benefit the public much. This includes location restrictions for retailers. No real social harm results from retailers being near libraries and parks, but these and other similar policies unduly burden cannabis businesses with higher real estate costs and make licensing unnecessarily competitive, driving costs up further. Legislators presumably adopt these policy in place to keep kids and other vulnerable populations away from cannabis dispensaries. But hundreds of thousands of people (including kids) walk and drive the major streets where cannabis retailers are located. So these regulation are not even effective in achieving their presumed goal.

The third concern, sustainability, creates another question: is this cannabis business regulation adaptable and flexible?

Is it flexible enough to make room for complexity and nuance? Can it adapt to changes in the economy or society? Good regulation respects the autonomy and individuality of operators, understands that industries are complex, and allows room for change and innovation.

For example, cannabis cultivators in Washington State are now subject to product testing at any time. If their product fails certain tests, they have no choice but to destroy entire batches. This lack of flexibility doesn’t make room for complex and unpredictable situations that arise when growing cannabis outdoors, such as pesticide drift. Forcing businesses to destroy entire batches of product without an opportunity to remediate a problem is anything but sustainable.

When faced with new regulations coming down the legislative pipelines, these are some questions one should ask oneself before writing public comments or rallying your colleagues to lobby legislators: is this cannabis business regulation necessary given its costs and benefits? And, if so, is it adaptable and flexible enough to be sustainable? Answering those questions will help one frame a more persuasive response to potentially harmful regulations. It will also help think of recommendations for better business regulations to address the issue at hand.

2. How does one advocate for better cannabis business regulations?

Cannabis business regulation is often political. Legislators, motivated by electoral politics, influence regulations that align with political and social views rather than more practical concerns. In a representative democracy, this sort of politicization is common and often necessary. But, unfortunately, harmful social norms, stigmas, and beliefs often unduly influence politics. Social norms and stigmas come from a multitude of sources, some positive, and some not so positive. Understanding the social and political landscape that influences regulation will help inform one’s advocacy.

For example, many people still believe that cannabis is a scary drug, and local level regulators respond to those pressures and create strict regulations or bans. Cannabis bans across the State of California are a perfect example of this issue. So when lobbying for better cannabis regulations, advocates often emphasize the science that dispels many of the public’s concerns about the plant. Convincing the public is often just as important as convincing legislators. This is where advocacy becomes about organizing, too.

In conclusion, to advocate for better cannabis business regulation, one should first try to figure out what good cannabis business regulation would look like. This may take some consultation with lawyers and experts in the field, especially if one is new to it. Then one should try to understand  the underlying motivation of the regulations, the answer could be social stigma or politicization. Finally, one should put together public comments and advocate accordingly.

The post Advocating for Better Cannabis Business Regulations appeared first on Harris Bricken Sliwoski LLP.


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