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The Perfect Pairing: California’s Wine and Cannabis Industries Collide



For any plant enthusiast, it’s a particularly romantic truth that the United States’ historic home of Cannabis cultivation also happens to be coterminous with its dominant wine-producing region. For fans of intoxicating substances, it’s downright exciting, not to mention convenient. And, for history and geography buffs, the fact that American weed and wine country not only significantly overlap with one another, but also got their starts in Northern California, is more than just a coincidence – it’s a testament to the special land both industries call home, as well as the industriousness and foresight of the people who brought them both to life.

In a perfect world, weed and wine are obvious bedfellows. They are both delicious and make people feel good. They come from the earth. And, for those who dare to think a little bit more about what they are putting into their bodies and why, both products evoke a legacy of taste and enjoyment that transcends just getting drunk or high – a lifestyle, some might say.

Unfortunately, the relationship between legal weed and wine hasn’t always been friendly up until now. In Sonoma, Napa, and Santa Barbara counties, fierce wars are being waged between Cannabis cultivators and wine producers, the latter of whom argue that Cannabis cultivation damages their agriculture and sullies the upscale reputation of the wine industry. They’re also not keen on the smell, which they say lessens their quality of operations, especially as tourism is concerned. On their side are wealthy proprietors, who don’t want to live next door to a weed farm, legal or not. 

Those battles are currently being litigated in the public sphere via local governments and court cases. But there are brighter spots: In late 2020, a law was passed in California, State Bill 67, which allows the California Department of Food and Agriculture to begin administering an appellations program. It will determine geographic boundaries for Cannabis producing regions, the way such designations exist in wine. Many people in the wine world were instrumental in helping Cannabis industry folks put that program, which is still in its infancy, together. They believe that strengthening an appellations system in one industry leads to an overall strengthening in the concept of geographically centered agriculture, which is ideal from both a farming and a marketing standpoint.

Some winemakers are taking it a step further, either by fully advocating for Cannabis cultivation in their wine-producing proverbial backyards, or by getting into weed growing themselves. 

Sunstone Winery Owner Teddy Cabugos at their Santa Barbara County property. (Photo courtesy of Sunstone Winery).

Teddy Cabugos, who owns Sunstone Winery in Santa Barbara County’s Santa Ynez Valley, is doing both. In a notable judgment, his winery applied for a land-use permit to grow Cannabis at the vineyard’s estate, which would mean grapes intended for winemaking and weed are grown on the same property. This is strictly verboten just about everywhere else, especially in California. 

After a lot of back and forth with local governments and agencies, as well as his well-heeled wine cultivating neighbors, Cabugos was able to reach an agreement. In May 2021, Sunstone was approved for the permit to plant up to six and a half acres. It’s the first time such a permit has been granted in Santa Barbara County and it represents a significant step in pairing wine with weed, pun fully intended.

“Sunstone is in a neighborhood with very wealthy people, most of whom don’t want Cannabis,” he says. “I had to work against seven appellates, very high-profile people, and for a year I had to work with them to dwindle down my project to something ‘respectful,’” adding that he understands he’s the newcomer to the neighborhood – having bought the property in 2019, though he’s a fourth-generation Santa Barbara resident. He respects that not everyone was initially on board with his plans to grow weed, and thus was willing to compromise. 

Cabugos says he and his wife bought the property with Cannabis cultivation in mind from the start. “I think the wine industry missed a huge opportunity in Santa Barbara County for filing for their permits, because they have the most beautiful properties,” he says. “They already have brand names. They already have the public coming onto their properties to buy their goods. That can catapult their entry into Cannabis,” he says, recognizing the value of an established brand – something many legal Cannabis brands are sorely lacking due to prohibition.

Stephanie Honig of Honig Vineyard & Winery in the Napa Valley, helped found the Napa Valley Association. (Photo courtesy of Devin Cruz).

Cabugos is not alone in thinking the wine industry has severely missed the mark. Stephanie Honig of the Napa Valley estate Honig Vineyard & Winery is not interested in cultivating Cannabis, but she is steadfast in fighting for cultivators’ rights to do so in Napa County, advocating for it in public and private and helping to found the Napa Valley Cannabis Association. Currently, Cannabis cultivation is banned in the county.

The association is largely responsible for keeping the issue of cultivation at the county’s forefront, which has been no small task in the Covid era, seeing as many of these ballot initiatives and ordinances require in-person signature gathering. So, an official county ordinance is currently tabled until it’s safer and more possible to move it forward, Covid-willing. In the meantime, Honig says that she and her team are more focused on education until the next time they can vote on it. They are shooting for 2024 to ensure as high of voter turnout as possible, which they don’t think is likely for a 2022 election.

“There are a few reasons why I’m a believer in [Cannabis cultivation] in this county,” Honig says. “Everybody knows that a monoculture is not good for the environment, nor is it good from an economic standpoint,” she says of the dominant cash crop for the region, which is obviously grapes.

“Especially with these fires we have been experiencing, nobody wants just one crop. The other piece is with marketing – Napa produces only four percent of the wine made in the state of California. But it generates over a third of the value of California’s wine industry, monetarily speaking. So, it’s really the top of the pyramid when looking at quality and quantity, because it’s the premium end of the market, right? Price, quality, and a small amount,” she explains. 

To Honig, the wine industry is so focused on the high-end older consumers, which keep the industry afloat for now from both a retail and tourism perspective. But they have a “Millennial and Gen Z problem” that she thinks Cannabis can help, saying that no longer are people wanting “just” a wine vacation. They are going to want to mix it with Cannabis, distillery visits and brewery stops, in addition to world-class farm-centric cuisine and beautiful views.

Honig’s idea is that, ideally, Cannabis cultivators in Napa would mimic the wine model with weed. “If we can even grow one or two percent of the Cannabis that is grown in the state with the Napa name, then we are really touching on that luxury market,” she says, noting that would-be growers have asked for only 100 acres out of the entire county. For context, grape growing takes up about 850,000 acres. She also notes they have made serious concessions in the process to get even this far, as Cannabis cultivation would be set back far from the main artery of the valley along the Silverado Trail. Instead, Cannabis cultivation would take place in the agricultural watershed, far away from most vineyards and certainly so from any tourist attractions. 

Nearby in Sonoma County, storied winemaker Mike Benziger of Benziger Family Winery is quietly growing legal weed at his GlenTucky Farm while making award-winning, certified organic and biodynamic wines at his estate winery.

Apart from championing Cannabis cultivation in wine country, Benziger was also involved in the creation of California’s appellations law, which requires sun-grown buds and prioritizes organic and biodynamic farming – his specialty and, in the opinion of the law’s architects, the only way to ensure land and geography has its rightful place in cultivation, and the marketing of weed that comes from a specific area. 

Sunstone Winery owner Teddy Cabugos says he and his wife bought the property with Cannabis cultivation in mind from the start.

To Benziger, the link between growing weed and grapes for wine is an obvious one. They’re both just plants, after all, and those who care for one crop or another, ultimately, are stewards of the land. That it falls on the same territory, only means more care in his view. 

“When we were creating appellations, we looked to France and their A.O.C. system,” Benziger says of the French system for creating geographic boundaries for winemaking, which includes best practices for farming and land management. “The French model for appellations takes a lot into consideration. It takes everything from the environment, to the soil, farming techniques, the mindset of the grower, and the politics of the area … it’s all part of creating the best product possible. Cannabis is a very expressive plant, so are grapes,” he says, indicating the level of care exhibited by Cannabis cultivators as they move further into winemaking territory.

Like with the planned cultivation in Napa, Benziger is required to grow on a separate parcel of land that in no way touches the wine part of his business, whether literally or figuratively speaking. Down in Santa Barbara County, Cabugos at Sunstone will have to do no such thing, thanks to his land use ordinance which allows him to grow weed in full view of his grapes, and vice versa. 

Cabugos, who is about to hire an estate grower for his new Cannabis venture, is also in possession of a somewhat hard to come by dispensary permit. He owns an off-site manufacturing and processing center as well. Ideally, he would like for the dispensary – and eventually a consumption area – to be on-site at the estate property. Both of those are not currently possible, so he said that the worst-case scenario is he holds onto the license for as long as that takes, and will utilize his local dispensary connections to sell whatever weed he grows. 

Either way, Sunstone Winery’s first Cannabis seeds will be planted next spring. It remains to be seen what, exactly, grows from that – but planting seeds is always the first step. | |

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Rhode Island Rakes In $1.6 Million in First Week of Recreational Pot Sales



Rhode Island’s new adult-use cannabis market opened for business earlier this month, and so far, business is good. 

Local news station WPRI, citing the state’s Department of Business Regulation, reported this week that “Rhode Island’s six marijuana dispensaries — five of which are currently authorized to sell to recreational customers — collectively sold just over $1.63 million worth of marijuana from Dec. 1 to Dec. 7.” 

“Less than half of those sales were for recreational marijuana, at about $786,000. The rest, about $845,400, were sales to medical marijuana patients,” the station reported. “For comparison, during the last week of October — the most recent full week available prior to recreational sales — the dispensaries collectively sold $1 million worth of medical marijuana.”

Rhode Island legalized recreational cannabis use in May, when Gov. Dan McKee signed a bill that was passed by lawmakers in the state General Assembly

The law made it legal for adults aged 21 and older to cultivate and possess marijuana, while also establishing the regulatory framework for cannabis sales. 

“This bill successfully incorporates our priorities of making sure cannabis legalization is equitable, controlled, and safe,” McKee, a Democrat, said in a statement at the time. “In addition, it creates a process for the automatic expungement of past cannabis convictions. My Administration’s original legalization plan also included such a provision and I am thrilled that the Assembly recognized the importance of this particular issue. The end result is a win for our state both socially and economically.”

Additionally, the law “will give courts until July 1, 2024, to automatically expunge past convictions, and those who want their expungement sooner may request it,” the governor’s office explained in a press release at the time.

Late last month, McKee and the state’s Department of Business Regulation’s Office of Cannabis Regulation announced that “five licensed medical marijuana compassion centers have received state approval to begin selling adult use marijuana on or after December 1.”

The five “compassion centers” that were given approval to begin adult-use sales are: Aura of Rhode Island (Central Falls); Thomas C. Slater Center (Providence); Mother Earth Wellness (Pawtucket); Greenleaf Compassionate Care Center (Portsmouth); and RISE Warwick (Warwick).

“This milestone is the result of a carefully executed process to ensure that our state’s entry into this emerging market was done in a safe, controlled and equitable manner,” McKee said last month. “It is also a win for our statewide economy and our strong, locally based cannabis supply chain, which consists of nearly 70 licensed cultivators, processors and manufacturers in addition to our licensed compassion centers. Finally, I thank the leadership of the General Assembly for passing this practical implementation framework in the Rhode Island Cannabis Act and I look forward to continuing our work together on this issue.”

Matt Santacroce, who is serving as interim deputy director of the Rhode Island Department of Business Regulation, said last month that the state was “pleased with the quality and comprehensiveness of the applications we received from the state’s compassion centers, and we are proud to launch adult use sales in Rhode Island just six months after the Cannabis Act was signed into law, marking the Northeast’s fastest implementation period.”

“We look forward to continuing to work with the state’s cannabis business community to ensure this critical economic sector scales in compliance with the rules and regulations put forward by state regulators,” Santacroce said. 

The launch of recreational sales on December 1 was only one change to Rhode Island’s existing marijuana policy to arrive this month. 

WPRI reported that, on the same day, “the state also stopped charging medical patients to obtain or renew their medical marijuana cards,” adding that “there is an expected revenue loss from the pending plan to expunge marijuana possession charges, which will eliminate court fees from those crimes.”

The post Rhode Island Rakes In $1.6 Million in First Week of Recreational Pot Sales appeared first on High Times.

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D.C. Council Approves Cannabis Bill To Promote Equity, Provide Tax Relief And Eliminate Medical Marijuana License Caps



On Tuesday, lawmakers in Washington, D.C., approved a bill that would significantly alter the city’s medical marijuana program. The bill would, among other things, remove licensing caps on cannabis businesses, reduce taxes for operators, increase efforts to promote social equity, and establish new categories of regulated businesses, such as on-site consumption facilities and cannabis cooking classes.

Additionally, it would allow current “gifting” operators, who sell non-cannabis items in exchange for “free” marijuana products, to transition into the permitted market while granting authorities the ability to crack down on those who continue to operate unlawfully.

The measure, which had been revised by the Committee of the Whole earlier in the day, was passed by the full D.C. Council by a vote of 7 to 4. 

A second reading vote by the Council is still required before it can be sent to the mayor’s office.

Pro-reform lawmakers have voiced concerns that the bill’s most recent iteration may have unintended consequences for social fairness by granting preferential treatment to already established medical cannabis outlets.

Legally, adults would be able to selfcertify their medical marijuana use according to the Medical Cannabis Amendment Act. 

Council Chairman Phil Mendelson (D) introduced the legislation on behalf of Mayor Muriel Bowser (D).

A note prepared for the hearing by the Committee of the Whole states that the most recent print “retains a majority of the adjustments and additions made by” the Committee on Business and Economic Development (CBED), which passed the measure last week. 

It had progressed out of a different panel before.

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Dispensaries’ Cashless ATM Transactions Get The Ax



Cannabis dispensaries in several states were left scrambling to find ways to process transactions without cash when a popular workaround to federal banking regulations known as cashless ATMs stopped working for many retailers beginning last week. Cashless ATMs, also known as “point of banking” systems, allow customers to use bank cards instead of cash at cannabis dispensaries, giving retailers and their patrons alike more flexibility when processing transactions for marijuana purchases.

But beginning last week, some of the biggest ATM transaction processors including NCR Corp.’s Columbus Data Services have shut down the ability of cashless ATM transaction processors to use their service, according to unidentified sources cited by Bloomberg. NCR declined to comment on the situation, according to the report.

“This is a pivotal point in cannabis banking,” Ryan Hamlin, chief executive officer of payment technology provider Posabit Systems Corp., told Bloomberg about the cashless ATM shutdowns.

Notice Given Last Year

Late last year, international payment processing giant Visa announced in a memo to retailers that it “was aware of a scheme where POS devices marketed as ‘Cashless ATMs’ are being deployed at merchant outlets.” 

The system worked by rounding up purchases, often to multiples of $20, to make the transaction appear to be cash disbursements. Instead, only the change from the transaction would be returned to the customer, and the dispensary would keep the rest to cover the payment for the purchase.

“Cashless ATMs are POS devices driven by payment applications that mimic standalone ATMs. However, no cash disbursements are made to cardholders,” the December 2021 memo continues. “Instead, the devices are used for purchase transactions, which are miscoded as ATM cash disbursements. Purchase amounts are often rounded up to create the appearance of a cash disbursement.

In April, Bloomberg reported that cashless ATM transactions were able to be processed because they were disguised by listing an address of a nearby business such as a fast food restaurant instead of the actual dispensary address. An estimate put the portion of cannabis sales processed through cashless ATM transactions at 25% of the $25 billion in projected annual dispensary sales.

“Those sales could generate more than $500 million in fees for payment processors, based on average purchase sizes,” Bloomberg reported.

Banking Laws Hinder Legitimate Cannabis Businesses

The popularity of cashless ATM transactions is indicative of the difficulty federal regulations pose for cannabis businesses, even those operating legally under state law. Federal banking and money laundering laws put restrictions on the banking industry, making it difficult for financial institutions to provide traditional services such as credit card processing, loans, and deposit and payroll accounts. But cashless ATMs fail to pass muster with the federal regulations.

“The cashless ATM trend is damaging to investors, dispensaries, and consumers, as when it comes down to it, it’s blatant money laundering,” CannaTrac CEO Tom Gavin told High Times. “Instead of creating loopholes and using a cashless ATM, dispensaries should take advantage of other solutions currently on the market that are safe, legal, and transparent. A proper financial solution should be registered with FinCEN and have a money transmitter license, or be the agent of a sponsor or bank with a money transmitter license in their state.”

Hamlin of Posabit said that signs of the cashless ATM shutdown began to appear in November and increased last week. He estimated that by the end of the weekend, only about 20% of the cannabis industry was still able to use cashless ATM payments.

Cannabis dispensaries in Arizona, California, and Massachusetts have reportedly been affected by the shutdown of cashless ATM transactions, with employees at those shops recommending that they pay for their purchases with cash instead. Curaleaf Holdings, one of the largest cannabis retailers in the United States, reported in April that approximately one-third of the company’s dispensary transactions were processed through cashless ATMs.

“It’s left merchants in the lurch because it happened overnight, but the writing has been on the wall for a while now,” said Peter Su, a senior vice president at Green Check Verified, a consulting and software company that specializes in cannabis and banking.

Sahar Ayinehsazian, a partner at Vicente Sederberg LLP and co-chair of the law firm’s Banking and Financial Services Access Group, said that the shutdown of the cashless ATM system illustrates the need for the passage of legislation now pending before Congress that would allow legal cannabis businesses access to banking services.

“This shutdown further underscores the ongoing need for banking and financial reform for cannabis businesses and the passage of the SAFE Act,” Ayinehsazian wrote in an email to High Times. “While there can be no guarantee that the Act will open up payment processing for cannabis operators, the industry is very optimistic that its passage will facilitate access to legal and legitimate cashless payment options for cannabis operators.”

The post Dispensaries’ Cashless ATM Transactions Get The Ax appeared first on High Times.

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