Aloha Alliance!
The September meeting of the Act 230 Legislative Working Group tasked with improving the laws and regulations overseeing Hawai‘i’s medical cannabis industry came to a close today, on September 20, 2017. In the audience were almost a dozen members of the Hawai‘i Dispensary Alliance, representing every aspect of the industry. The Committee heard from Iris Ikeda of the State Department of Financial Institutions the inception and implementation of the new cashless payment system for dispensaries. The Department of Health gave a brief update on the status of the registry system, the dispensary system, and laboratory certification. The meeting allowed various stakeholders to engage in an extensive questions and answers period about the new cashless payment system.
The University of Hawai‘i Public Policy Center administers the operations of the working group and posts all documents generated by and for the committee to their website. If you would like to sign up for the working group’s email list, email your request to Act230wg@gmail.com.
This article will cover everything that happened in the meeting today in a detailed narrative, much like a Q&A, organized according to the meeting agenda. This record is not verbatim, but it is as close as our notes will allow. This meeting was not broadcast on Olelo or on the legislature’s internal broadcast network and will likely not be available outside of this record and the minutes that will be posted to the Act 230 Working Group site sometime in October.
If you have any questions about the meeting, or about how to get involved in the industry, email the Hawai‘i Dispensary Alliance at info@hawaiidispensaryalliance.org or find us on Facebook.
Panel Members Present
The meeting began with a brief introduction of all of the committee members. The list of participants at today’s meeting and their affiliation include:
Present Panel Members
- Representative Della Au Belatti, Co-Chair
- Senator Rosalyn Baker, Co-Chair
- Senator Will Espero
- Representative Joy San Buenaventura
- Christopher Garth, Hawai‘i Dispensary Alliance
- Carl Bergquist, Drug Policy Forum
- Wendy Gibson, Medical Cannabis Coalition of Hawai‘i
- Michael Takano, Pono Life Sciences, Maui CountyDispensary
- Jaqlyn Moore, Lau Ola, Hawai‘i County Dispensary
- Karen Kahikina, Department of Transportation, Airports Division
- Rob Lee – Department of Transportation, Airports Division
- John Paul Bingham – CTAHR
- Thomas Wills – UH Cancer Center
- Ally Park – Clinical Laboratories/AEOS Labs
- Greg Yim – Physician
- Stacy Kracher, APRN/RX
- Bill Jarvis, Patient
- Patricia Wilson – HPD
- Thayne Taylor – Hawai‘i Dispensary Alliance
- Keith Ridley – DOH
The Working Group is administered by Dr. Susan Chandler and the University of Hawai‘i Public Policy Center, with assistance from Center Director Collin Moore, Dr. Michelle Ibanez, and Joy Agner, policy assistant. A guest moderator, Jose Barzola from the Public Policy Center, managed the September meeting in place of Dr. Chandler who is on sabbatical.
Review of Minutes – Rep. Della Au Belatti. These notes are hot off the press and available for approval. Any amendments?
Keith Ridley – May I stipulate that DOH was present, with Danny Wong representing the Director.
Ally Park – In the 2nd to last Q/A – “What do you think Canada is doing?” It should say Colorado.
Rep. Della Au Belatti – The minutes are accepted as amended.
DOH Monthly Update
Since all of the dispensaries have presented on their status and upcoming plans over the last eight months, DOH started the meeting with its monthly update on the progress of its Registry, Dispensary, and Lab departments.
Patient Registry Program
Keith Ridley:
Please check the DOH website – Patient counts are updated monthly.
You have the report in front of you, but I will go over it very quickly. We also have Dr. A. Christian Whelen, from the State Laboratory Division, here to speak on the laboratory status. I will be addressing the registry and dispensary status.
The Registry website is available for everyone’s reference. We would appreciate any input from the public or other stakeholders to help us clean up the website and make it as useful as possible.
At the end of August, the registry showed 18,619 registered patients, a 3.4% increase over July numbers. In July there was a 3% increase in patient numbers. This is perhaps a modest tick up in the number of registered patients. We are not sure if the opening of the dispensaries contributed to the uptick, but we do except the number to continue to increase.
We process an average of ~1,700 applications per month.
Turnaround time for applications is now 6 business days instead of 3-4 business days. This is due to an uptick in the number of patients and to a staff person transitioning out of the office. We hope to be back on track for the next report.
DOH held its first public hearing today on adding new conditions: ALS and general anxiety disorder.
Dispensary Program Update
Keith Ridley:
Regarding the dispensaries. I wanted to provide additional detail on most but not all of them. The full report is available here.
Pono Life Sciences Maui – They will have their final pre-opening retail inspection next Tuesday. If they pass that inspection, product testing, and location inventory, then they will get their notice to proceed to begin selling medical cannabis. Both dispensaries on Maui will be dispensing and selling very soon.
On Oahu, we did provide Cure Oahu with a notice to proceed to cultivate and acquire their cannabis. They have started their production. They have had some operational problems and may delay retail opening until later in the calendar year. We will keep working with them on the final retail inspection.
Manoa Botanicals did have their final inspection on their retail location today. We are not expecting any problems with the results, hopefully they will have the final pre-opening retail inspection on their request in early October, retail sales to follow thereafter.
Green Aloha on Kauai – We conducted an unannounced inspection and found no issues. They anticipate their final retail location inspection at the end of December, and they hope to open by January 2018. This is based on self-provided information and is subject to change.
On Big Island, both dispensaries are still working with county on the building permits. They are looking at later this calendar year or early next year before actually selling.
We continue to have monthly meetings with the dispensaries about the interim rules and clarifications. We also talked about a product called keef. This is a residue on the cannabis plants. The dispensaries wanted to know if it was sellable? We answered yes. It is a product of the cannabis plant, so it is fine to be packaged and sold. It will require certain kinds of testing, but it is an allowable product.
You have heard the announcements on banking and the cashless system. Iris Ikeda will be here this afternoon after a meeting with federal regulators to discuss the system.
There was a concern about disability insurance. This was not a general problem among dispensaries, only one was affected and it should be resolved by this time.
On the next agenda for the meeting with the dispensaries, we will be talking about the alternative tracking system required i n HB1488 as way to address concerns that emerged during the last legislative session.
With BioTrackTHC being in Florida, we wanted to make sure there was no down time for the system in the wake of the hurricane. They maintain duplicate systems across the country which provides additional protections. We are not worried at this time.
After a month or so of dispensary sales. Here is a high level summary of operations based on numbers in the tracking system:
These numbers are cumulative for all open dispensaries, from the date of the first opening through September 19, 2017.
- Customers served (includes duplicates) – 7,800+
- Gross Sales Revenue – $426,000
- Items purchased – $8,900
- Weight of sales – 57 lbs
- Customers are averaging 3.3 grams per purchase
- Average of $54 dollars and change per purchase
- Average cost per gram, $16.75
We talked about grams and lbs. For the lay folks, to give you perspective, if you look at your spice cabinet. Your bottle of oregano is between 13 and 18 grams. The amount of weed purchased is 3.3 grams which gives some perspective on the quantity people are buying.
The medical cannabis update newsletter was published this last week.
The last document is the dispensary status. 6 of 8 dispensaries are cultivating. Indicated in green are upcoming inspections.
Dr. A. Christian Whelen – Lab Report
There is an updated status report, updated as of this morning, providing quite a bit of detail. A few highlights:
We hosted a forum on September 5th as suggested at the last meeting. A summary of topics discussed is in the handout at the bottom of the page. It also describes an example where the labs worked together to solve a problem with controlled material.
All labs have submitted information for ongoing validation studies since last meeting, as recently as yesterday. We provide feedback as quickly as possible, usually within a day or too.
The State Labs Division has expanded the provisional certification of Steep Hill Labs to include pesticides and microbial testing of concentrates, including oil and tinctures. Steep Hill Labs can now facilitate retail sales of those products.
Q. Sen. Rosalyn Baker – The amount of grams per purchase. Do you know if the cause of the number of folks coming in and the amount of product available, did the dispensaries impose purchase limits? Or did patients purchase what they could and this is how it averages out?
A. Keith Ridley – We know that Maui Grown Therapies required appointments to control patient count at the facility. But we are not aware and have received no complaints about imposed limitations.
A. Sen. Baker – We all know the dispensaries ran out, so I’m just curious.
Q. Sen. Will Espero – Did we get input from patients on the cashless system?
A. Sen. Baker – Please hold banking questions for Iris’s presentation.
Q. Rep. Joy San Buenaventura – I’m disappointed that the big island dispensaries are slower. Are they waiting on county permits or are there other problems?
A. Keith Ridley – They are waiting for county permits. DOH is part of that process, we have given our approvals back to county. They are now waiting on county.
Q. Rep. San Buenaventura – Can we expedite the process for Big Island? They are not doing very well compared to the others.
A. Keith Ridley – We can contact county. We have done our specific role, but we are happy to touch base with all parties.
Q. Carl Bergquist, Drug Policy Forum – You mentioned that the Kauai dispensary had a harvest date estimate. Nothing for Big Island yet?
A. Keith Ridley – They have told us they intend to be open no earlier than the end of this year, likely next year.
Q. Carl Bergquist, Drug Policy Forum – Patient registry – You showed a percentage increase of 3.4% in patient count – but a 50% increase in wait time. Is the wait time an aberration?
A. Keith Ridley – We think the increase in applications may play a role. The registry folks also lost a staff person who relocated to the continent. They have a small staff, any disruption like that can be large. We are in the process of beginning to recruit and will do so as quickly as possible.
Q. Carl Bergquist, Drug Policy Forum – In the future, can we separate out duplicate visits. Can we breakout the data to find-out how many of the state’s 20,000 patients are visiting dispensaries?
A. Keith Ridley – We will try to see if that is a report we can generate.
Q. Rep. San Buenaventura – It seems to be particular problem in the Hawaii county permitting process. Any recommendations prior to next session to help expedite the permitting process to uniformly open retail locations across the state.
A. Keith Ridley – We can think about it and talk with county. We haven’t given it any thought, but we can look at it.
Q. Rep. San Buenaventura – You have no concerns about Hawaii county permitting being different than other counties?
A. Keith Ridley – We haven’t done the side-by-side comparison.
Q. Rep. Della Au Belatti – The public hearing on new conditions was this morning. Whats the timeline for new ailments to be added?
A. DOH Registry Program – We have someone on contract to conduct a literature review. From there they will draft a report and send it to the director.
Q. Sen Baker – Were there any other petitions?
A. DOH Registry Program – We had two conditions submitted this round – ALS and anxiety disorder. They were the only two submitted.
Q. Rep. Au Belatti – Will there be opportunity for public input?
A. DOH Registry Program – Until 4:30pm today. Submit via email to DOH.
Q. Sen. Espero – Who is the consultant and where did they come from, can you say?
Q. Sen. Espero – Is he a researcher, scientist, cannabis expert, doctor, etc.?
A. Thomas Wills – UH Cancer Center – He is a Professor of Public Health at UH Manoa.
Q. Rep. Au Belatti – What’s the timeline?
A. DOH Registry Program – 90 days from today, our report and recommendation is due to the director.
Q. Rep. Au Belatti – Regarding the operations information. Thank you Keith. I’m appreciative. HB2707 asks that you work with DBEDT to collect information on:
- Quantities of marijuana cultivated and dispensed;
- Number of qualifying patients;
- Geographic areas in which marijuana is cultivated and consumed;
- Prices of marijuana and related products;
- Number of employment opportunities related to marijuana; and
- Economic impact of marijuana cultivation and sales.
So has DBEDT reached out in terms of the follow-up to begin that process?
A. Keith Ridley – We will be reaching out to them to schedule a meeting with them.
Q. Rep. Au Belatti – This is important for us to understand the impact on jobs and other economic aspects for Hawaii. Data is good. The Dispensaries are also supposed to provide dis-identified customer data. Please work together to get that working.
Q. Sen. Baker – Follow-up, the other important data is geographic areas and are they all being served? How is DOH tracking that information and how are you asking dispensaries to provide that information to determine how that information can be created?
A. Keith Ridley – Look at the system to see what reports are possible. We hope that patient information can be provided by zipcode. We are not sure if the interface with the registry translates to a tracking system for us to capture that. Absent that we will have to ask the dispensaries to provide that information. They should be able to provide it by zipcode.
Q. Sen. Baker – Can you break out people with 329 cards by geographic area and zipcode?
A. Keith Ridley – Maybe, I’ll check.
A. Sen. Baker – That would be key.
Q. Rep. Au Belatti – Regarding laboratories – Steep Hill is now approved for concentrates and tinctures, so will the two operating dispensaries be able to send their products to them?
A. Dr. Whelen – We issued the certification yesterday. So they are in the process of getting the submissions. So those products should be purchased by next month. Will have some data on that as well.
Q. Carl Bergquist, Drug Policy Forum – Regarding laboratories – Last time there was a question from the public regarding the lab division and laboratories meeting up with the applicants. Did you meet with them all?
A. Dr. Whelen – We are certainly happy to meet with the applicants. What happened last week was the labs got together and met with each other. It would be good to have the dispensaries and labs all meet. We should probably all meet together – dispensaries, labs, and the lab division.
Q. Rep. Au Belatti – I’m curious what DOH is doing about new statutory prohibitions that allow dispensaries to cultivate an increased number of plants. I want to inquire if any of the dispensaries have moved forward or what is going on with that. There may be some language to that increase being tied to servicing rural communities. My assumption is that the currently open dispensaries are serving urban areas, but rural areas too because they are the only ones open. So I just want to know what the department is doing with that provision?
A. Keith Ridley – Only one dispensary has expressed interest thus far. We need to find the protocol for how to deal with that increase. Each dispensary can have 2 production centers at 3000 plants each. All current dispensaries are at less than 3,000 plants in only one production center. We are disinclined to allow them to increase right now with only one production center and less than 3000 plants.
A. Rep. Au Belatti – I’m concerned because of the running out of product. We don’t want that to happen from a lack of supply created by DOH.
Q. Rep. San Buenaventura – Regarding the latest bill – It allows DOH to consider applications for new licensees after October 2018. Seeing there is demand, do you see any problems with at least getting the applications in for new licensees?
A. Keith Ridley – That is so far away.
Q. Rep. San Buenaventura – But here before you know it. Are you planning for it?
A. Keith Ridley – We are preparing, but we don’t have anything written as a formal plan. But we are preparing knowing that the demand will be very evident for whether more dispensaries will be needed. We know there will be another application process. There are things we could do differently, we have conducted a debrief to know how to do it the next time. In terms of the premise for the demand, we’ve seen for example what appears to be significant demand. Will the lines continue to be as long? We don’t know. That is what we need/would like to do to do research by county to determine more licenses.
Q. Rep. San Buenaventura – Is demand the only factor in determining opening up the application process?
A. Keith Ridley – It is a big one.
A. Sen. Baker – A determining factor.
Q. Rep. San Buenaventura – But also providing services to rural areas – like big island – where nothing is working.
A. Sen. Baker – But a new licensee would not necessarily solve that.
A. Rep. San Buenaventura – Artificially limiting supply would artificially increase prices.
A. Carl Bergquist, Drug Policy Forum – The legislation is written to give favorable consideration to licensees that will serve those areas.
Q. Michael Takano, Pono Life Sciences, Maui – Similar issue, from a different side, you mentioned only one request for 5,000 plants. Dispensaries are making investments, we are assuming the demand is out there. We need to know that capacity is out there so our equations can help us know if we are going to have a need to fulfill. We may build more infrastructure, more consulting, etc… it means a safer better product for patients in the end, having a clear path or at least the process for growing 5,000 plants. Our initial production center we did because the steps were clear. We want predictability about our next steps.
A. Keith Ridley – We know that from a business sense, it may be prudent to have more than 3,000 plants in one center prior to opening the second center. We are looking at that possibility.
Q. Carl Bergquist, Drug Policy Forum – Regarding inter-island transportation of lab samples? They are coming from Maui to Oahu. How often? Any issues? Kauai is opening soon, what can they do to prepare?
A. Keith Ridley – There have been no problems with transporting samples to Oahu. I don’t know how often. I can check in the tracking system, I can provide that.
Q. Sen Baker – One final question on labs – When will other labs be certified?
A. Dr. Whelen – The other folks are getting really close I think. PharmLabs Hawaii is almost there with chemistry, more to go with microbiology. AEOS Labs is close with both. I think it will be very soon. I think it would better to have a forum with labs and dispensaries with more than a single certified lab.
Q. Sen. Baker – what does soon look like?
A. Whelen – They submitted validation studies yesterday which have not finished evaluation yet. The process is going very well, but the crystal ball is not clear enough.
Q. Sen. Baker – How long does it take to evaluate data from the labs?
A. Dr. Whelen – Usually back in 1-2 days. Its interactive, they respond back very quickly. One reason PharmLabs has more micro to do is the recent addition of a microbiologist.
Q. Stacy Kracher, APRN/RX – Have you had any patients go to the labs yet?
A. Dr. Whelen – Not sure that I am allowed to say. It is my understanding that they are receiving non-regulatory samples.
Banking Presentation
Sen. Rosalyn Baker – This was one of the big problematic areas. No one wanted lots of cash, let alone large trucks backed up to the business or government buildings. Cash only makes it problematic for the patients too.
Iris Ikeda, Department of Commerce and Consumer Affairs, Division of Financial Institutions
Thank for letting me share the solution with you folks. I’ve noticed others had powerpoint presentations. I didn’t want to be the only one without one, so here it is.
(Editor’s note: The following is the text of the powerpoint slides along with the few additional words added by the presenter throughout the presentation. Where there are no additional words, nothing was said beyond the text of the slides. The presentation was followed by a Q and A.)
Agenda
- Background
- Baking activity and risks
- Hawaii’s banking solution
Background
- DFI started on banking issue about 2 years ago, after Act 231 was signed into law in 2015
- We provided educational opportunities on banking to:
- Banks and financial institutions
- Lawyers
- Bank officers
- Bank directors
- We met with banks as a group and individually
- We talked with money transmitters
- We talked with armored car service providers
We do not supervise armored car services, and this is not an ask to supervise them. Just so we are clear. *laughter*
Banking Activity and Risks
Banking is highly regulated by federal government and state government
Chief law is the Bank Secrecy Act
- First enacted in 1970
- Evolved through drug cartels
- Tax evasion
- Terrorist financing
- To the US Patriot Act
Now, a bank’s Board of Directors needs to agree to the risks taken by bank management. Without agreement, they can’t accept a customer.
Problems with Cash
Public Safety
- Crime
- Armored Cars
- Vaulting
- Cash Accounting
We looked at crime statistics, armored care services, some of which said they would not carry that money. Vaulting and monitoring is an issue. Also cash accounting is expensive, not just sitting in a bank account, you have to account for every penny as it goes in and out of your retail location.
Hawaii’s Cashless Banking Solution – What Were We Looking For?
- To address public safety
- To take the cash out of the equation of product purchasing
- Allow for limited banking activity for dispensaries.
Background to a Solution
We met with banks and others in groups and individually, consulted with other state bank commissioners, and looked at out of state financial institutions. We found as a temporary solution – Colorado CU. This is a temporary solution. We are still looking for a state chartered local institution to take on these accounts. Colorado CU has approached local banks. So far no takers, but it is still a temporary solution.
The solution offers limited banking services for the dispensaries. There are restrictions on the accounts. Deposits must be 90% on hand at the credit union. Comes with a cashless solution.
How it works
- Need a smartphone or in-store tablet
- need a checking account – a prepaid card option is being developed
- A QR code or PIN
- Creates an ACH transaction
- That expires after 30 minutes
- Each transaction is a one time use
- No bank acct info is in the QR code, just instructions
Other Alternatives
- We found just one
- Other financial institutions can open accounts
- Other fin-tech companies can provide services
- As technology evolves other solutions may be available
- Prepaid stored value cards (this is a thing, it just doesn’t work with CanPay)
- Debit card use (maybe with technology in the future)
Iris Ikeda
Commissioner, Division of Financial Institutions, DCCA
808-586-2820
twitter: @hawaiiDFI
Q. Sen. Baker – So do you have a website with a direct link to the FAQ? Can you send that out?
A. Iris Ikeda – Yes.
Q. Rep. John Mizuno, new House Health Committee and Act 230 Working Group Chair – This is a game changer, I think its great. The practicality of not walking around with cash. The biggest benefit is public safety. People will target dispensaries and employees. Besides Florida, Colorado, and Hawaii, any other states?
A. Iris Ikeda – I know there are other states they are looking at CanPay. And other states are using other solutions from other vendors. CanPay is not the only solution. I know of at least 5 other vendors .
Q. Rep. Mizuno – We want to congratulate you. Commendable. But temporary, how do we institutionalize it?
A. Iris Ikeda – We are looking for a local financial institution. Once we find it, Colorado will help transition it. It is still illegal under federal law, all of our financial institutions are at risk. Similarly in Colorado, the Credit Union is taking a lot of risk offering this here.
Q. Stacy Kracher, APRN/RX – The credit union is extending services to dispensaries and labs. Any work to extend to physicians qualifying patients?
A. Iris Ikeda – The limited services they offer is limited to the labs and dispensaries. If they go beyond that in offering banking services, they would need to get a charter from DFI.
Q. Stacy Kracher, APRN/RX – It seems like the providers are part of that package.
A. Sen. Baker – The providers don’t handle the volume. That was the problem that needed to be solved.
Q. Bill Jarvis, Patient – Can you comment on the cost structure for the dispensaries. I was stunned at the cost of similar solutions a while back.
A. Iris Ikeda – We are not regulating the fees that Colorado CU is charging. We are not regulating what CanPay is charging. It is free for patients. They can download the app for free. That is not something we do for any of our charters, the marketplace decides.
Q. Jaclyn Moore – Lau Ola, Big Island Dispensary – Colorado CU is state chartered. Could you discuss how state chartered vs federally charged plays into a long-term solution?
A. Iris Ikeda – Here in Hawaii we have both. The difference is the regulator. In Hawaii we are a partner with the federal counterpart. We don’t necessarily take their side but we can explain to federal regulators our marketplace, risk, and local economy. Rather than federal regulators who only see what they see, not the individual state dynamics. That is where we come in. This particular one is state sponsored. Jointly regulated by the banking commission in Colorado and the credit union regulator.
Q. Jaclyn Moore – Do we have any state chartered credit unions in Hawaii?
A. Iris Ikeda – No. They see it more as beneficial to be federally chartered.
Q. Jaclyn Moore – What is the barrier – is there a process for transition?
A. Iris Ikeda – There is a process. We are working through what it looks like. If they do, they would have to pay state taxes which they currently do not have to.
Q. Carl Bergquist, Drug Policy Forum – This solution seems made for the dispensaries. But not for patients. What is the timeline – is it mandatory, is the timeline aggressive? Did we look at other states with cashless options to see adoption rates? We don’t want to exclude patients. Also on the CanPay app, is there any risk of linking checking account to the CanPay app? The banks will see that.
A. Iris Ikeda – To your first question, it is a particular solution to the public safety issues. We have a target date to get all of the dispensaries to agree to the solution. Not having cash on the street would be safer for everyone involved. Dispensaries, patients, and state employees. In other states, those operating in those states have recreational and medical, so it is hard to determine how much of the medical group is using the cashless solution vs. the medical space. We requested data, but don’t have any good data yet. It is new to the states. The thing about Hawaii is we are medical only, we have an advantage, all of the purchasers are known to the Department of Health. It is a group that is pre-identified. When the bank customer does the QR code, the bank statement will show the dispensary name. CanPay I believe is pretty safe. We have looked at their information security protocols. Their IT. I mean nothing is safe or full-proof, but they do have protocols.
Q. Bill Jarvis, Patient – Relative to Carl’s questions, I came from a business where customers were unbanked, we found where ACH helped a percentage of the customers get on autopay programs, that the unbanked were still hard to serve. We set up store valued systems. Do you have a sense for how soon they plan on moving to stored value cards? The unbanked percentage here is high compared to a lot of states.
A. Iris Ikeda – We believe 95% have a checking account. Stored valued cards, we are working on it. CanPay needs to feel secured with the cards information security protocols. We are waiting on that. We have told CanPay that we already license stored value card companies and if they wanted to go that way first, that is an option. There are other options, if another company wanted to come in and offer something else – they should apply for a money transfer license or explain why they don’t need a license.
Q. John Paul Bingham, CTAHR – Security is only as strong as the weakest link. Patients can access labs for testing, receiving money, but it may be ill-gained, is that a potential problem?
A. Iris Ikeda – That is why we are offering a cashless solution. Patients are known to the Department of Health. That is part of the risk the banks are looking at. If they don’t know who is bringing in the cash or doing the transactions, they will be less likely to offer services.
Q. John Paul Bingham, CTAHR – Are those using lab services outside of dispensaries, card holders?
A. Keith Ridley/Sen. Baker – Yes. Its the only way to use the card.
Q. Sen. Espero – State taxes are an issue when moving from federal charter to state charter. Is that a legislative fix?
A. Iris Ikeda – I’m not sure, but that is why all of the state chartered credit unions decided to go to the federal charter. It happened after 2010. Something happened in the tax law, maybe on the federal side.
A. Sen Baker – About that time they got FDIC access to credit or something related to credit unions.
Q. Sen. Baker – Follow-up – What does it take to be a state chartered credit union in Hawaii?
A. Iris Ikeda – There is a whole statute. Separate section for credit unions. Need to file application with us. Because they are already federally chartered, should be simple.
Q. Sen Baker – What are the requirements from scratch? Capital requirements, maybe it make sense for people in the room to hui up and create one?
A. Iris Ikeda – There is a $15 million capital requirement. We look at the management group and directors. They need to understand the laws and have the wherewithal to manage the credit union. We do criminal background checks on all. It is a longer process. Capital requirements could go up based on the risk we see.
Q. Sen. Baker – If a group did want to put it together. The dispensaries already went through a similar process. Could we fast track them?
A. Iris Ikeda – Well, if it were specific to cannabis, they probably couldn’t get access to the federal reserve to provide banking services. The Colorado bank has other non-cannabis clients.
Q. Paul Klink, Honolulu Wellness Center – It seems to me that banks are already taking direct income from taxes? Is that held in Colorado, where is that going?
A. Iris Ikeda – I’m not sure the dispensaries are paying the tax yet. Maybe they haven’t made the first payment yet.
Q. Rep. Belatti – Mechanically I understand what is happening. They need an account in Colorado. That is not a solution for taxes. Will they be able to write a check for taxes?
A. Iris Ikeda – For those open right now, they have a bunch of cash in their vault, that will be how they make their first tax payment. If they already sent that to Colorado, I don’t know how they did it. I assume it got there. I don’t have a solution to get cash from here to there.
Q. Sen. Baker – But they do have to ship it?
A. Iris Ikeda – Yes. Colorado CU people came in to talk to the dispensaries and labs to open accounts. I’m not sure how they did it.
Q. Derek Gabriel, Ignite Solutions – I’m a vendor for the cannabis industry – what problem are we solving with this? Patients are elderly and not good with tech? This seems like a scam on someone’s part, what protects the local people when the company in Colorado goes up? Will the state consider waiving capital requirements in the beginning for a bank here? Why does the state not consider running their own bank like in North Dakota?
A. Iris Ikeda – We did vet the bank in Colorado; they are in a safe and sound position. They are not closing down anytime soon. We are working with the bank commissioner in Colorado. It is probably as safe as it can be.
A. Derek Gabriel – That is what people said about Enron.
A. Tai Cheng, Aloha Green, Oahu Dispensary – That is a risk for the dispensaries.
A. Iris Ikeda – The capital requirement is high. We can lower it. The reason it is high, is because with new businesses, they are not making a profit, they need a cushion to build up a business model before making a profit. If they don’t have capital they fail. We won’t let a company fail in the first few years. We want them to succeed.
Its not a scam. We think this is real. As far as an option. We are happy to entertain other solutions through our division.
Q. Paul Klink, Honolulu Wellness Center – Thank you for CanPay. I see hundreds of patients. Is it true, they can only do CanPay? Patients are grateful. Just an option. Other question, if local bank takes GET taxes from tax department why can’t the dispensaries?
A. Iris Ikeda – The tax department has its own protocol for how to handle its own tax payments. They also need to transfer their tax collection to their own bank. They are trying to be as safe as they can. The tax departments bank will accept the cash and tax payment. They probably are collecting tax revenue from the different people who are paying taxes. The big ones they are looking at are the dispensaries.
Q. Tai Cheng – Aloha Green, Chair of HEALTH – Thank you Iris. Patients have been quick to adopt. Event though we have security, it helps put patients at ease. With the bank account in Colorado, we can wire and write checks. It will help with taxes. The fees are quite reasonable compared to other options. We are glad to note that our Colorado partners are vetted and subject to audits from their local regulators. We feel safe. But we do ask that local banks look at this industry.
A. Iris Ikeda – We continue to talk with local banks. Taking a wait and see approach. In six months to a year, maybe we can transition the accounts. We might also have a state sponsored credit union. We don’t know the future, but as I talk with them, I continue to hope that one of them will step up.
Q. Sen. Baker – Thank you Iris. It was good and important to get everyone on the same page. There were questions and concerns, about do we have to do this. Is it mandatory. No. But it is important that we try to reduce the cash risk as much as we can. I know the Maui dispensary has the tablets ready to help the seniors make those transactions and give them some relevant comfort.
Public Q&A and Wrap-Up
Q. Rep. Au Belatti – We will wrap up the formal part of this meeting – Then the subcommittees can meet if they like.
Q. Carl Bergquist, Drug Policy Forum – Is there a process for subcommittees – do we need a report by next meeting?
A. Sen. Baker – Yes – After your meeting today, or any other time, we need a short report prepared for our next meeting.
Q. Carl Bergquist, Drug Policy Forum – So we need to submit reports prior to the October meeting, then we vote?
A. Rep. Au Belatti – There will be discussion.
A. Sen. Baker – Anything obviously that doesn’t rise to the consensus of the group going forward, obviously individual legislators can support it. We do need to work towards consensus on some things.
Q. Rep. San Buenaventura – Last time we talked about trying to determine the size of the black market – Are we going to have a report – talk to the prosecutors. Any type of report?
A. Rep. Au Belatti – UHERO might have done an economic study on the benefits of recreational. We can look at that?
A. Sen. Baker – At our recent legislative conferences, we did learn that we should find out about the black market to know how we are doing.
Q. Rep. Au Belatti – I did want to mention new Chair Rep. John Mizuno. I am passing the reigns to him. I will still be on the group, working with the subcommittees. Also, happy birthday to Sen. Rosalyn Baker.
Q. Brian Goldstein, Manoa Botanicals, Oahu Dispensary – There were comments earlier about concerns about the availability of supply and limitations when the dispensaries first opened. Hopefully this provides some relief. Our first harvest, dried weight exceeds the entire weight of sales in the entire state. So there will not be a lack of supply.
Q. Paul Klink, Honolulu Wellness Center – I brought this up about infirm patients at the last meeting. I am still waiting on my answer. They are running out of time. We don’t have a solution for him. Working group, please discuss this. Patients are law abiding, but they are infirm and have no way to get the proper ID’s to register for a card.
A. Carl Bergquist, Drug Policy Forum – This will be addressed in a report from the patients subcommittee.
Q. Henry Curtis – I understood this meeting was to discuss the competition between black market and legitimate market. Will that be discussed in the future?
A. Rep. Au Belatti – It can be on the agenda, but I’m not sure how to address it.
A. Rep. San Buenaventura – I can volunteer that it should be part of the licensing subcommittee. Like when Colorado cuts down on the black market, I also went to the conference. We do need to measure the black market and learn how to crackdown on it. Not sure it can be done by the next session.
Q. Henry Curtis – Sen. Baker said that in order to understand your impact, you need to understand the total market, not just your part of the market.
A. Rep. Au Belatti – I’m not going to discuss it at large, but the subcommittes can discuss. So a piece of a larger agenda, but we are not bringing in economists.
A. Sen. Espero – Plus there will be a large difference between now and when the dispensaries open 6 months from now.
Q. Rep. San Buenaventura – But the measurement must be done now so that we know the impact of the dispensaries on the existing black market.
Q. Henry Curtis – So to find out if we are taking the black market and making it legal, or if we are operating separately.
A. Rep. Au Belatti – I want to manage the expectations of the group. That study would take 2-5 years. We are just managing things as they happen. We can have a discussion, but we don’t want to get stuck spinning our wheels.
Q. Representative of Drug Policy Alliance California, formerly of the ACLU – Whenever we talk about marijuana in California, it was very patient centered. About the people who are low income, with healthcare access issues. But they certainly may not have property to grow on. We always have to keep those people in mind as we contemplate a regulatory regime. The people I’ve met are seniors, late stage patients. No money. Dispensaries might even give it away to them in California. A model that put compassion as the centerpiece of the enterprise.
Next Steps and Announcements
Announcement: To get on the email list, go to Act230wg@gmail.com. All updates are also posted to the Act 230 website.
Next Meeting:
The next meeting will occur on October 25th. Start at 1 pm. Conference Room TBD.
Adjournment
Conclusion
Now it is your turn! The Alliance has a role on the Committee and access to each of the subcommittees – Products, Education, Patients, Reciprocity, Licenses, and Laboratories. We need your thoughts, comments, and detailed considerations for any and all of these committee priorities that you would like to see action or deliberation on. What did we miss? What do you think we should emphasize? The Legislative Oversight Committee will generate the successful legislative and administrative progress the industry needs in the coming years, and this is your opportunity to guide our hand.
We want to know what you think! Email us at info@hawaiidispensaryalliance.org if you have any suggestions or comments, find us on Facebook, Contact Us through this website, or give us a call anytime. You are invited to be as broad or specific with your submissions as possible.
Mahalo nui for your continued support as we build a better future for Hawai‘i’s legitimate cannabis industry!
It is the Alliance’s mission to provide up-to-date and relevant industry information to the patients, dispensary applicants, and related businesses of Hawai‘i’s growing medicinal cannabis industry. If you are not yet an Alliance member, join today to receive the HDA Industry Update every month and to take an active role in the future of Hawai‘i’s medical marijuana industry. Contact us today and we will send you the Winter 2017 edition of the HDA Industry Update absolutely free to say thank you for your interest!