Cannabis Law Prof Blog

Editor: Franklin G. Snyder
Texas A&M University
School of Law

Monday, June 20, 2016

Maryland's Harris Sponsoring MMJ Research Legislation

AThe White House doesn't have much interest in medical marijuana legalization, but support is now coming from a surprising Congressional source.  Rep. Andy Harris (R-Md.), a physician who strongly opposed D.C.'s legalization last year, is now leading efforts to ease restrictions that prohibit research on marijuana's medicinal benefits.  From the Baltimore Sun:

 

Harris, a Johns Hopkins-trained anesthesiologist who hangs a white lab coat in his waiting room on Capitol Hill, has been working for roughly a year to build a bipartisan coalition of lawmakers who want to ease restrictions on marijuana for the purpose of studying its effect on debilitating diseases.

 

Harris and other lawmakers intend to introduce legislation this week to create a less cumbersome process for marijuana researchers seeking Department of Justice approval to work with the drug.

 

Among other changes, the measure would require federal regulators to approve or deny research applications within two months.

 

. . .

 

“Part of my frustration in the entire debate around legalizing medical marijuana is that there really isn’t good scientific evidence about what it’s good for and what it’s not good for,” Harris, who still practices medicine, told The Baltimore Sun. “We really don’t have good data supporting widespread use.”

 

That position is uncontroversial — even some proponents of looser marijuana laws have lamented a lack of peer-reviewed research. The American Medical Association calls for “further adequate and well-controlled studies” in the opening lines of its formal policy on medical marijuana.

 

There is anecdotal evidence that the drug has helped patients who are suffering from seizures, Parkinson’s and other complex conditions. But Harris and others say states are making decisions about which types of disease can be treated with marijuana without a clear sense of the drug’s efficacy.

 

In that sense, both supporters of expanding the use of medical marijuana and opponents can find reasons to back the legislation. Both sides agree that one of the reasons there is so little data is because it’s been difficult for researchers to get their hands on the drug.

June 20, 2016 in Drug Policy, Federal Regulation, Legislation, Medical Marijuana, News, Politics, Research | Permalink | Comments (0)

Thursday, January 14, 2016

Who's the Bigger Cartel Operator, El Chapo or John Hickenlooper?

AaJacob Sullum:  Legalization Lawsuit Shows Conservative Constitutionalists Have Marijuana-Related Memory Loss.   As usual with Mr. Sullum, the whole thing is worth reading.  Some highlights:

    Last week, two days before Mexican authorities recaptured Joaquín Guzmán Loera, a.k.a. El Chapo, Oklahoma Attorney General Scott Pruitt pointed to another drug lord, this one hiding in plain sight: John Hickenlooper, a.k.a. the governor of Colorado. “The State of Colorado authorizes, oversees, protects, and profits from a sprawling $100-million-per-month marijuana growing, processing, and retailing organization that exported thousands of pounds of marijuana to some 36 States in 2014,” Pruitt writes in a Supreme Court brief joined by Nebraska Attorney General Douglas Peterson. “If this entity were based south of our border, the federal government would prosecute it as a drug cartel.”

    Hickenlooper actually was a drug dealer of sorts before he got into politics, having cofounded Wynkoop Brewing Company, a Denver brewpub, in 1988. But he ended up running the drug trafficking organization described in Pruitt’s brief by accident. He was elected governor two years before Colorado voters decided, against his advice, to legalize marijuana. Pruitt and Peterson are trying to overturn that result, claiming that it hurt Oklahoma and Nebraska by encouraging an influx of Colorado cannabis. Their argument shows how readily some conservative Republicans let their anti-pot prejudices override their federalist principles.

This, of course, is true.  But it goes both ways.  What's also interesting, though, is how many folks who believe the federal government has nearly total power over the states -- e.g., Governor Jerry Brown -- let their pro-pot opinions suddenly turn them into John C. Calhoun states-righters with respect to marijuana.  When it comes to guns, for example, President Obama is all for federal control, but when it comes to pot . . . well, not so much.  Mr. Sullum continues:

The Commerce Clause has been the most important excuse for expanding the federal government since the New Deal, and Raich stretched it further than ever before. It is precisely the sort of decision that an avowed federalist like Pruitt, who has resisted Obamacare as an unconstitutional extension of federal power, should condemn. Instead he is relying on it to force his policy preferences on a neighboring state.

To be fair to General Pruitt, however, that's what lawyers do.  Obamacare is constitutional; it's the law.  He's stuck with it.  He's simply arguing that if liberals are going to force conservatives to have federal health care, conservatives are going to force liberals to follow the Controlled Substances Act. 

Perhaps he even thinks that we'll get a limited Commerce Clause only if liberals find that some of the stuff they like gets taken away.  It was U.S. Grant who said, "I know no method to secure the repeal of bad or obnoxious laws so effective as their stringent execution."

January 14, 2016 in Federal Regulation, News, Recreational Marijuana, State Regulation | Permalink | Comments (0)

Thursday, January 7, 2016

Federal Judge Nixes Cannabis Credit Union Appeal

AA proposed cannabis credit union in Colorado lost another round this week.  U.S. District Judge Brooke Jackson threw out a lawsuit by Fourth Corner Credit Union challenging the Federal Reserve's refusal to issue a "routing number" to the FCCU.  Without a routing number, FCCU cannot access the federal check-clearing process and can't function as a credit union.  The Denver Post has details of the decision.

While I haven't seen the opinion, the ruling was hardly unexpected.  As Judge Jackson apparently noted, selling marijuana is a federal crime, handling marijuana deposits and using the banking system for marijuana profits is a separate crime ("money laundering"), and thus the Federal Reserve had no obligation to help further the NCCU's.

The decision leaves cannabis businesses in the banking limbo they've been in since quasi-legal marijuana sales began a decade ago.   But until the Obama Justice Department moves to reschedule marijuana, or Congress changes the law, it's hardly likely that the Federal Reserve (or the National Credit Union Administration, which FCCU is also suing) will change the rules to allow illegal businesses to use the banking system.

 

 

 

January 7, 2016 in Banking, Federal Regulation, News | Permalink | Comments (0)

Wednesday, January 6, 2016

Should we expect any major federal marijuana reform developments in 2016?

ADoug Berman asks that question over at Marijuana Law, Policy & Reform.  My answer is the same as his.  No.  Here's his quick take:

But while 2016 could prove historic for marijuana reform on the state level, I am inclined to predict that this year could well be a huge nothingburger on the federal front.  Absent some unexpected developments, I would be shocked if an essentially lame-duck President Obama or his Department of Justice will see any reason to significantly alter its present Cole-memo, leave-the-states-mostly-alone prosecutorial policies.  And though there are lots of marijuana reform proposals and bills kicking around Capitol Hill, I have no reason to believe or expect any leaders in either the House of the Senate have any real interest in moving any marijuana bills forward (or even having hearings on the topic).  

He's hoping he's "missing something" in that assessment, but I don't believe he is.  I don't see anybody at the federal level moving to do anything this year.

The Administration?  President Obama has had seven years to start the process of rescheduling cannabis, and has shown absolutely no interest in doing it.   Given that he's spending his last year doing a victory lap of world capitals and top golf courses (and spending whatever political capital he has left on making it harder for people other than drug lords and gangbangers to get guns), it's hard to see him suddenly get interested.  Attorney General Lynch is an old-line drug warrior whose troops are still busy denying that Rohrabacher-Farr amendment limits them from prosecuting medical marijuana growers.  Think she'll suddenly see the light?

Congress?  It's an election year, which means that despite lots of promises to various constituent groups, virtually nothing will get done.

The presidential candidates?  On the Democratic side, Hillary is an old drug warrior who had eight years as First Lady, eight in the Senate, and four as Secretary of State to do something about it, and has never made the slightest attempt to do anything.  Sure, for enough money she'd come out in favor of it, but compared to investment banks and Silicon Valley, the marijuana industry is small potatoes.  As for Bernie, he'd probably support it as President, but he doesn't seem capable of even talking about any issue that isn't out of Class Warfare 101.

On the GOP side, many of the candidates are conservative drug warriors who are philosophically opposed to legalization.  Of the others, I suspect that they took note of the huge boost that coming out for legalization did not give to Rand Paul.  The number of Republic primary voters whose choice will depend on the candidate's position on marijuana is probably somewhere between "almost none" and "zero."  And in the general election, issues like immigration, the Islamic State, Obamacare, North Korean hydrogen bombs, and Hillary's record will trump (no pun intended) minor stuff like marijuana.  Again, enough campaign cash could change that, but it's hard to see how the industry could come up with enough to make it worthwhile. 

So I'm even less optimistic than Doug.  Of course, if Rand Paul does win the Republican nomination, and a brokered Democratic convention gives us Rocky de la Fuente, things might change.

January 6, 2016 in Decriminalization, Drug Policy, Federal Regulation, Legislation, News, Politics | Permalink | Comments (0)

Marijuana and the Rise of "Executive Federalism"

AOne of the legacies of the Obama Administration is likely to be the degree to which Congress gets increasingly excluded from national policy making. The marijuana legalization situation is an obvious example, where a statute overwhelmingly passed by Congress has been seriously undercut by Administration policy makers without any serious attempt to get the law amended.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2687205

In a forthcoming paper in the Virginia Law Review, Executive Federalism Comes to America, author Jessica Bulman-Pozen (Columbia Law) uses the Administration’s changes in federal marijuana policy as an example of a broader trend that involves a wide range of fields, including health care, environmental law, and education. According to Bulman-Pozen, presidents today find it more difficult to get Congress to enact legislation that they favor, and thus have an irresistible urge to bypass legislation in favor of executive action in cooperation with like-minded states. "[I]ntead of Congress shaping national policy and state-federal relations," she writes, "state and federal executives craft national policy, looking to state sources of authority." In the field of marijuana, for example:

Without an amendment of federal law, then, executive federalism has transformed national drug policy. States have taken the initiative, by adopting new state laws and establishing novel regulatory apparatuses, but negotiations between state and federal officials over the enforcement of state and federal law have ultimately determined the contours of today’s drug law. Such executive federalism has allowed for differences among the states even in the context of the federal Controlled Substances Act: as a matter of federal as well as state law, marijuana today is effectively legal for recreational purposes in four states, legal for medicinal purposes in nineteen additional states, and illegal in the remaining states.

The author finds some merit in this approach, which she notes reflects the current approach used in the European Union, in which policy is set by negotiation among states rather than by an elected assembly. This has, she notes, the advantages of less transparency and more room to horse trade rather than attempt to reach "grand" solutions in Congress.

I suspect that the appeal of this approach will differ depending on how much one likes the current president's agenda -- President Obama's precedents could be a blueprint for later inhabitants of the White House.  Trump or Cruz, anyone?

 

January 6, 2016 in Drug Policy, Federal Regulation, Medical Marijuana, Recreational Marijuana, State Regulation | Permalink | Comments (0)

Monday, January 4, 2016

DOJ Still Prosecuting Over Medical Marijuana

Jacob SullumNo, the federal government did not legalize medical marijuana in recent omnibus budget bill.  The bill reiterated language from last year's omnibus bill, known as the Rohrabacher-Farr Amendment, which prohibits using federal funds to prevent a state from "implementing" its medical marijuana laws.  But while various news sites trumpeted this as effectively ending the federal ban on medical marijuana, Reason's Jacob Sullum, in a piece titled The Federal Ban on Medical Marijuana Was Not Lifted, argues that the ambiguous language in the Amendment isn't stopping the Justice Department from prosecutions.

The problem with the Amendment is its language.  The Justice Department interprets it to mean that it cannot use federal funds to prosecute state employees who are involved in medical marijuana licensing, taxation, and regulation -- that is, those who are actually implementing the state program.  There seems to be a difference between implementing a law (for example, being a state employee who sets or enforces speed limits) and merely obeying a law (a driver who follows the speed limit).  If Congress had wanted to ban individual prosecutions, the most natural way to do so would have been to bar DOJ from prosecuting individuals and businesses who are licensed by state medical marijuana offices and who are in compliance with those regulations.  While it's true that the authors of the Amendment hoped it would ban individual prosecutions (and while one federal judge has said it does) the DOJ argument is, from a pure statutory construction perspective, perfectly reasonable.

Sullum concludes that even if the Amendment did bar DOJ from individual prosecutions, its effects are still very limited:

The rider has no impact in the 27 states that do not have medical marijuana laws, and it applies only to the Justice Department, so it has no effect on actions by the IRS or the Treasury Department that make it difficult for medical marijuana suppliers to pay their taxes and obtain banking services.

More fundamentally, the amendment, which has to be renewed every fiscal year, does not change the Controlled Substances Act (CSA), which continues to classify marijuana as a Schedule I substance with no legal uses. Because marijuana is still prohibited by federal law, people who grow and sell it, no matter the purpose and regardless of their status under state law, commit multiple felonies every day. If no one is trying to put them in prison right now, that is only thanks to prosecutorial forbearance that may prove temporary.

Anyone who provides services to marijuana businesses is implicated in their lawbreaking. Last week a Colorado credit union that wants to specialize in serving state-licensed marijuana businesses tried to persuade a federal judge that it is legally entitled to participate in the Federal Reserve's payment system, without which it cannot operate. The judge did not seem inclined to agree, saying, "I would be forcing the reserve bank to give a master account to a credit union that serves illegal businesses." The U.S. Postal Service announced last month that periodicals containing marijuana ads are "nonmailable," citing a CSA provision that makes it a felony to place ads promoting the purchase of illegal drugs. An accounting firm and a bonding company hired by a Colorado marijuana merchant recently paid $70,000 to settle a federal racketeering suit filed against them by a hotel whose owners were upset about plans to open a pot shop near their business.

Problems like these cannot be solved without changing marijuana's status under federal law. The Rohrbacher-Farr amendment does not do that, no matter how many hopeful headlines it generates.

January 4, 2016 in Decriminalization, Drug Policy, Federal Regulation, Law Enforcement, Legislation, Medical Marijuana, Politics | Permalink | Comments (0)

Wednesday, June 10, 2015

"House bill aims to keep D.C. sales of marijuana illegal"

. . . is the title of a new piece in the Washington Times.  The headline is a little misleading -- marijuana is now and will remain, for some considerable time, illegal everywhere in the U.S., the District of Columbia included.

What the author is referring to -- as the article itself makes clear -- is a spending bill pending in the House of Representatives that would continue prohibiting the D.C. government from enacting a tax-and-regulation system for marijuana.  Congress did this in the last spending bill, and the new rider seems to continue the plan:

    A House spending bill introduced Wednesday would block the District of Columbia from using any money "to legalize or otherwise reduce penalties" for possession of marijuana — a move that would keep the drug quasi-legal in the city.

    Voters approved a ballot initiative in 2014 that legalized possession of up to an ounce of marijuana in the District, however without legislative action by local lawmakers it will remain illegal to buy or sell the drug.

    The congressional rider will continue to block city leaders from pursuing legislation to regulate the sale and taxation of marijuana. A similar provision was included in a congressional spending plan adopted in December.

    Marijuana policy experts interpreted the fact the rider did not include more restrictive language as a sign Republican leaders were not interested in engaging in a larger fight over marijuana.

    "I’m pleasantly surprised that the rider that they did include was not more restrictive," said Dan Riffle, director of Federal Policies at the Marijuana Policy Project. "I fully expected them to include tougher language explicitly naming the law in the language of the rider."

    Tom Angell, chairman of the Marijuana Majority, is holding out hope that the  rider could be removed from the budget.

    "If there’s a floor vote on an amendment to strip this language from the bill, I think we have a really good shot of assembling a bipartisan majority of lawmakers who will stand up for letting D.C. enact its own marijuana policies without interference," Mr. Angell said.

That last prediction may be correct, but I doubt it.  Congressional Republicans may not want to stop D.C. residents from growing and smoking a little, but Weed Marts scattered around Capitol Hill isn't something many of them will want to see.  Add in the potential for D.C.'s chronically corrupt government to start trading licenses for under-the-table cash, and you've got a recipe for problems.

It's an interesting paradox.  In enacting the spending bill, Congressional Republicans aren't thwarting the will of the D.C, voters -- they've made no attempt to overturn what the voters did.  They merely seem to be thwarting the D.C. government, which wants to license, control, and profit from the trade.

June 10, 2015 in Federal Regulation, News, Recreational Marijuana, State Regulation, Taxation | Permalink | Comments (0)

Monday, June 8, 2015

Texas MMJ Physicians Probably Won't Go to Jail

The Dallas Observer has an article with the scary title, Texas' New Medical Marijuana Law Could Send Doctors to Jail.

The story under the headline doesn't really match the scare, though.  The fact is that any physician anywhere in the country who is involved in helping a patient get marijuana -- a Schedule I controlled substance -- could be thrown in jail at any time, regardless of what any state law says.  The problem with the new Texas law -- as I wrote in an op-ed in the Dallas Morning News before the bill passed -- is that its wording misses a chance to decrease the risk that physicians will lose their rights to prescribe controlled substances if they prescribe cannabis for patients.

It's extremely unlikely that a Texas physician who complies with the new state law will go to jail.  As my colleague Chris Lindsey wrote:

The question as posed is "could it?" and the answer is yes, it could. If the question were "would it?" the answer depends not on the law as it was written, but on prosecutorial discretion. Clearly it is illegal for doctors to prescribe a Schedule 1 substance, as both the federal courts and the DEA have explained in response to the first medical marijuana law passed. For all the several states that have used the term "prescribe," none of them have functioned, so we don't actually know what federal prosecutors would do - likely because doctors are not inclined to take the risk.

The problem is that "very unlikely" isn't "no chance at all," and physicians who have spend their lives building up a substantial practice treating epilepsy may not want to run even the slightest risk of jeopardizing their practices.

On the other hand, my talks with various folks here in Texas suggest that there are, in fact, some physicians who are already planning to start prescribing the low-THC product when the system is up and running.  That's good news.

June 8, 2015 in Federal Regulation, Law Enforcement, Legislation, Medical Marijuana, State Regulation | Permalink | Comments (0)

Thursday, April 23, 2015

Rohrabacher Reintroduces Bill to Require DOJ to Recognize State Marijuana Regimes

Rep. Daha Rohrabacher and ten of his colleagues have reintroduced a bill that would prevent the federal government from prosecuting people who are acting in compliance with state marijuana legalization laws.  The bill is a response to the Obama Administration's position that its operatives are not, in fact, bound by language passed in last year's appropriations bill and signed by the President, which prohibits use of federal funds to pursue those who are in compliance with state marijuana regulations.   From Matt Ferner at HuffPo:

    “The American people, through the 35 states that have liberalized laws banning either medical marijuana, marijuana in general, or cannabinoid oils, have made it clear that federal enforcers should stay out of their personal lives," Rohrabacher said in a statement Wednesday. "It’s time for restraint of the federal government’s over-aggressive weed warriors.”

        . . .

    And while a federal spending bill signed by President Barack Obama in December prohibits the Department of Justice from using funds to interfere in state-legal medical marijuana programs, the DOJ has said that it doesn't believe the congressional measure prohibits them from prosecuting individuals or businesses in violation of federal law.

    The House bill introduced by Rohrabacher would go further than those previous measures by amending the Controlled Substances Act so it would make an exception to federal law for states that have developed their own marijuana policies.

    Under the Obama administration, the Drug Enforcement Administration and several U.S. attorneys have raided hundreds of marijuana dispensaries and sent people to prison, even though they complied with state laws. According to a 2013 report from advocacy group Americans for Safe Access, the Obama administration has spent nearly $80 million each year targeting medical marijuana.

    The federal government has ignored the congressional action, also introduced by Rohrabacher, in ongoing federal asset forfeiture actions against multiple dispensaries in the San Francisco Bay Area. The congressman sent a letter to Holder slamming the DOJ's interpretation of his amendment, calling the department's interpretation "emphatically wrong."

Co-sponsoring the bill, H.R. 1940, are Reps. Justin Amash (R-Mich.), Earl Blumenauer (D-Ore.), Steve Cohen (D-Tenn.) Duncan Hunter (R-Calif.), Tom McClintock (R-Calif.), Thomas Massie (R-Ky.), Jared Polis (D-Colo.), Jan Schakowsky (D-Ill.), Dina Titus (D-Nev.), Mark Pocan (D. Wisc.), and Don Young (R-Alaska). 

The bill has been referred to the Committee on the Judiciary (where Rep. Cohen the ranking minority member of the Subcommittee on the Constitution and Civil Justice), and the Committee on Energy and Commerce (where Ms. Schakowsky is ranking minority member of the Subcommittee on Commerce, Manufacturing and Trade).

What's also interesting is the diversity of the sponsors.  Mr. Rohrabacher is a former Reagan speechwriter and a strong free-market proponent, while Mr. Amash is the head of the House Liberty Caucus and is usually regarded as a Tea Party favorite.  On the other hand, Ms. Schakowsky, Mr. Cohen, and Mr. Pocan are all active in the Congressional Progressive Caucus and are among the House's most liberal members.

That diversity, and the fact that a majority of Congress supported the restrictions that the Administration is now ignoring, means that the bill might have a much better  chance now than it did when last introduced in 2013.

 It will be interesting to see if President Obama, in light of his recent remarks, will make any effort to put Administration's support behind the bill.

April 23, 2015 in Drug Policy, Federal Regulation, Law Enforcement, Legislation, News, Politics | Permalink | Comments (0)

Wednesday, April 15, 2015

California Judge Refuses to Re-Schedule Marijuana

The federal judge who held an "unprecedented" hearing on the constitutionality of marijuana's classification on Schedule 1 of the CSA has ruled that there is no constitutional violation.  There apparently is not yet a written opinion for us to pore over.

As I've noted before, this isn't unexpected.  There are formidable legal and practical hurdles to courts who want to overrule agency determinations, and so long as any evidence supports the government's determination, it's unlikely to be overruled.  Still, it was an amazingly good effort by the lawyers and raised a lot of great issues.  Sounds like marijuana advocates will take it up to the 9th Circuit Court of Appeals.

NORML's reaction to the ruling seems to me to be dead right:

    "We applaud Judge Mueller for having the courage to hear this issue and provide it the careful consideration it deserves,” said Paul Armentano, NORML’s deputy director. “While we are disappointed with this ruling, it changes little. We always felt this had to ultimately be decided by the 9th Circuit and we have an unprecedented record for the court to consider.”

ADD:  Reading the vitriolic comments on some web sites about Judge Mueller's decision, it seems necessary to remind people that despite what it sometimes looks like, U.S. judges are not given carte blanche to overturn any laws they personally find unsupported by evidence, or which interfere with notions of "liberty."  Her decision is correct as a matter of law.  That law can be changed either by the Administration (which has been delegated power by Congress) or by Congress, but it can't be changed by one unelected woman in a black robe in Sacramento.

April 15, 2015 in Drug Policy, Federal Regulation | Permalink | Comments (0)

Tuesday, April 14, 2015

President: No Changes Likely for Marijuana at Federal Level

Not surprising, I think, given his general lack of enthusiasm on the topic . . . .  Obama Still Taking It Slow on Marijuana.  Here's a sample quote:

    There’s then the second issue of legalizing marijuana, whether it’s medical marijuana or recreational use.  There are two states in the United States that have embarked on an experiment to decriminalize or legalize marijuana — Colorado and Washington State.  And we will see how that experiment works its way through the process.

    Right now, that is not federal policy, and I do not foresee anytime soon Congress changing the law at a national basis.  But I do think that if there are states that show that they are not suddenly a magnet for additional crime, that they have a strong enough public health infrastructure to push against the potential of increased addiction, then it’s conceivable that that will spur on a national debate.  But that is going to be some time off.

The striking thing is that in areas like immigration and foreign treaties, the Administration has claimed vast powers to ignore Congress.  But on marijuana, where Congress specifically gave power to the executive branch to reschedule marijuana (18 USC § 811), the President suggests he needs to wait for Congress.  That's a pretty good indicator that despite the rhetoric he's not really interested in doing anything.

April 14, 2015 in Drug Policy, Federal Regulation | Permalink | Comments (0)

Wednesday, March 25, 2015

Marijuana and Heavy Metal Go Together Like . . .

Marijuana and heavy metal have gone together since at least the Seventies, when you rolled doobies while Led Zeppelin or Black Sabbath LPs spun on the turntable.

They still apparently get along, but now it turns out that heavy metal is often found in the marijuana that's smoked these days.  Along with other stuff that manufacturers don't want necessarily to put on the labels.  From Smithsonian.com:

    In Colorado, which made marijuana legal in November 2012, the latest results show that the pot lining store shelves is much more potent than the weed of 30 years ago. But the boost in power comes at a cost—modern marijuana mostly lacks the components touted as beneficial by medical marijuana advocates, and it is often contaminated with fungi, pesticides and heavy metals.

    “There's a stereotype, a hippy kind of mentality, that leads people to assume that growers are using natural cultivation methods and growing organically," says Andy LaFrate, founder of Charas Scientific, one of eight Colorado labs certified to test cannabis. "That's not necessarily the case at all." LaFrate presented his results this week at a meeting of the American Chemical Society (ACS) in Denver.

    LaFrate says he's been surprised at just how strong most of today's marijuana has become. His group has tested more than 600 strains of marijuana from dozens of producers. Potency tests, the only ones Colorado currently requires, looked at tetrahydrocannabinol (THC), the psychoactive compound that produces the plant's famous high. They found that modern weed contains THC levels of 18 to 30 percent—double to triple the levels that were common in buds from the 1980s. That's because growers have cross-bred plants over the years to create more powerful strains, which today tout colorful names like Bruce Banner, Skunkberry and Blue Cookies.

    Those thinking that stronger pot is always better pot might think again. Breeding for more powerful marijuana has led to the virtual absence of cannabidol (CBD), a compound being investigated for treatments to a range of ills, from anxiety and depression to schizophrenia, Huntington's disease and Alzheimer's. Much of the commercially available marijuana LaFrate's lab tested packs very little of this particular cannabinoid. “A lot of the time it's below the detection level of our equipment, or it's there at a very low concentration that we just categorize as a trace amount,” he says. Consumers specifically seeking medical benefits from cannabis-derived oils or other products may have a tough time determining how much, if any, CBD they contain, because Colorado doesn't currently require testing.

    “I've heard a lot of complaints from medical patients because somebody claims that a product has a high level of CBD, and it turns out that it actually doesn't,” LaFrate says. Colorado also does not yet require testing of marijuana for contaminants. Washington, the second state to legalize recreational marijuana, does require such testing for microbial agents like E. coli, salmonella and yeast mold, and officials there rejected about 13 percent of the marijuana products offered for sale in 2014.

    "It's pretty startling just how dirty a lot of this stuff is," LaFrate says. His team commonly found fungi and bacteria in the marijuana products they tested. But for now it's unclear just how much marijuana growers need to clean up their product. "Like ourselves, this plant is living with bacteria that are essential to its survival. In terms of microbial contamination, it's kind of hard to say what's harmful and what's not," he adds. "So the questions become: What's a safe threshold, and which contaminants do we need to be concerned about?"

    At the top of that list would be chemical contaminants in products such as concentrates, like the hard, amber-colored Shatter, which contains more than 90 percent THC, LaFrate suggests. Concentrates and edibles (think brownies) make up perhaps half of the current Colorado market. Their makers sometimes suggest that their chosen products are healthier than standard weed because they don't involve frequent smoking. But some manufacturers employ potentially harmful compounds like butane to strip the plant of most everything but THC. Tests also show that marijuana plants can draw in heavy metals from the soil in which they are grown, and concentrating THC can increase the amounts of heavy metals, pesticides or other substances that end up in a product. That means regulations for their production still need to be hammered out, LaFrate says.

    “People use all kinds of different methods to produce concentrates,” LaFrate says. “They allow people to use rubbing alcohol and heptane. But what grade of solvents are they using? Are they buying heptane on eBay, and if so, what exactly is in there? There are a whole bunch of issues to figure out, and right now there are not enough resources and really no watchdog.”

Hey, here's a thought:  Maybe the FDA could get involved.

March 25, 2015 in Drug Policy, Edibles, Federal Regulation, News, Research | Permalink | Comments (0)

Tuesday, March 24, 2015

Same anti-legalization arguments, new state

As Douglas Berman pointed out, Derek Siegle, executive director of the federally funded Ohio High Intensity Drug Trafficking Area  Program, presented a guest column piece today at cleveland.com, in which he included nearly every argument he could imagine in opposition to ending marijuana prohibition. His article presents a wonderful (if stream-of-consciousness) summary of all the main talking points currently used by HIDTA officials around the country. This seems like a great opportunity to dispel some of the dire warnings we often hear. I’m cherry picking here, since there are so many arguments, a full response rather longish. But here are some of the more commonly used, and abused, arguments I see out there.

Not that many people are arrested for marijuana possession, so the impact on the criminal justice system isn't that great.

I never really understood this argument. It seems to be saying "we could be jailing everyone, but we really aren't doing it all that much - so that's good, right?" If it is so rarely invoked, then why allow for jail time at all? It seems to suggest that even the system recognizes that jail is not an appropriate sanction. 

Of course, lots of people (particularly African Americans) are arrested for possession, so this argument might not be as compelling for those lucky contestants who win a free police escort to their local jail. But more to the point, the criminal justice system is far more than incarceration. Jailable offenses mean court appointed attorneys or private counsel, courtroom time, and the time law enforcement spends processing cases. On the back end, it can mean the loss of personal property and money in asset forfeiture proceedings, along with probation. Even technical violations of probation rules can lead to (re)arrest and incarceration, which would not show up in the claim that possession doesn't often lead to jail time. And then there is a criminal drug conviction that could show up in background checks for jobs, school, and housing for a lifetime. 

Heavy consumers may find that the accumulation of THC in their system can affect them in a variety of ways, both physically and mentally.

If this is true, it is a compelling reason to not over-consume, but there is no reason to believe that criminalizing behavior changes people’s practices. Research has shown that teen use does not go up when penalties go down. Nebraska and Mississippi removed the possibility of jail in the 1970s, and teen use is lower in those states than in neighboring Texas, which treats possession as a crime. Studies also generally show that raising penalties for use does not deter behavior, and lowering penalties does not encourage behavior. The bottom line is that while marijuana over-consumption could possibly be a health concern, making it a crime does not deter consumption nor deal with the actual concern mentioned here - health.

Marijuana is more potent than it used to be.

There is some evidence that marijuana is more potent that it was several decades ago, but unlike both narcotic medications and alcohol — which take the lives of tens of thousands of Americans every year — there are no known incidents of overdose deaths attributable to marijuana at any time.  Despite its increased potency, it is still a safer alternative than substances we already regulate and control.

Potential tax revenue will only cover about 15 percent of the collateral costs to our community: increased drug treatment, emergency room visits, crime, traffic accidents and school "dropouts."

While it is not clear where HIDTA's statistics come from, the Congressional Research Service did an analysis of the revenue potential of a federally taxed adult marijuana market, published in November 2014, which is directly on point. It found these costs manageable with a modest tax:

Economic theory suggests the efficient level of taxation is equal to marijuana’s external cost to society. Studies conducted in the United Kingdom (UK) and Canada suggest that the costs of individual marijuana consumption to society are between 12% and 28% of the costs of an individual alcohol user, and total social costs are even lower after accounting for the smaller number of marijuana users in society. Based on an economic estimate of $30 billion of net external costs for alcohol, the result is an external cost of $0.5 billion to $1.6 billion annually for marijuana. These calculations imply that an upper limit to the economically efficient tax rate could be $0.30 per marijuana cigarette (containing an average of one half of a gram of marijuana) or $16.80 per ounce. An increased number of users in a legal market would raise total costs, but not necessarily costs per unit.

We do not know what the wholesale or retail sales rate would be under the better-known legalization effort in Ohio, or if they are comparable to prices in other parts of the country for similar products. If they were, a tax rate of 15% would be considerably higher than $16.80 per ounce. 

States that do not tax medical marijuana find that their adult consumers cheat and sign up as medical marijuana patients. And most medical marijuana patients are under 40.

First of all, the “most are under 40 argument” is simply false. According to state marijuana program statistics, the average age of patients in Colorado is 42.  The average in Montana is 47, and the average in Arizona is between 40 and 50.

Secondly, in states that have both medical marijuana and adult use, whether or not people are gaming the system is a question for regulators, not an argument in favor of maintaining the criminality of marijuana use. It is worth noting that according to research by the Toronto-based Center for Addictions and Mental Health and the Canadian Centre for Substance Abuse, there are somewhere between 400,000 and 1 million self-reported medical cannabis users in Canada, or approximately 4% of the adult population, while only around 1/10 that number are registered patients. It is hard to speculate how many adult consumers would qualify as patients. But at the end of the day, it took a medical professional - not a law enforcement officer - to recommend medical use of marijuana in the first place.   

Legalization will lead to greater use by our youth.

This statement is directly contradicted by peer-reviewed studies, which show that teen use either remained constant, or more often than not, dropped in medical marijuana states. (One interesting question is whether or not teen use of alcohol went up or down after alcohol Prohibition ended. Incidents of reported alcoholism actually did drop based on medical records from the time, but I have never seen this issue researched with respect to teen use.)

Marijuana is a gateway drug.

No anti-marijuana opinion piece is complete without the gateway drug myth, which has been repeatedly debunked by those who have actually studied it, most notably in a White House-commissioned study by the Institute of Medicine in 1999. That study found that marijuana "does not appear to be a gateway drug to the extent that it is the cause or even that it is the most significant predictor of serious drug abuse.” The gateway myth confuses causation and correlation. As recently explained by Susan Weiss, a psychologist with the National Institute on Drug Abuse, “[p]eople tend to use marijuana before they use other illicit drugs, but that’s probably because it’s much more available, and it’s the drug that people are more likely to come in contact with.” Just like alcohol does not cause people to use marijuana, marijuana does not cause use of harder drugs.

I would also point out that California has allowed practically unregulated medical marijuana since 1996 without any perceptible increase in hard drug use. 22 other states and D.C. followed. Where are all the new cocaine and heroin users ushered in by these laws? But hey, it sure sounds scary. 

Accidents and fatalities on the highway will increase if marijuana is more available as it has in Colorado.

The Colorado Department of Transportation has called out HITDA for misusing state statistics in the law enforcement agencies' repeated efforts to advance this argument. In reality, very recent research by federal government’s own National Highway Traffic Safety Administration (NHTSA) found THC-positive drivers possess no elevated risk of motor vehicle accident, after adjusting for drivers’ age and gender. NHTSA acknowledges that this is the largest US-based crash risk assessment ever performed. They also note that their findings are ‘in line’ with other well-controlled studies also finding little to no increased risk.

If marijuana is medicine why isn't it prescribed?

This is one of my personal favorites. Here’s why not:

  • The Food and Drug Administration (FDA) studies and approves or rejects drugs for prescription use.
  • It doesn't study a substance for medical benefit if the drug is already scheduled as having no medical benefits - it needs to be rescheduled first as something with at least theoretical medical benefit.
  • The DEA has the authority to reschedule marijuana, thus enabling the FDA to begin study in earnest, but refuses to do so until there are studies on its medical benefit.
  • Any studies on medical benefit (or any other use) must use marijuana provided by the National Institute of Drug Abuse (NIDA).
  • NIDA has an institutional policy, imposed by Congress, to only make marijuana available for research if that research examines its harmful effects.

The lack of study is based on the federal government’s general policy to refuse to make it available for studies on its benefits – not because marijuana actually does lack medical benefit.

Crime went up in Colorado after legalization.

No, it did not. Well, some types of crime did go up, while other categories dropped. The claim that crime increased selectively reports the data in order to fit the theory, ignoring the crime rates that dramatically fell. In fact, it's probably too early to really know what has happened to crime rates, although street cops in Denver don't seem to think it made much difference.

As I mentioned in the comments section following Doug’s post, the real problem with these sorts of arguments is that they lack any solution except "maintain the status quo – or else!" All they really do is present the possible harm to society/kids/budgets/crime rates if things change. But in reality they have been changing for decades and the sky is still, well, in the sky.  If there really were horror stories to tell based on what states have been doing since reducing criminal laws since the 70’s, or adopting medical marijuana laws since the 90’s, or legalizing marijuana since 2013, we would not be arguing about hypotheticals. 

March 24, 2015 in Decriminalization, Drug Policy, Federal Regulation, Law Enforcement, Legislation, Local Regulation, Medical Marijuana, News, Politics, Recreational Marijuana, Research, State Regulation, Taxation | Permalink | Comments (0)

Tuesday, March 10, 2015

So Three U.S. Senators Introduce a Medical Marijuana Bill . . . .

By now you've heard that Senators Rand Paul (R-Ky.), Cory Booker (D-N.J.), and Kirsten Gillibrand (D-N.Y.) have introduced a federal medical marijuana bill.  It doesn't seem that the text of the "Compassionate Access, Research Expansion and Respect States (CARERS) Act" -- who comes up with these acronyms? -- is public yet, but this is a summary of what supporters are saying about the bill, via the Washington Post:

  1. Under the bill, marijuana would be downgraded one level in the Drug Enforcement Agency’s five-category drug classification system. It is currently treated, along with heroin, LSD, and ecstasy, as a Schedule 1 drug—those deemed by the DEA to have “no currently accepted medical use and a high potential for abuse.” The bill would reclassify it as a Schedule 2 drug, joining cocaine, OxyContin, Adderall and Ritalin.
  2. The bill would also make it easier to transport some marijuana between states. While medical marijuana is allowed in 23 states and D.C., another dozen states allow the drug on a much more limited basis. Those states typically allow restricted access to medicine derived from marijuana strains with low levels of THC, the drug’s primary psychoactive component, and high levels of CBD, which is believed to have medicinal benefits. But patients often have no way of accessing such drugs, so the proposed bill would ease restrictions on inter-state transport to facilitate access to such medicine.
  3. The bill would also make it easier for banks to provide services to the marijuana industry as they do to any other.
  4. It would reform the National Institute on Drug Abuse in order to broaden access to cannabis for research purposes.
  5. And it would allow doctors working for the Department of Veterans Affairs in states where medical marijuana is legal to recommend it for certain conditions.

Many observers think the bill is likely D.O.A., given the priorities of both Republican and Democratic leadership and the Obama Administration.  But when dealing with a logjam it's always good to see the first log start to shift, even a little bit. 

March 10, 2015 in Drug Policy, Federal Regulation, Legislation | Permalink | Comments (0)

Monday, March 9, 2015

Why Most CBD Laws Fail

2014 was the year conservative state legislators discovered cannabidiol, or CBD, and rushed to pass nearly a dozen laws intended to allow access. 2015 will likely see the passage of at least a few more. Unfortunately, with the exception of one state, these laws are proving to be utterly dysfunctional and end up betraying the hopes of the seriously ill patients whom they are intended to help. 

CBD is one of many active ingredients in marijuana that shows tremendous promise for its medical applications. Most notably, for some people it seems to contribute to a huge reduction in the number and severity of seizures when traditional medicines fall short. As a result, CBD has become very popular in some circles — particularly among parents — as something of a miracle cure. 

It also became a miracle cure for conservative legislators, who are under increasing pressure to pass medical marijuana laws. While there is more and more evidence that marijuana really does have practical medical applications, conservative states really can’t get over the fact that marijuana is used recreationally too. This rankles. Add to that the association with damned dirty hippies, and conservative legislators in Tennessee, Alabama, Kentucky, Mississippi, the Carolinas, Utah, Iowa, and other red or dark purple states find the whole medical marijuana thing too icky to seriously contemplate. 

Enter CBD, which doesn’t lead to euphoric effects. Helping sick kids without opening a back door to the subculture getting access to legal pot is a win-win as far as these states are concerned. It seems to provide a simple solution to a complicated problem. One state passed a CBD law in 2013, with 10 more additions in 2014. Our first 2015 addition to the club is Virginia.   

These laws go by different names, including “high CBD,” “low THC,” “hemp oil,” “cannabis oil,” and others. The only real naming convention is that they rarely use the word “marijuana.” But like a lot of simple solutions to complicated problems, there’s a catch: almost none of them work. 

There are several reasons for this, and it is important for those who advocate for these laws to know and take measures against their nearly perfect record of dysfunction. Here is my top ten list, which I pared down to five because ten is actually a lot. 

  1. CBD cannot be prescribed by a doctor. Like the plant from which it comes, CBD is a schedule 1 substance and a prescription from a doctor for it is illegal. Language which requires it to be prescribed (de facto or otherwise) renders the law moot because of federal law. And of course doctors can’t distribute it either. (Alabama, Florida, Kentucky, Wisconsin)
  2. Colleges won’t grow marijuana. Some of these laws require post secondary schools to cultivate marijuana plants used to produce CBD. But since colleges and universities are heavily dependent on federal government dollars for research and student aid, they won’t go there. While technically the DEA could authorize it, they have only ever allowed one university to do it: the University of Mississippi. (Tennessee, Utah)
  3. Patients cannot legally transport CBD across state lines. Some of these laws do not allow in-state cultivation or distribution, and either imply or advise patients to go somewhere else and bring it back home. The federal government has a catchy phrase for this, called “interstate trafficking of a controlled substance.” It is frowned upon.  (Iowa, North Carolina, maybe South Carolina, Wisconsin)
  4. States cannot violate federal law. CBD laws that require the state to be in the business of cultivation or distribution are moot because it requires a state to break federal law. It’s one thing to regulate (probably not a direct conflict), it’s another to grow marijuana and distribute it. (Nearly Missouri until amended at the last second, Utah)
  5. Affirmative defense bills suck. Sometimes we see bills that say that if a person gets in trouble, they can get out of it if they meet certain criteria. But first there is an arrest, one or more criminal charges, possible jail, press coverage, lawyers, lost jobs, and no infrastructure to actually get CBD other than breaking a series of laws. They are no solution at all. (Alabama, Mississippi, Virginia)

The one state that got it right was Missouri. How did they do it? Well, they listened to the organizations that have been passing workable medical marijuana laws for a long time now. Then they calibrated the regulatory structure to allow only a minimal amount of THC. Smart. Kansas is now considering a similar approach. Texas? Not so much. They want doctors to prescribe it and the bill sponsor is now refusing to consider any amendment. <Sigh.>    

While there is some entertainment value in tittering behind our collective hands at legislators who think they know better and don’t, there are significant problems. First, they distract from comprehensive bills that actually do work – not only for the seizure patients, but for the other 98% of the patients in the state who could benefit from larger amounts of THC. Second, they are likely to gum up the legislative process for at least a second session while legislators try and figure out what to do to fix these broken laws before they consider anything broader. And finally, they leave those who urgently need CBD out in the cold while legislators proclaim victory and return to finding ways to make it harder for Democrats to vote. 

Most of the national groups continue to push for comprehensive medical marijuana laws, but for those states in which they are not politically possible, I hope they can learn the lesson from their peers and then look to Missouri. Because where CBD laws are concerned, Missouri actually does turn out to be the Show Me State. 

March 9, 2015 in Drug Policy, Federal Regulation, Law Enforcement, Legislation, Medical Marijuana, Really Stupid, State Regulation | Permalink | Comments (0)

Friday, March 6, 2015

Colorado Sheriffs: Which Constitution Should We Follow?

Chris Lindsey noted yesterday a lawsuit by sheriffs in three states asking a federal court in Denver to declare Colorado's legalized cannabis regime unconstitutional.   The claims by sheriffs from Kansas and Nebraska make much the same claims as those made in the pending Nebraska v. Oklahoma lawsuit pending in the U.S. Supreme Court, that their jobs are made more difficult by the flow of quasi-legal weed from the Centennial State.

The claim by the Colorado sheriffs, however, is different, and in some respects more interesting.  They claim that they have taken oaths of offices to protect and defend the constitutions both of the United States and of Colorado -- and Colorado's refusal to follow federal law forces them to violate their obligation to enforce the law of the land.

Whether there is a cause of action here or not is outside my areas of expertise.  It is very definitely within the expertise of Doug Berman at MLP&R, so here's his take:

I fully understand why various law enforcement officials, who seemingly enjoy and benefit from waging a drug war without many limitations or uncertainties, are struggling to deal with the new legal regimes in place in Colorado and other marijuana reform jurisdictions. Indeed, I am especially sympathetic to those sheriffs in non-reform jurisdictions which border reform regions because they have to deal with unique spill-over challenges. But this is a problem that has been long endured by localities with lots of other potential dangerous but legal products like alcohol and guns, and I find a bit troublesome that in this context law enforcement officials are so quick to turn to make novel claims in courts to vent their frustrations with what is really just a small pull-back in the modern drug war.

I don't disagree with this, although I suspect I'm more sympathetic to the Colorado sheriffs.  Most of them genuinely believe that marijuana is bad and the War on Drugs is necessary.  And I suspect they've seen a whole lot more of the actual harm marijuana can cause than most of us.  I believe they're wrong because they tend to underestimate drastically the harm caused by the War on Drugs itself, but that's an honest disagreement.

And I sense the discomfort with being told not to enforce a federal law when they see it violated before their eyes.  I'm a lawyer, so I'm obliged by my own oath to support the Constitution and to respect federal law.  When I'm asked to help a business violate federal law, my own ethical sensors kick in, although I have decided that it's appropriate to do so given the current situation.

Nevertheless, it's a bad situation when law enforcement officers are forced to ignore violations of the law and lawyers have to decide whether to cooperate in illegal activities.  Necessary, given the current situation.  But still bad.

That said, Doug says the claim is "novel," which I take it means that it's not likely to go anywhere.

March 6, 2015 in Drug Policy, Federal Regulation, Law Enforcement, State Regulation | Permalink | Comments (0)

Wednesday, March 4, 2015

When Libertarian Ideals and Marijuana Laws Collide

There are fair weather libertarians, and then there are Texas Libertarians. Rep. David Simpson is most certainly the latter. As noted by Prof. Snyder, he has presented a bill in Texas that utterly removes penalties for marijuana. All of them, for everyone. No regulatory system, either.

The press around the bill so far has centered on his reasons for doing so: God made the plant and put it here, why do we need to micro-manage it? (I would add to that argument by mentioning that for those of you who believe in a Creator, God also built our brains with cannabinoid receptors and then placed exactly one plant on Earth that just so happens to make cannabinoids. And our government has banned it.)

But I applaud Rep. Simpson for doing something few “libertarians” are really willing to do – apply his unapologetic ideals to marijuana. For many, libertarianism is really just a way to frame traditional conservative talking points. It’s easy to hate Obamacare and claim it’s because of libertarian views if enough voters in your district hate President Obama.

But step outside the traditional conservative talking points, and those very same ideals can quickly disappear. Take for instance a popular refrain of libertarians - state’s rights. Recently, former Oklahoma Attorney General Scott Pruitt, self-proclaimed champion of state’s rights, lobbed a hand grenade into the legalization debate when he joined with his counterpart in Nebraska to file a lawsuit with SCOTUS intended to block Colorado from proceeding with its adult market. Here is a state’s rights advocate, jumping up and down on the playground demanding that the federal government go make Colorado cut it out. Who cares what the citizens of Colorado voted for. And still support.

And then there is Arizona Rep. Bob Thorpe, another one of these so-called libertarians, who saw a ballot initiative coming in 2016 that would impose a legalization system like Colorado’s. He presented a bill this year that would require that voter initiatives designed to establish state laws that are inconsistent with federal law can only pass with a 75% or greater majority vote. It was so obviously inconsistent with his own platform he was even called out by reporters in the course of announcing the bill.

Good ol’ Cannabis sativa L. It sure does have a powerful effect. For some, it gets them high. For others, it can alleviate pain or help them sleep. For fair weather libertarians, it can make them forget their talking points. Thank you Rep. Simpson for reminding us what it really means to be libertarian.  

March 4, 2015 in Decriminalization, Drug Policy, Federal Regulation, Local Regulation, Medical Marijuana, Politics, Recreational Marijuana, State Regulation, Voter Initiatives | Permalink | Comments (0)

Tuesday, March 3, 2015

Top Cop in D.C. Weighs in on New Marijuana Law

In journalism, the phrase “man bites dog” refers to the notion that the unusual is more likely to receive coverage than the ordinary. Today’s man bites dog story comes from the District of Columbia, where the chief of police voiced her support for the district’s new law that that allows adults to be in possession of up to two ounces of marijuana, give one of those ounces to another adult, and grow up to six plants at home. The law went into effect February 26. Today, quotes attributed to Police Chief Cathy Lanier include such zingers as “It’s a small change,” “We’ve embraced it,” and “No big deal.”  

But of course it is a very big deal. The nation’s capital - the seat of the federal government - now allows individuals to possess, grow and distribute (free of charge at least) a substance that is illegal under federal law. And we don’t often hear law enforcement take that sort of thing in stride. 

I say we don’t often hear it, because in jurisdictions such as Colorado and Washington, law enforcement has generally found that significantly changing marijuana laws has not produced the swarm of locusts or rivers of blood we were promised. 

Now that gay marriage is a reality in many parts of the country, stories on gay marriage just won’t be news much longer. It is heartening to think that as more jurisdictions move away from failed marijuana policies, and law enforcement finally gives a collective shrug over the end of prohibition, these types of stories won’t be news either. 

March 3, 2015 in Decriminalization, Drug Policy, Federal Regulation, Law Enforcement, Local Regulation, News, Recreational Marijuana | Permalink | Comments (0)

Monday, February 16, 2015

Can Nonprofits Get Marijuana Licenses and Tax Breaks?

If for-profit marijuana businesses face serious tax penalties because they can't deduct certain expenses, what about nonprofits?  Should nonprofits get federal 501(c) tax status if they engage in things that are illegal under federal law?

I don't know, but that's a question raised by this story out of Illinois, where a for-profit business is suing to stop a nonprofit from exploiting one of the state's licenses, claiming that it's improper for a tax-exempt group to get a sales monopoly on an illegal product. 

    A medical marijuana business is facing what's believed to be the first legal challenge in Illinois to its license to operate..

    A downstate corporation that lost out on the license argues that Shelby County Community Services Inc. is ineligible to cultivate medical marijuana because it is a not-for-profit entity, and therefore must pledge not to violate federal law.

    A state law that took effect last year authorizes production and distribution of marijuana for patients with any of about three dozen illnesses. It remains illegal under federal law, though federal authorities have stated generally that they won't prosecute businesses that comply with state laws.

    Shiloh Agronomics LLC, which is challenging the license, was formed by owners of a family farm in downstate Edgar County, including former County Board Chairman and Sheriff James Sullivan, according to his son, Chicago attorney Jude Sullivan. It sought the cultivation license awarded to Shelby County Community Services in District 10, which includes Champaign and nearby counties.

    Shiloh Agronomic's attorney, Sean Britton, sent a letter to the Illinois attorney general on Monday asking the office to take action to revoke the license, a precursor to the company pursuing the matter in court. The attorney general's office did not immediately comment Tuesday on the request.

    "It seems to me the state shouldn't be able to create a monopoly for someone who is tax-subsidized," Jude Sullivan said.

    Shelby County Community Services in Shelbyville offers residential and out-patient programs for developmentally disabled individuals. Formed in 1975, it puts its clients to work at its own plastic bag and paper plate manufacturing plants, and hopes to do the same with the cultivation center, Executive Director Tom Colclasure said.

    The agency also counsels substance abusers, but Colclasure sees no contradiction in that, emphasizing that medical marijuana is tightly controlled and only for therapeutic purposes for patients who are authorized by doctors. The cultivation center would also help fund the agency's $14 million annual budget in the face of tight state funding, he said.

    "That was our motivation," Colclasure said. "It met with our mission of helping people and also provide jobs to people with disabilities."

    In some states, the laws encourage not-for-profits to run medical marijuana facilities, to avoid the appearance of the industry being driven by profits, said Chris Lindsey, legislative analyst for the Marijuana Policy Project, a lobbying group.

    Internal Revenue Service regulations state: "If (a not-for-profit) organization engages in illegal acts that are a substantial part of its activities, it does not qualify for (tax) exemption."

    However, while medical marijuana businesses generally do not qualify for not-for-profit tax exempt status, that is a separate issue from qualifying to receive a license to operate, according to Robert McVay, an attorney who specializes in marijuana law.

    Many not-for-profits operate medical marijuana licenses in other states, he said, though they typically must pay exorbitant taxes because the IRS does not allow standard business deductions for federally prohibited activities.

This probably won't be the last challenge, given that many states give strong preferences to nonprofits in the medical marijuana arena.  One obvious question is whether a 501(c) that sells marijuana loses the tax-deductibility of its contributions.

February 16, 2015 in Federal Regulation, State Regulation, Taxation | Permalink | Comments (0)

Wednesday, February 11, 2015

D.C. Won't Go Forward With Marijuana Regulations

Officials in the District of Columbia won't go forward with plans to develop a scheme for regulating and taxing newly legalized marijuana in the nation's capital.  That's according to reports in the Washington Post.

Council members had planned a series of hearings with experts from around the country, but an opinion by D.C. Attorney General Karl Racine said that doing so might well put District leaders in jeopardy of punishment (including jail time) under the federal Anti-Deficiency Act.  (The Act prohibits persons from spending appropriated funds on things that Congress has prohibited.) 

General Racine's opinion conflicts with one earlier given to the Council by its own general counsel, David Zvenyach.  At issue is the language from section 809 of last year's Cromnibus funding bill, which provides:

    (a) None of the Federal funds contained in this Act may be used to enact or carry out any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance under the Controlled Substances Act or any tetrahydrocannabinols derivative.

    (b) None of the funds contained in this Act may be used to enact any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance under the Controlled Substances Act or any tetrahydrocannabinols derivative for recreational purposes.

The question is whether introducing bills, holding and preparing the regulations count as part of the "enactment" process (as General Racine suggests) or whether the prohibition is only on the final "enactment" itself,  not on the preliminaries (as Mr. Zvenyach argues).

It's a nice little question of statutory interpretation, but if the penalty for being wrong was two years in jail, I'd probably be conservative and adopt the A.G.'s view.  So I'm not surprised that the Council has decided to back off.

February 11, 2015 in Federal Regulation, Legislation, State Regulation | Permalink | Comments (0)