Tuesday, August 22, 2017
"Regulating Marijuana Advertising and Marketing to Promote Public Health: Navigating the Constitutional Minefield"
The title of this post is the title of this notable new article authored by Leslie Gielow Jacobs that is available via SSRN. Here is the abstract:
Marijuana legalization, at least to some extent, is now a reality in half of the United States. This shift reflects the good reasons to decriminalize marijuana use and to legalize and regularize its cultivation, distribution and retail sale. Legalization also introduces substantial public health dangers and injects the potent tool of advertising and marketing to promote marijuana into the struggle for persuasive influence between sellers aimed at increasing profits and regulators trying to minimize the damages to public health. But limits on advertising and marketing to reduce adverse public health consequences are difficult to impose because of the increasingly aggressive interpretations of the protections for advertising articulated by the Supreme Court. Regulators must understand the types of regulations that will provoke constitutional challenges, and how a court’s analysis of each type of regulation will proceed.
This Article is the first to provide detailed analysis and concrete, step-by-step guidance for regulators seeking to balance the electoral mandate to provide access to marijuana products with their ongoing and urgent responsibilities to protect public health. It provides regulators with the knowledge they need to understand the constitutional implications of a wide range of options, and to make choices that implement their public health objectives without provoking expensive legal challenges.
Monday, August 21, 2017
Only a couple of years ago, it seemed relatively rare to find lawyers in big firms with significant marijuana practices and rarer still to hear those lawyers actively discussing their marijuana work. Against that backdrop, this new Philadelphia Inquirer article provides another example of the changing marijuana times. The piece is headlined "Philly-area law firms bullish on cannabis despite grave legal risks," and here are excerpts:
Lawyers going into the marijuana business face potential arrest, disbarment, and even imprisonment. But they’re gambling that the smoke will clear, and the federal government will eventually legalize cannabis. Many of Philadelphia’s biggest firms — Duane Morris, Fox Rothschild, and Cozen O’Connor among them — have set up practices recently to serve cannabis growers, dispensaries, and related entrepreneurs as the state aggressively gears up to make medical marijuana available to patients by early 2018. Last month, Pepper Hamilton “formalized” its marijuana industry group.
“We saw it as a growth opportunity,” said Joseph C. Bedwick, partner at Cozen O’Connor. But the continuing disconnect between state and federal laws, and the Trump administration’s antipathy toward marijuana, has created what Bedwick calls “a big ball of uncertainty.”
“At any moment, theoretically, they can say, ‘We’re going to crack down on this,’ ” Bedwick said. And with so many attorneys getting into the cannabis game, some doubt there will be enough work to sustain those practices....
“You have a hatchet over your head with the federal government,” said Andrew B. Sacks, chairman of the medical marijuana and hemp department at Sacks Weston Diamond, which was among the first to represent marijuana-related businesses.
Joshua Horn, co-chair of the cannabis practice at Fox Rothschild, is optimistic. He said it’s unlikely the feds would shut down state-legal medical marijuana operations, given the current status of the law, guidance from the DOJ, and budgetary constraints. “They don’t have the manpower, they don’t have the budget, and popular will is strongly against it,” Horn said. “More than 90 percent of the people in the commonwealth support the medical marijuana program, and Pennsylvania isn’t the most liberal state.”
Few attorneys have been prosecuted under federal or local laws. However, California attorney Jessica McElfresh — who has represented cannabis clients for more than seven years — was arrested at gunpoint in May. The San Diego district attorney charged McElfresh on multiple felony counts, alleging she helped hide evidence of a hash oil manufacturing facility. It seized her client files and issued a warrant for all of McElfresh’s cellphone location data for three years, along with her calendar, address book contacts, and internet searches. “There have been attorneys that have been charged, but they participated more directly in the businesses,” McElfresh said last week. “There’s never been one like mine.”
Philadelphia attorney Steven Schain of the Hoban Law Group said he considers the San Diego case chilling. “It represents a landmine in all our paths,” Schain said. “Sizzle aside, marijuana remains 100 percent illegal under federal law. Any real cannabis lawyer is exposed to massive federal and civil prosecution. But we’re willing to take the risk.”
Boutique firms were the the first to represent aspiring cannabis clients in the state, said Sacks. As trailblazers, they wrestled early on with the dilemmas created by the tension between the conflicting state and federal statutes.... Though the boutiques ... were the first to have a toehold in the state, large national firms soon appeared.
Of the 12 companies chosen by the state Department of Health to grow cannabis, six were represented by out-of-state firms. That hasn’t dampened the enthusiasm of attorneys wanting to get into the cannabis game. More than 145 lawyers have signed on to serve on marijuana committees run by the Pennsylvania and Philadelphia Bar Associations, said Sacks, who chairs those committees.
Hoban’s Schain doubts there’s enough work to warrant so many players. “Legalized marijuana is suffused with irrational exuberance,” Schain said. “Everyone is convinced that somebody is making loads of money and trying to get a piece of the action. But if you’ve been in the industry more than 10 minutes, you know the reality is quite different.”
But Bedwick, of Cozen O’Connor, said that his firm was in for the long game and that many clients are related tangentially to the cannabis industry. They’re real estate owners, investors, lighting manufacturers, builders, and security companies. Those entrepreneurs are looking for advice on issues that include banking, taxation, intellectual property, and labor law.
Friday, August 18, 2017
Though dated July 2017, I believe the National Highway Traffic Safety Administration (NHTSA) has only just this week released this lengthy report titled "Marijuana-Impaired Driving A Report to Congress." The report's introduction explains that it "has been prepared in response to a requirement in Section 4008 (Marijuana-Impaired Driving) of the Fixing America’s Surface Transportation Act (FAST Act)," and it highlights the limited research on marijuana-impaired driving and continued challenges:
Unlike alcohol, marijuana is classified as a Schedule I substance under the Controlled Substances Act. A much smaller number of studies have looked at the impairing effects of marijuana use on driving-related skills. Less is known about these effects due in part to the typical differences in research methods, tasks, subjects and dosing that are used. A clearer understanding of the effects of marijuana use will take additional time as more research is conducted. The extra precautions associated with conducting research on a Schedule I drug may contribute to this relative lack of research. For example, these include the need for a government license to obtain, store and use marijuana, the security requirements for storage, and documentation requirements and disposal requirements.
While fewer studies have examined the relationship between THC blood levels and degree of impairment, in those studies that have been conducted the consistent finding is that the level of THC in the blood and the degree of impairment do not appear to be closely related. Peak impairment does not occur when THC concentration in the blood is at or near peak levels. Peak THC level can occur when low impairment is measured, and high impairment can be measured when THC level is low. Thus, in contrast to the situation with alcohol, someone can show little or no impairment at a THC level at which someone else may show a greater degree of impairment....
There is a need to improve data collection regarding the prevalence and effects of marijuana-impaired driving. NHTSA has collected some data on the prevalence of marijuana use by drivers on a national basis, though NHTSA has been prohibited from continuing to collect this information. In contrast, there is little State level data about the prevalence of use of marijuana by drivers being collected. As States continue to change their laws regarding marijuana use in general and as it relates to driving, this lack of State level data prevents evaluation of the effect of policy changes on driver behavior, including willingness to drive while under the influence of marijuana, as well as the effect of marijuana on crashes, deaths and injuries.
August 18, 2017 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Data and Research, Recreational Marijuana Data and Research | Permalink | Comments (1)
Monday, August 14, 2017
Federal district court in Connecticut rejects preemption claims by employer sued after rescinding employment offer to medical marijuana user
I noted in this post last month the significant ruling of the Massachusetts Supreme Judicial Court in Barbuto v. Advantage Sales and Marketing, LLC, No. SJC 12226 (Mass. July 17, 2017) (available here) allowing a state-law-based civil discrimination lawsuit to proceed after an lawful medical marijuana user has been fired for a positive drug test. This past week, as detailed in this helpful opinion summary, a similar type of decision was handed down by a federal district judge in Connecticut in Noffsinger v. SSC Niantic Operating Co, LLC, No. 3:16-cv-01938 (D. Conn. Aug 8, 2017) (available here). Here are the basics:
In an issue of first impression, a federal district court in Connecticut found an implied private right of action under Connecticut’s Palliative Use of Marijuana Act (PUMA) and further held that federal law did not preempt the PUMA discrimination claim of a registered medical marijuana user whose job offer was rescinded after she tested positive, even though she explained to the employer that she only took synthetic cannabis at bedtime and was not under the influence at work. In finding no preemption, the court explained the federal Controlled Substances Act (CSA) does not regulate the employment relationship and that the ADA does not regulate non-workplace activity.
Here is how the opinion in Noffsinger gets started, along with a key passage from the heart of the ruling:
Connecticut is one of a growing number of States to allow the use of marijuana for medicinal purposes. Connecticut likewise bars employers from firing or refusing to hire an employee who uses medical marijuana in compliance with the requirements of Connecticut law. By contrast, federal law categorically prohibits the use of marijuana even for medical purposes.
This lawsuit calls upon me to decide if federal law preempts Connecticut law. In particular, I must decide if federal law precludes enforcement of a Connecticut law that prohibits employers from firing or refusing to hire someone who uses marijuana for medicinal purposes. I conclude that the answer to that question is “no” and that a plaintiff who uses marijuana for medicinal purposes in compliance with Connecticut law may maintain a cause of action against an employer who refuses to employ her for this reason. Accordingly, I will largely deny defendant’s motion to dismiss this lawsuit....
Although most cases dealing with the CSA’s preemption of state medical marijuana statutes have come out in favor of employers, these cases have not concerned statutes with specific anti-discrimination provisions; courts and commentators alike have suggested that a statute that clearly and explicitly provided employment protections for medical marijuana users could lead to a different result. Indeed, one court recently held that the CSA does not preempt the anti-discrimination-in-employment provision of Rhode Island’s medical marijuana statute. See Callaghan v. Darlington Fabrics Corp., 2017 WL 2321181, at *13–14 (R.I. Super. 2017).
Tuesday, July 18, 2017
Massachusetts top court issues major ruling allowing medical marijuana user to pursue lawsuit against employer after her termination
As reported in this Boston Globe piece, headlined "Ruling means Mass. companies can’t fire workers for medical marijuana," the top court in Massachusetts issued a significant employment law ruling yesterday on behalf of a medical marijuana patient. Here are the basics from the press report:
Massachusetts companies cannot fire employees who have a prescription for medical marijuana simply because they use the drug, the state’s highest court ruled Monday, rejecting employers’ arguments that they could summarily enforce strict no-drug policies against such patients.
Supreme Judicial Court Chief Justice Ralph D. Gants said a California sales and marketing firm discriminated against an employee of its Massachusetts operation who uses marijuana to treat Crohn’s disease when it fired her for flunking a drug test.
In Massachusetts, Gants wrote, “the use and possession of medically prescribed marijuana by a qualifying patient is as lawful as the use and possession of any other prescribed medication.” Therefore, he said, employers can’t use blanket anti-marijuana policies to dismiss workers whose doctors have prescribed the drug to treat their illnesses.
Instead, antidiscrimination laws require companies to attempt to negotiate a mutually acceptable arrangement with each medical marijuana patient they employ, such as exploring alternative medications or allowing use of the drug only outside of work hours. The ruling overturned a lower court’s dismissal of a lawsuit against brought in 2015 by Cristina Barbuto of Brewster, who was fired by Advantage Sales and Marketing after just one day on the job because she tested positive for marijuana.
Barbuto said she told the company during interviews that she uses cannabis several nights a week — not before or during work hours — to treat her Crohn’s disease, a chronic inflammatory disorder that affects the digestive tract and can inhibit appetites. She said the local hiring manager told her it would not be a problem, and that she was blindsided by her dismissal....
Advocates called the ruling long overdue, and said they expected that other medical marijuana patients who had been fired over their use of the drug would soon contest their dismissals. “We are thrilled that the Supreme Judicial Court of Massachusetts has ruled in favor of compassion for people that use medical marijuana for a range of debilitating conditions,” the Massachusetts Patient Advocacy Alliance, which sponsored the state’s successful 2012 medical marijuana ballot initiative, said in a prepared statement.
A business group that interceded in the case, however, said the ruling would especially hurt small companies that don’t have the resources or expertise to negotiate accommodations for marijuana patients. “This is opening small business owners up to a ton of litigation,” said Karen Harned, the executive director of the National Federation of Independent Business Small Business Legal Center, which filed a brief in support of Advantage. “It’s making their lives harder because they can no longer have a clear drug-free-workplace policy.”
The decision doesn’t mean employers can never fire a patient for using marijuana medically; firms that contract with the federal government, for example, or where workers operate heavy machinery, could argue that accommodating their employees’ use of the drug constitutes an “undue hardship.” But the ruling puts the burden on employers to prove they cannot accommodate medical marijuana patients because their cannabis use impairs their ability to do required work, endangers public safety, or otherwise demonstrably endangers the business, Gants wrote.
“Employers can still prevail,” said Chris Feudo, an attorney at Foley Hoag who represents companies in employment disputes. “Employees aren’t entitled to the accommodation they want; they’re entitled to a reasonable accommodation — and sometimes, there isn’t one.” Still, Feudo said, the ruling will have “really wide implications.”
The full ruling in Barbuto v. Advantage Sales and Marketing, LLC, No. SJC 12226 (Mass. July 17, 2017), is available at this link. And it gets started this way:
In 2012, Massachusetts voters approved the initiative petition entitled, "An Act for the humanitarian medical use of marijuana," St. 2012, c. 369 (medical marijuana act or act), whose stated purpose is "that there should be no punishment under state law for qualifying patients . . . for the medical use of marijuana." Id. at § 1. The issue on appeal is whether a qualifying patient who has been terminated from her employment because she tested positive for marijuana as a result of her lawful medical use of marijuana has a civil remedy against her employer. We conclude that the plaintiff may seek a remedy through claims of handicap discrimination in violation of G. L. c. 151B, and therefore reverse the dismissal of the plaintiff's discrimination claims. We also conclude that there is no implied statutory private cause of action under the medical marijuana act and that the plaintiff has failed to state a claim for wrongful termination in violation of public policy, and therefore affirm the dismissal of those claims.
Saturday, July 8, 2017
"State of Emergency"!?!: Nevada dispensaries struggling to keep up with demand after first week of recreational sales
As reported in this USA Today article, headlined "Nevada dispensaries running out of marijuana," recreational marijuana sales are off to quite a start in the Silver State and that is actually creating a significant problem:
Nevada dispensaries licensed to sell recreational marijuana are running out of pot less than a week after the legal market came to life, according to the state Department of Taxation.
On Friday, taxation officials announced that Gov. Brian Sandoval had endorsed the department's "statement of emergency," allowing state officials to consider adopting an emergency marijuana regulation that could alleviate the shortage. The Nevada Tax Commission will vote on the regulation Thursday.
"Based on reports of adult-use marijuana sales already far exceeding the industry’s expectations at the state’s 47 licensed retail marijuana stores, and the reality that many stores are running out of inventory, the Department must address the lack of distributors immediately. Some establishments report the need for delivery within the next several days," said department spokeswoman Stephanie Klapstein in an email.
The regulation would allow the department to consider a larger pool of applicants for distribution licenses, licenses that permit the transport of recreational marijuana from cultivation and packaging facilities to the dispensaries.
When the state law legalizing recreational marijuana was passed in November, wholesale alcohol distributors were promised exclusive rights to transport wholesale marijuana for the first 18 months of legal sales. The department, however, has run into multiple roadblocks in reviewing the seven applications that they have received as of Friday.
"We continue to work with the liquor wholesalers who have applied for distribution licenses, but most don’t yet meet the requirements that would allow us to license them. Even as we attempted to schedule the final facility inspection for one of the applicants this week, they told us their facility was not ready and declined the inspection. As of mid-day Friday, not one distribution license has been issued," Klapstein said....
Now that any marijuana dispensary licensed to sell recreational marijuana must receive all product — both recreational and medical — from a distributor licensed to transport recreational marijuana, many of them are stuck with dwindling supply. "The business owners in this industry have invested hundreds of millions of dollars to build facilities across the state," Klapstein said. “They have hired and trained thousands of additional employees to meet the demands of the market. Unless the issue with distributor licensing is resolved quickly, the inability to deliver product to retail stores will result in many of these people losing their jobs and will bring this nascent market to a grinding halt. A halt in this market will lead to a hole in the state’s school budget."
While the department does not plan to release any numbers on state tax revenue from the industry until late September, the Nevada Dispensary Association earlier this week estimated that dispensaries made about $3 million in sales and the state made about $1 million in tax revenue between Saturday and Tuesday. Revenue collected from the 15% cultivation tax goes toward schools, while the 10% sales tax revenue goes toward the state's rainy day fund, which can be used for any number of expenditures.
Friday, July 7, 2017
The title of this post is the headline of this interesting news report from The Last Frontier. Here are the details:
Some Alaska marijuana shops have suddenly found themselves with one less outlet for advertising this week. Owners and employees of at least six marijuana retail stores in the state said that within the past week, their Facebook pages were either taken down or entirely deleted by the tech company.
At Arctic Herbery, owner Bryant Thorp said his shop's page was shut down Friday or Saturday. Another Anchorage shop, Enlighten Alaska, also had its page removed from the site about a week ago, said co-owner Jane Stinson. It also happened at Frozen Budz and Pakalolo Supply Co., both in Fairbanks, and Dankorage and Alaska Fireweed in Anchorage. “(Facebook) has been huge for us. That’s where almost all our advertising comes from,” Thorp said. He’s had issues with his Facebook page for a few months and has since focused on boosting his following on Twitter and Instagram.
Facebook has a set of community standards that dictates what is and isn't allowed on the platform, said spokeswoman Ruchika Budhraja. “Anyone can report content to us if they think it violates standards,” she said. “Our team reviews reports to determine whether there was a violation.”
On a page explaining those community standards, under a section called "regulated goods," Facebook says it prohibits "any attempts by private individuals to purchase, sell, or trade prescription drugs, marijuana, firearms or ammunition." Marijuana businesses generally have to use caution in advertising, in part because state guidelines for pot ads are somewhat unclear, Alaska Dispatch News reported last year. Facebook — along with other social media platforms — is one of the biggest places for getting the word out about their businesses.
Jana Weltzin, an Anchorage-based attorney who specializes in the marijuana industry, said this is hardly the first time cannabis companies have had issues with Facebook. “This is not a new thing,” she said, adding that Colorado pot businesses dealt with a similar issue last year. “If you’re doing something that’s illegal and Facebook knows that, they try to not promote that. It’s still illegal under federal law.”...
The timing of the Facebook page removals seemed odd to some people in the local marijuana industry, too. The pages went dark around the same time Facebook CEO Mark Zuckerberg was visiting Alaska for the Fourth of July weekend. "That's what kills me," said Cary Carrigan, executive director of the Alaska Marijuana Industry Association. "Zuckerberg shows up and Facebook pages are down."
"It's a weird coincidence, that's for sure," said Rich Beezley, chief operating officer at AK Fuzzy Budz in Anchorage. He said the shop's Facebook page has been shut down four times in the past month, but didn't have an issue this past weekend. He speculated that might be because the shop was closed for the holiday and wasn't posting on Facebook. "We're just in fear we're going to be shut down too," he said....
At Pakalolo in Fairbanks, co-owner Keenan Hollister said he got a notice on the Fourth of July that his company's page was taken down. “We face challenges every day running a legal cannabis business, but this is a disappointing one,” he said. “It feels like an attack on commerce in our state.”...
Some retail shops around the state don't appear to be affected. Facebook pages for Herbal Outfitters in Valdez, The Herbal Cache in Girdwood and Rainforest Farms in Juneau were still up Thursday afternoon.
This effective on-line article from a few months ago, titled "The Legally Hazy World of Cannabis Marketing," provides some additional background and context on the interesting issues that arise from the modern intersection of social medial and marijuana reform.
University of Maryland pharmacy school partnering with Americans for Safe Access on medical marijuana instruction
As an academic working at a large state university believing in the importance of training students about marijuana law, policy and reform, I am always extra interested hearing about academics at other large state universities working in this space. One such story is covered in this new AP article with the sub-headline "The University of Maryland School of Pharmacy will begin offering training to prepare prospective workers for the medical marijuana industry." Here are some of the notable details:
The University of Maryland School of Pharmacy will begin offering training to prepare prospective workers for the medical marijuana industry. The move puts the Baltimore school in league with few other established universities and colleges, including the University of Vermont College of Medicine's Department of Pharmacology, seeking to bring educational standards to a growing national industry that grapples with evolving science and uncertain legal standing.
"We wanted to be there as a resource," said Magaly Rodriguez de Bittner, a pharmacy professor and executive director of the school's Center for Innovative Pharmacy Solutions, which began signing up potential workers for training June 29. "If you're going to be dispensing," she said, "let's make sure your staff in trained in best practices to do it safely and effectively."
The pharmacy school will offer classes through its online platform toward certifications required under the state's medical marijuana law for those involved in the business. It's partnering with the advocacy group Americans for Safe Access on the certification program. That organization will provide the instructors and the curriculum, which the school vetted and adjusted.
Training doesn't mean an endorsement of using marijuana by the school, a well-regarded institution founded in 1841, Rodriguez de Bittner said. Medical marijuana is not approved by the U.S. Food and Drug Administration. The school had an online platform to offer the training and a mission to provide education to health care providers, even if the science and government regulation has yet to catch up with demand, she said.
Few universities even support research into medical uses for cannabis, largely because accessing the plant is restricted by federal law that categorizes it the same as heroin and LSD. And though Maryland, 28 other states and the District of Columbia have made medical marijuana legal, the administration of President Donald Trump has signaled it could increase enforcement efforts.
Some large health systems in Maryland are concerned enough to ask their doctors not to recommend the drug, including LifeBridge Health and MedStar Health. Johns Hopkins Medicine and the University of Maryland Medical System still are formulating policies. Maryland's medical marijuana rules don't obligate doctors to get specific training before prescribing cannabis, but like other states it does require growers, processors, dispensaries and laboratories to be "certified," said Patrick Jameson, executive director of the Maryland Medical Cannabis Commission....
The pharmacy school's partnership with Americans for Safe Access gives the nonprofit advocacy group "immediate legitimacy" for its courses, said Shad Ewart, a professor at Anne Arundel Community College, who teaches a course about the marijuana industry for credit but not yet industry certification. He said the school also benefits because officials there had to do little legwork in developing a curriculum that could have taken months or years to produce on their own. (University officials said they reviewed the content and made it conform to educational norms.)
Still, Ewart understands many colleges and universities don't want to jeopardize federal funding for research, student loans or other programs by wading into the medical marijuana arena. He said there was a need, and in his case, demand particularly from students who wanted to launch their own businesses. He said he steers students to focus on ancillary operations such as security, marketing, accounting and retail. "If the legislation says you must have fencing with video surveillance, well, that's good for the fencing and video industries," he said.
Jahan Marcu, chief science officer for Americans for Safe Access, said the group has been offering training since 2002 when there were approximately 11 dispensaries around the country. Instruction initially focused only on "survival," which meant how to handle law enforcement. Now that there are several thousand businesses, the training has evolved to match what's required by states that allow medical marijuana for each type of operation from growing and processing to retailing and laboratory testing, he said. Courses offer instruction about laws and regulations; the latest evidence on uses for medical marijuana; plant and product consistency; pesticides; sanitation; operating procedures; labeling, inventory control and record keeping; and other relevant information....
Marcu said his group is not the largest marijuana educator, though it's not clear anyone is keeping track. Among others offering instruction are Cannabis Training Institute, THC University and Green Cultured. In addition to such new "universities" dedicated to medical marijuana certification, there are some medical societies and health departments offering training. The university affiliation, Marcu hopes, will bring some accountability and possibly standards that others could adopt.
Rodriguez de Bittner said since launch of the training site, there has been interest from potential workers in Maryland, West Virginia, California and the District of Columbia. "There is so much out there," she said. "We're trying to partner and provide courses based on the best evidence — as it develops."
Wednesday, July 5, 2017
The title of this post is the headline of this reader-friendly piece by Craig Nard at The Conversation about the intersection of marijuana reform and intellectual property law. Here is how the piece gets started:
It’s hard to make sense of cannabis regulation.
The Drug Enforcement Agency (DEA) continues to categorize marijuana as a Schedule I drug. That means the government believes it has “no currently accepted medical use and a high potential for abuse,” putting it in the same league as LSD and heroin. The Trump administration has expressly voiced skepticism of marijuana’s medical benefits, with Attorney General Jeff Sessions calling them “hyped.” Yet, legal pot has become a multi-billion-dollar industry that stuffs the coffers of eight states where voters have approved its legal recreational use. And nearly 30 states have legalized pot for medicinal purposes so far.
This burgeoning industry has also witnessed the issuance of dozens of patents related to cannabinoids and various strains of cannabis, including ones on marijuana-laced lozenges, plant-breeding techniques and methods for making pot-spiked beverages. Some of these products contain a significant amount of THC, the psychoactive ingredient in marijuana that makes people high.
As a professor who researches and teaches in the area of patent law, I have been monitoring how private companies are quietly securing these patents on cannabis-based products and methods of production, even though marijuana remains a Schedule 1 drug. An even richer irony is that the government itself has patented a method of “administering a therapeutically effective amount of a cannabinoids.”
This engagement with the patent system raises several interesting questions as the legal pot industry grows and medical research on cannabis advances.
Monday, July 3, 2017
The title of this post is the title of this notable new paper available via SSR authored by W. Michael Schuster and Jack Wroldsen. Here is the abstract;
Though several states have legalized marijuana use, the drug remains illegal under federal law. Not surprisingly, the United States Patent and Trademark Office (USPTO) refuses to register trademarks related to marijuana because of the federal prohibition. What is surprising, though, is the USPTO’s willingness to grant trademarks for cannabidiol (CBD) — a marijuana derivative that is likewise expressly illegal under federal drug laws.
This article explains why the USPTO’s divergent treatment of trademark applications for CBD and marijuana products is legally incoherent. Additionally, when viewed from an entrepreneurial perspective, this phenomenon exemplifies how legal uncertainty breeds entrepreneurial opportunity. Specifically, the article argues that the evolving regulatory landscape for CBD and marijuana products has been, and continues to be, ripe for legal strategists and innovative entrepreneurs to combine forces to create competitive advantages in the emerging marijuana industry.
July 3, 2017 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (3)
Thursday, June 29, 2017
Complicated Tenth Circuit ruling tries to sort out marijuana banking issues in shadow of federal prohibition
As reported in this Cannabist article, headlined "Federal appeals court gives Colorado marijuana credit union another chance," the Tenth Circuit has issued an intricate and complicated ruling on banking issues in the marijuana space. Here are the basics from the article:
A federal appeals court has breathed life into a plan hatched in Colorado to open a credit union for the marijuana industry. A three-judge panel for the 10th U.S. Circuit Court of Appeals on Tuesday vacated a district court ruling that nixed Denver-based Fourth Corner Credit Union’s bid to receive a master account with the Federal Reserve Bank of Kansas City.
Fourth Corner Credit Union first formed in late 2014 with the goal of serving licensed marijuana-related businesses, which have had trouble accessing financial services from traditional banking institutions. Any credit union or bank needs a Federal Reserve master account to operate.
The judges remanded the case to the district court with instructions to dismiss the amended complaint without prejudice. “By remanding with instructions to dismiss the amended complaint without prejudice, our disposition effectuates the judgment of the two panel members who would allow the Fourth Corner Credit Union to proceed with its claims,” the judges wrote in the June 27 opinion.
Previously, the district court dismissed Fourth Corner’s case with prejudice, meaning that the credit union could not refile. The 10th Circuit panel decision allows for Fourth Corner to reapply to the Federal Reserve for a master account, and — if it were to be denied again — the credit union could take the case back to court, said Tom Downey, a Denver-based attorney who specializes in cannabis regulations and law with Ireland Stapleton Pryor & Pascoe P.C.
This paragraph from the start of the Tenth Circuit panel's 60+ page opinion in Fourth Corner Credit Union v. Federal Reserve Bank of Kansas, No. 16-1016 (10th Cir. June 27, 2107) (available here), serves as a kind of a symbol of the mess that persists thanks to state and federal laws on marijuana being in tension:
In this appeal, we vacate the district court’s order and remand with instructions to dismiss the amended complaint without prejudice. This disposition is addressed in three opinions — one by each member of the panel. Judge Moritz would affirm the dismissal with prejudice. Judge Matheson would vacate and remand with instructions to dismiss the amended complaint without prejudice on prudential-ripeness grounds. Judge Bacharach would reverse the dismissal of the amended complaint. By remanding with instructions to dismiss the amended complaint without prejudice, our disposition effectuates the judgment of the two panel members who would allow the Fourth Corner Credit Union to proceed with its claims.
Tuesday, June 27, 2017
This new posting at Marijuana Business Daily, headlined "Cannabis industry employs 165,000-plus workers," includes this interesting chart highlighting just how many legal jobs might be linked to state-level marijuana reforms. Here is part of the text that goes with the chart:
With 165,000-230,000 full- and part-time workers, the U.S. cannabis industry has quickly become a major job generator. Cannabis-related businesses now employ more people than there are dental hygienists and bakers in the United States and will soon surpass the number of telemarketers and pharmacists.
The estimates – published in the newly released Marijuana Business Factbook 2017 – include employment data for retailers, wholesale grows, infused products/concentrates companies, testing labs and ancillary firms. The job figures represent an impressive feat for an industry that has, for the most part, been operating legitimately only since 2009. They also underscore marijuana’s rapid transformation out of the black market and into a viable economic force, capable of producing a host of new jobs and business opportunities for towns and communities across the country.
Employment figures were calculated using a variety of methodologies, including the use of survey data regarding the average number of employees for each type of company in the industry. That information was then applied to the estimated number of companies in each sector to arrive at a rough idea of how many employees work in the industry. Only ancillary companies that glean a sizable portion of their revenue from the marijuana industry are included in these employment figures.
A majority of the jobs in the marijuana industry are currently with small businesses, most needing only a handful of employees to maintain daily operations. Though the average number of employees at marijuana companies has been rising in recent years as businesses grow, the state-by-state nature of the marijuana industry has prevented companies from developing into large-scale enterprises that employ hundreds of people....
The cannabis industry is coming off a landmark year in 2016, when four states legalized recreational marijuana and another four approved measures tied to medical cannabis. Additionally, Ohio and Pennsylvania legalized MMJ earlier in the year, while Louisiana passed a law to set up commercial cultivation and sales of medical cannabis. Though it will take some time for these markets to fully develop, they have the potential to create tens of thousands of new jobs in the marijuana industry.
California’s recreational market alone could eventually bring in between $4.5 billion and $5 billion in annual retail sales – more than the nation’s entire legal cannabis industry generated in 2016 – so the impact adult-use legalization will have on business and employment opportunities in the state is massive.
June 27, 2017 in Business laws and regulatory issues, Employment and labor law issues, Medical Marijuana State Laws and Reforms, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)
Sunday, June 25, 2017
"The Golden State's ‘High’ Expectations: Will California Realize the Fiscal Benefits of Cannabis Legalization?"
The title of this post is the title of this notable new paper authored by George Theofanis now available via SSRN. Here is the abstract:
The federal government has been taking an increasingly relaxed approach to enforcing marijuana laws, allowing states that have legalized to realize the tax benefits of lawful marijuana. California is now seeking to realize those same benefits. In 2016, California voters legalized recreational marijuana with the passing of Proposition 64 (Prop. 64), also known as the Adult Use of Marijuana Act (AUMA).
With the country’s highest population and largest economy, California’s impact on the marijuana industry is expected to be massive. Some are predicting that California’s marijuana market will generate $1 billion in tax revenue alone. Nonetheless, successfully generating revenue from the recreational market largely depends on several unknowable and unpredictable variables. For example, high prices when legal sales begin could polarize consumers toward the illicit market and stall industry growth. On the other hand, low prices could undercut a state’s revenue goals. In addition, even with the general success of the recreational markets in Colorado and Washington, the unique circumstance’s present in California make revenue projections unpredictable. Complicating matters more, marijuana’s illegal status under federal law also has the potential to slow down market growth and decrease revenue, depending on unpredictable circumstances. Accordingly, a sound cannabis tax scheme must take these and other uncertainties into account.
This Article focuses on how a tax regime that strives for short term gains will be more susceptible to the unstable conditions of the market. It explores how California is able to minimize financial risk in the recreational market while facilitating its growth. This Article argues that California should adopt several mechanisms for adjusting the marijuana tax rate, as recommended in the Rand report, because the current tax scheme is too aspiring and will result in slower market growth over time. For instance, by scheduling future tax rate increases and exploiting untapped tax bases, California can cash in long-term without overburdening the market in its infancy. Indeed, a tax scheme that focuses on a short rate of return rather than long term gain will fail to optimize cannabis tax revenue. The marijuana industry will continue to develop in unpredictable ways, making flexibility to change important to the overall success of any marijuana tax regime. By minimizing risk and facilitating market growth, California can seek to become the golden standard of the cannabis industry.
June 25, 2017 in Business laws and regulatory issues, Initiative reforms in states, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Taxation information and issues | Permalink | Comments (1)
Tuesday, June 20, 2017
Fearing Trump turn, big bank no longer willing to serve national advocacy group Marijuana Policy Project
This new Washington Post article reports on a new reality in the banking space for the nation's leading marijuana reform advocacy group. The article is headlined "‘It is too risky’: Marijuana group says PNC Bank to close its accounts amid fears of a DOJ crackdown," and it begins this way:
One of the nation’s leading marijuana legalization groups says PNC Bank has notified it that it will close the organization’s 22-year-old accounts, a sign of growing concerns in the financial industry that the Trump administration will crack down on the marijuana industry in states that have legalized it.
The Marijuana Policy Project (MPP) lobbies to eliminate punishments for marijuana use but is not involved in growing or distributing the drug — an important distinction for federally regulated banks and other institutions that do business with such advocacy groups.
Nick Field, MPP’s chief operating officer, said a PNC Bank representative told him in May that the organization’s bank accounts would be permanently closed July 7 because an audit of the organization’s accounts revealed it received funding from marijuana businesses that handle the plant directly. “They told me it is too risky. The bank can’t assume the risk,” Field said.
Although marijuana businesses are legal in some states, many banks will not provide services to sellers or growers of the drug because it is banned at the federal level. But policy and advocacy organizations such as MPP are spared. A bank’s severing ties with an organization that accepts donations from such businesses signals a new level of concern in the banking industry.
PNC bank declined to discuss its relationship with MPP, but a spokeswoman said that “as a federally regulated financial institution, PNC complies with all applicable federal laws and regulations.”
The bank has held MPP’s accounts since the organization was formed in 1995.
June 20, 2017 in Business laws and regulatory issues, Campaigns, elections and public officials concerning reforms, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (1)
Saturday, June 10, 2017
BuzzFeed News has this lengthy new article about employment law limitations on use of medical marijuana. The lengthy full headline of the lengthy article serves as an effective summary: "This Firefighter Took A Doctor’s Advice To Use Medical Marijuana — Now He Could Be Fired: Medical marijuana is off-limits for police officers, firefighters, truck drivers, and millions of other workers in safety-sensitive jobs, even in states where it’s legal. These employees face a tough choice: Live with pain, or lose their job." Here is an excerpts from the start of the article:
Employees ... in jobs categorized as “safety-sensitive” — which include the millions of truck drivers, police, firefighters, paramedics, people who operate heavy machinery, airline employees, and others who are responsible for people's health or well-being — face additional hurdles. Their employers almost always have zero-tolerance drug policies, leaving workers with little choice but to swap medical cannabis for opiates or other pharmaceuticals.
At a time when the opioid epidemic is ravaging US cities and towns, supporters of medical cannabis say policies like the one that got [fire-fighter Brad] Wiltshire in trouble are outdated and dangerous. After all, tranquilizers and prescription pain pills can also affect a person's ability to do a job safely. After his diagnosis, Wiltshire was prescribed a tranquilizer that came loaded with warnings against operating heavy machinery or driving until the user knew it was safe to do so. Over time, he said, the tranquilizers stopped working as effectively, so he turned to medical cannabis. Not only did it help him deal with breakthrough pain, it also helped him sleep.
Thursday, June 8, 2017
Cleveland.com has this notable lengthy new article providing a kind of one-year-later update on Ohio's medical marijuana program under the headline "A year after Ohio's medical marijuana bill signed: Patients waiting, growers applying." Here are excerpts:
The landscape has changed since Gov. John Kasich signed Ohio's medical marijuana law one year ago today. Details of the new, tightly-controlled program began rolling out in November. The state began accepting applications for 24 grow licenses on Monday, and other businesses are preparing to apply for dispensary and processor licenses in a few months.
Several cities and villages that passed moratoriums or temporary bans on marijuana businesses have decided to allow them, usually after being approached by a potential business promising jobs and tax revenue.
But much remains the same. Patients still can't buy legal marijuana here, and doctors can't become certified to recommend it. No licenses have been awarded to marijuana cultivators, processors, testing labs or dispensaries. Some details about the program are still unknown....
The law, which went into effect in September, set the framework for the medical marijuana program: patients with one of 21 medical conditions could buy and use marijuana if recommended to them by a physician. Smoking marijuana and growing it at home were not allowed in the law. But details, including who would grow and sell marijuana, were left to three agencies to work out before September 2017. State officials say dispensaries will open by the statutory Sept. 8, 2018 deadline.
So while it seems to be taking a long time to set up, state officials are on track to meet their deadlines. Rules and regulations for cultivators were finalized in April, and the rest are nearing the end of the process.
The state plans to license up to 24 cultivators (12 for up to 3,000 square feet of growing space and 12 for up to 25,000 square feet), 40 processors that will make marijuana oils, tinctures, patches and edible products allowed by law, 60 dispensaries and an unknown number of testing labs. Cultivator licenses will be awarded based on how they plan to grow marijuana, staff and secure their facilities and comply with state regulations.
The application process is complicated, and state-imposed fees are steep. For example, larger cultivators will pay a $20,000 nonrefundable application fee and a $180,000 license fee if selected, renewable for $200,000 a year. That's not stopping entrepreneurs, many with the help of out-of-state consultants, from applying....
Ohio's law allows cities, villages and townships to limit the number of marijuana businesses or ban them altogether. More than 50 municipalities have passed temporary or permanent bans: some because of public safety concerns, others wanting to see what decisions state officials make. Businesses cannot apply for a license for a site where a moratorium or ban is in place. The cultivator application also requires a local zoning official to sign a form indicating the applicant has applied for local permits.
So communities that haven't lifted their bans by the end of June won't be home to a cultivator unless state officials decide in September 2018 to add licenses. In recent months, more than a dozen communities have lifted those bans or let them expire. The driving factor: Entrepreneurs and investors want to start businesses there. Youngstown gave its approval to five cultivator applicants Wednesday night. Columbus and Johnstown have each signed off on six applicants. Lorain, Painesville, Eastlake and Richmond Heights have given their blessing to cultivator applicants eyeing underutilized city property.
Johnstown was the first Ohio community to open its doors to potential medical marijuana businesses last year and lined up so many potential cultivators it ran out of eligible land to grow on. But it almost lost them all when village council members were mulling a hefty local licensing fee and tax on top of state fees and taxes. Interested businesses balked at the proposal, noting several communities are welcoming marijuana businesses to its empty business parks and vacant lots without tacking on high fees. The village opted to tax 1 percent of net profits -- the same as any other business and lower than neighboring Columbus' 2.5 percent....
Lawmakers recognized it could take two years before legal marijuana was available for patients and built in a safeguard intended to allow patients to use medical marijuana without being prosecuted for possession. Patients with qualifying conditions, who comply with the possession and paraphernalia parts of the law, have an affirmative defense in court if they have a letter or other paperwork certifying compliance and signed by an Ohio physician. But the law didn't say where patients could get marijuana.
Doctors have been reluctant to sign off on paperwork before becoming certified by the state. The certification process is not yet in place, and no continuing education courses -- required to become certified -- have been approved. Only about 7 percent of Ohio physicians said they would be willing to recommend medical marijuana and their hospital or employer would allow them to, according to a state medical board survey of Ohio doctors.
There's only been one known case of an affirmative defense letter being used. The Bedford police chief told the Associated Press charges were dropped against the man because the illegal substances found didn't match the search warrant.
Amanda Candow, a Mentor woman who has multiple sclerosis, has a letter but doesn't know how much she can trust it. Candow said patients like her want to be on the right side of the law, and many, including terminal cancer patients, don't want to buy illegal marijuana. "Everything is so vague and when you're a patient, it feels personal -- why are they doing this to me still?" Candow said. "I didn't choose to have MS or choose to have super tight muscles when I wake up in the morning, and the one thing that gives me relief I can't have."
Wednesday, June 7, 2017
Tom Angell has this interesting and somewhat surprising new article at MassRoots under the headlined "More Banks Open Marijuana Accounts Under Trump." Here are the details:
New federal data shows a sharp increase in the number of banks opening accounts for marijuana businesses since President Trump’s inauguration.
A report from the Financial Crimes Enforcement Network (FinCEN) released this week shows that 368 banks and credit unions had active accounts for cannabis companies as of March. The number of depositary institutions working with the marijuana industry is up roughly 10 percent since Trump moved into the White House.
The 34 new banks that began providing financial services to cannabis businesses between February and March represents the single greatest monthly increase recorded in the new report. The increase runs contrary to widespread fears that anti-marijuana comments from U.S. Attorney General Jeff Sessions and White House Press Secretary Sean Spicer could spook mainstream companies from working with the cannabis industry.
The new FinCEN report also indicates that there were at least roughly 1,600 active individual marijuana business bank accounts in the U.S. as of March.
Despite the growth in the number of banks willing to work with marijuana businesses and Obama administration guidance intended to encourage more to do so, many have remained reluctant in light of continuing federal prohibition laws. That means many cannabis growers and sellers conduct transactions in cash only, which makes them targets for robberies.
Those public safety concerns have spurred efforts in Congress to pass legislation providing additional protections sought by the financial services industry and cannabis businesses. On Wednesday, the U.S. House Rules Committee blocked floor consideration of an amendment that would have prevented the Treasury Department from punishing banks that work with the marijuana industry.
Friday, June 2, 2017
The title of this post is the headline of this lengty new Washington Post article which highlights racialized realities in the marijuana industry. Here are excerpts:
States generally do not track the race and ethnicity of license applicants, but industry analysts and researchers say that dispensaries and the more-profitable growing operations across the country are overwhelmingly dominated by white men.
The lack of minority representation is especially fraught given that research shows African Americans were disproportionately arrested and incarcerated during the war on drugs. Now that marijuana is seen as a legitimate business, advocates argue that minorities should also reap the profits....
The marijuana trade, legal in some form in 29 states plus the District of Columbia, is one of the country’s fastest-growing industries. The $6.6 billion in medical and recreational marijuana sales in 2016 is expected to expand to $16 billion by 2020, according to New Frontier Data, a cannabis data analytics company headquartered in the District.
But African Americans seeking to go into business as growers or retailers face a host of hurdles, researchers say. Many states bar convicted drug felons from the industry, disproportionately hurting minorities because of historically higher conviction rates. Others have set high investment requirements. Some dole out licenses through appointed commissions that industry researchers say reward the politically connected, who by and large are wealthy and white.
“Marijuana legalization without racial justice risks being an extension of white privilege,” said Bill Piper, a lobbyist for Drug Policy Alliance, which advocates for drug policy reforms.
The disparities have become such a source of consternation for some lawmakers and industry leaders that more than half a dozen states and municipalities, including Oakland and the District, are taking steps to boost minorities in the competitive licensing process....
Colorado, one of the earliest states to legalize marijuana, has nearly 1,000 dispensary licenses and nearly 1,500 cultivation licenses. African Americans make up less than a handful of license holders, according to cannabis entrepreneurs in the state. Wanda James, a former Navy lieutenant who says she’s one of the few black growers and dispensary owners in Colorado, blames regulations barring those convicted of drug crimes from owning, and working in, a dispensary or cultivation center.
“In Colorado, if you sell 10 pounds of cannabis today, you probably get written up in Forbes about what a great businessperson you are, but if a young black man sells a dime bag on a street corner in Alabama, he’s probably going to jail for 10 years,” she said. A black person is nearly four times more likely than a white person to be arrested for marijuana possession, even though the two groups use marijuana at similar rates, according to a 2013 American Civil Liberties Union report that examined arrests in every state using a decade’s worth of FBI crime data....
Jesce Horton, an Oregon marijuana entrepreneur who started the Minority Cannabis Business Association in 2015 to diversify the industry, said that as a college student in Florida, he was arrested three times for marijuana possession. His criminal record would have barred him from entering the business in other states. “It’s really a slap in the face to communities who have been targeted,” Horton said. “A lot of people see these as racist regulations. These are fear-based tactics by legislators who are more than willing to go along with the business interests sitting in the room.”
Some states also require applicants to have financial holdings upward of $1 million, a particularly high bar given the documented wealth disparities between blacks and whites. Those without ready access to capital cannot turn to banks, which are unwilling to provide business loans for an industry that is still illegal at the federal level....
Even with potential shifts in federal drug-enforcement policies, several jurisdictions have moved to address racial disparities in the industry. Oakland recently voted to set aside half of all marijuana business permits for people who had been arrested for drug crimes in the city or lived in neighborhoods with high marijuana arrests.
Illinois, like Pennsylvania, awards extra points to minority applicants. Ohio requires 15 percent of licenses to be issued to minorities. Florida has reserved one of its future marijuana-cultivation licenses for a member of the state’s Black Farmers and Agriculturalists Association. Maryland marijuana regulators, meanwhile, are fending off a lawsuit that threatens to halt its program after no black-owned businesses won cultivation licenses.
Some prior related posts:
- Highlighting notable state efforts to enhance minority participation in marijuana industry
- Looking at marijuana reform in black and white
- "The Growing Movement for Marijuana Amnesty"
- "'The Mellow Pot-Smoker': White Individualism in Marijuana Legalization Campaigns"
June 2, 2017 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)
Thursday, June 1, 2017
Bloomberg has this notable new article headlined "Trump Casts Cloud Over Cannabis, But Money Keeps Pouring In," and here are excerpts:
The Trump administration’s adversarial stance toward marijuana has brought jitters to the burgeoning cannabis industry, but money continues to pour in.
Pot-related companies raised more than $734 million between Jan. 1 and April 21, an almost sevenfold increase from $108 million in the same period last year, according to a report from New Frontier Data and Viridian Capital Advisors. That brings the total amount raised to $1.9 billion since the start of 2016.
The investment surge reflects optimism that President Donald Trump and Attorney General Jeff Sessions won’t crack down on the industry, even as those concerns weigh on stock prices this year. Since hitting a peak in February, the Bloomberg Intelligence Global Cannabis Index has dropped 36 percent.
For cannabis financiers, the industry’s growth potential outshines the political risk. Eight states voted to legalize cannabis in some form on Nov. 9, including the nation’s largest. Legal cannabis demand in California is set to grow by 50 percent in 2018, when recreational use is scheduled to come online, according to the report. The report’s authors forecast that national demand for legalized marijuana will almost quadruple by 2025.
“With each new state that legalizes, that need for capital is going to be there,” said John Kagia, New Frontier’s executive vice president of industry analytics and author of the report. “It will continue to represent a substantial investment opportunity for the foreseeable future.” As a result of competition for funding, seed capital is being raised in greater initial amounts and its cost is getting more expensive, New Frontier Chief Executive Officer Giadha Aguirre de Carcer said.
The boom has taken place amid an unclear policy outlook under Trump. Press Secretary Sean Spicer said in February that he expects the Department of Justice to increase enforcement of federal laws prohibiting recreational pot use, even in states where it’s allowed. While Spicer defended medical marijuana, Sessions indicated he dislikes anything to do with the plant....
The uncertainty has made some investors more nervous about getting into the industry. “There’s a lot of fear,” said Rob Hunt, a founding partner of Tuatara Capital, which invests in cannabis companies and has more than $100 million under management. The silver lining, however, is that “it’s not very likely we’re ever getting someone further to the right on this issue than Sessions is.”...
Neither the political threats nor ongoing banking and tax difficulties will ultimately derail the industry, Viridian and New Frontier predict. Legal sales of cannabis products are expected to reach $24.1 billion in 2025, up from $6.6 billion in 2016. Investment will keep gaining too, particularly because interstate commerce is prohibited. That means every state that legalizes weed must create its own infrastructure....
“What we’ve also seen in the past 18 months or so is an increased number of more sophisticated companies entering the industry,” De Carcer said. And they’ve come with “more mature and experienced management teams,” she said.
Wednesday, May 31, 2017
This new AP article, headlined "Growing pot industry offers breaks to entice minorities," reviews some efforts in some jurisdictions to help some minorities participating in the emerging marijuana industry. Here are excerpts:
Oakland and other cities and states with legal pot are trying to make up for the toll marijuana enforcement took on minorities by giving them a better shot at joining the growing marijuana industry.... The efforts' supporters say legalization is enriching white people but not brown and black people who have been arrested for cannabis crimes at far greater rates than whites....
Massachusetts' ballot initiative was the first to insert specific language encouraging participation in the industry by those "disproportionately harmed by marijuana prohibition and enforcement." The law does not specify how that would be accomplished.
In Ohio, a 2016 medical pot law included setting aside 15 percent of marijuana-related licenses for minority businesses. In Pennsylvania, applicants for cultivation and dispensing permits must spell out how they will achieve racial equity. Florida lawmakers agreed last year to reserve one of three future cultivation licenses for a member of the Florida Black Farmers and Agriculturists Association.
There have been setbacks as well. The Maryland General Assembly adjourned last month without acting on a bill to guarantee a place for minority-owned businesses that were not awarded any of the state's initial 15 medical marijuana cultivation licenses.
There's no solid data on how many minorities own U.S. cannabis businesses or how many seek a foothold in the industry. But diversity advocates say the industry is overwhelmingly white. The lack of diversity, they say, can be traced to multiple factors: rules that disqualify people with prior convictions from operating legal cannabis businesses; lack of access to banking services and capital to finance startup costs; and state licensing systems that tend to favor established or politically connected applicants. "It's a problem that has been recognized but has proven to be relatively intractable," said Sam Kamin, a professor at the University of Denver Sturm College of Law who studies marijuana regulation....
The Minority Cannabis Business Association has drafted model legislation for states considering new or revised marijuana laws, including language to expunge pot-related convictions and to encourage racial and gender diversity among cannabis businesses. "The people who got locked up should not get locked out of this industry," said Tito Jackson, a Boston city councilman and mayoral candidate. He suggests Massachusetts give licensing preference to groups that include at least one person with a marijuana conviction....
An Oakland-based nonprofit known as The Hood Incubator provides training and mentoring to minority cannabis entrepreneurs. "Maybe they lack the money to get into the industry or they might have, you know, gotten arrested in the past for oh, what do you know? Selling weed. And now they can't actually get into the legal industry," said Ebele Ifedigbo, one of the group's three co-founders.
This related AP article provides a details state-by-state run down of efforts to aid minority participation in the marijuana industry.