Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Thursday, December 7, 2017

Intriguing review of latest banking realities for marijuana businesses

MarijuanaBanks_FStateline has this interesting new piece on banking in the marijuana sector under the headline "Why It’s Getting Easier for Marijuana Companies to Open Bank Accounts." Here are excerpts:

State and local officials in places that recently legalized marijuana are bracing for the arrival of a sector that largely runs on cash. They’re anxiously envisioning burglars targeting dispensaries and business owners showing up at tax offices with duffel bags full of money. But the marijuana industry’s banking problems may be more manageable than many officials realize.

Just ask Washington state, which last year successfully pushed almost all legal marijuana businesses to open bank accounts and pay their taxes with a check or other non-cash method. Or Hawaii, which earlier this year announced a “cashless” system for buying medical marijuana, reliant on a technology analogous to PayPal.

“We’re definitely seeing more businesses in the industry getting banked every day,” said Aaron Smith, executive director of the National Cannabis Industry Association, a trade group. Despite the legal risk involved in serving the cannabis industry, almost 400 banks and credit unions now do, according to the U.S. Treasury — a number that has more than tripled since 2014.

That’s reassuring news for California, where sales of recreational pot start next month, as well as for Nevada, Maine and Massachusetts, where voters approved recreational marijuana sales last year, and Arkansas, Florida, Montana and North Dakota, where voters approved medicinal sales.

But the progress that has occurred in some legal markets remains fragile. The federal government still considers marijuana to be a dangerous, illegal drug. States can only permit marijuana sales — and financial institutions can only serve marijuana-related businesses — thanks to Obama-era guidelines that create wiggle room in federal law....

Local institutions that are chartered at the state level have been particularly willing to work with the industry. In Oregon, where sales of recreational marijuana began in 2015, Salem-based Maps Credit Union decided to serve marijuana businesses after audits revealed some of its members were already in the industry. “It didn’t really square with our philosophy to kick members out,” said Shane Saunders, chief experience officer.

Taking on the new line of business required investments in staff, anti-money laundering software, and extra security at bank branches, said Rachel Pross, the credit union’s chief risk officer. Under the current federal guidance, Maps has to send a report on each marijuana-related account to the U.S. Treasury every 90 days, plus a report each time an account experiences a cash transaction of over $10,000.

Maps staff run background checks on marijuana-related business owners who want to open an account. They conduct regular, in-person inspections of the businesses whose accounts they manage, and they require business owners to share their quarterly financial statements. Dispensaries that bank with Maps make most of their sales in cash, because credit- and debit-card processors typically won’t touch marijuana money. As of October, the credit union had handled $140 million in cash deposits from 375 marijuana-related accounts in 2017, Pross said. Some companies hold multiple accounts.

In neighboring Washington, where recreational marijuana sales began in 2014, several financial institutions are openly working with the industry. Washington has helped banks and credit unions monitor marijuana-related customers by collecting and publishing extensive data on monthly sales and legal violations to the liquor and cannabis control board’s website. State regulators last year nudged marijuana licensees to open deposit accounts, aware that banking services were available and worried that cash-based businesses threatened public safety....

In some states, such as Alaska and Hawaii, regulators say they’re not aware of any credit unions or banks that currently serve the industry. Recreational marijuana sales began in Alaska in 2015, and medical marijuana dispensaries opened in Hawaii in 2017. But Hawaii is pioneering a workaround. Regulators have given a Colorado-based credit union permission to serve the state’s medical marijuana dispensaries. The credit union, in turn, has partnered with CanPay, an app that allows patients to transfer money from their bank accounts directly to the dispensary’s account....

Seattle dispensary owner [John] Branch notes that stores with ATMs make money when they dispense cash, and store owners may not embrace an electronic payment system that instead will cost them 2 percent of each transaction, as CanPay’s service does.

A change in federal law would solve the cannabis industry’s banking problem and wipe away the need for services tailored to the industry, such as CanPay. But Congress has so far failed to pass — or even seriously consider — a law that would reclassify marijuana as a less dangerous substance or allow banks and credit unions to work with businesses without risking their charters. U.S. Rep. Ed Perlmutter, a Colorado Democrat who proposed a bill on the issue this year, says no action is expected anytime soon.

December 7, 2017 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana State Laws and Reforms, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Tuesday, December 5, 2017

"Did Ohio hire a drug felon to score medical marijuana applications?"

The title of this post is the somewhat amusing headline of this somewhat amusing article in the Columbus Dispatch.  Here are excerpts:

A company that failed to win a state license to cultivate medical marijuana is criticizing the state for apparently hiring a man with a felony drug conviction to score the applications.  “The state of Ohio has a lot of explaining to do ... they hired a convicted drug dealer for $150,000 to score applications for the Ohio medical marijuana industry,” said Jimmy Gould, chairman of CannAscend Ohio, the rejected would-be cultivator.

Applicants to grow medical marijuana were required to undergo criminal background checks, Gould noted.  “Did the Department of Commerce not think it important to check and report the fact that at least one of the scorers of the medical marijuana control program had a criminal record for dealing drugs ... did they require a background check to get a license, but not to give a license?”  Gould asked in a statement.

Court records verified by The Dispatch show a Trevor C. Bozeman was convicted of manufacturing, delivering and possessing drugs, with intent to manufacture or deliver, in Middleburg, Pennsylvania, in 2005.   The records do not provide details of the offense.  They also show misdemeanor charges of use and possession of drug paraphernalia and possession of a small amount of marijuana for personal use, that were dismissed.

Bozeman, now age 33, of Brunswick, Maine, paid $2,131 in fines and costs and was placed on probation for three years, which court records show he successfully completed.  Ohio incorporation papers show a Trevor Bozeman formed ICANN Consulting, with a Dublin address, in late 2016, The Dispatch confirmed....  The company was one of three to receive a $150,000 state contract in June to score applications submitted by those seeking licenses to grow medical marijuana. Messages seeking comment from Bozeman were left Tuesday morning at two telephone numbers listed in his name.

Stephanie Gostomski, a spokeswoman for the Department of Commerce, said the agency is checking the allegation made by CannAscend. ICANN Consulting appeared to meet all the requirements to receive the state contract and its scoring appeared to be done professionally, she said.

CannAscend’s bid to win a medical marijuana cultivation contract was rejected after it scored poorly in evaluations and failed to meet requirements, Gostomski said. Gould said the situation reflected “significant irregularities” that should be investigated.  “This is the start of a billion dollar industry and the fact that the start is marred by arbitrary and capricious irregularities is troubling and deserves a thorough and deep review,” he said.

December 5, 2017 in Business laws and regulatory issues, Medical Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)

Monday, December 4, 2017

"Lawyers walk fine line to navigate state, federal pot laws"

As regular readers know, my status as both a lawyer and as a law professor training lawyer, I am always distinctly interesting in stories about the intersection of marijuana reforms and the legal profession.  Thus, unsurprisingly, I was intrigued this morning by this lengthy new AP article with the headline that serves as the title of this post.  Here are snippets:

Lawyers specializing in the business see themselves at the frontier. That leaves a fascinating opportunity to shape laws and regulations and the daunting prospect of the unknown. “Lawyers like things to be settled,” Davis said. “It’s hard to get a lawyer to give you a yes or no answer. In the cannabis industry, there really is no yes or no answer.”

Just as entrepreneurs getting into the retail pot industry need a good lawyer, some of those lawyers might be wise to consult an attorney of their own. Lawyers in the burgeoning business are entering a legal gray zone where the drug is permitted for some purpose in most states but illegal under federal law — in the same controlled substances category as heroin. Missteps could lead to prosecution for conspiracy, money laundering or aiding and abetting drug dealers.

“Any lawyer that goes into this should be aware that a literal reading of federal law permits such a prosecution,” said Sam Kamin, a University of Denver marijuana policy law professor, whose research five years ago found lawyers more susceptible to being disbarred than criminally charged for cannabis-related work. “It probably makes sense for a lawyer to at least talk to a legal ethicist or get an opinion from a legal ethicist.”...

Despite a few instances of lawyers being prosecuted in federal and state court — including a pending San Diego County case — more attorneys are jumping into cannabis law. Legal needs range from financing to permits, real estate, water law, intellectual property, contracts and banking....

There has been a tipping point for many lawyers setting up boutique pot law firms and jumping from old-school law firms as demand for their services trumps fear of legal repercussions and the stoner stigma fades as more states legalize marijuana use. Attorney Chris Davis, who grew up in Berkeley around friends and family who use the drug, found people operating in the shadows who wanted to go legit when he returned to California from New York two years ago. “So many people were asking how to go legal and how to worry less,” said Davis, executive director of the National Cannabis Bar Association, which has about 300 members in the U.S. and Canada and is growing rapidly. “It became impossible to turn people away.”

December 4, 2017 in Business laws and regulatory issues, Who decides | Permalink | Comments (0)

Sunday, December 3, 2017

Looking into challenges facing communities of color in the marijuana industry

The final student presentation this year in my Marijuana Law, Policy & Reform seminar is looking at how communities of color are participating in the marijuana industry. Specifically, as the student has put it, the topic involves "an exploration of the hurdles communities of colors face when trying to break into the marijuana industry, and a discussion of the policy considerations we ought to engage when developing a framework for this new and emerging industry." Here are links for background reading on this topic:

Drug Policy Alliance, "Race and the Drug War"

"Rigged game: inequality on the rise in legal pot industry; How people of color are blocked from Washington’s legal pot marketplace"

"Minorities, punished most by war on drugs, underrepresented in legal pot"

"Pioneering women in cannabis industry losing ground, author says"

"Battling the racial roadblocks to joining the legalized marijuana trade"

"In politically charged D.C., cannabis is a cottage industry"

December 3, 2017 in Assembled readings on specific topics, Business laws and regulatory issues, History of Marijuana Laws in the United States, Medical Marijuana Commentary and Debate, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Looking into labor employment law issues in an era of marijuana reform

An important and enduring issue, and one being covered by a student presentation this week in my Marijuana Law, Policy & Reform seminar, concerns labor and employment law in the era of state marijuana reforms.  Here are an array of materials assembled by this student as background on this topic:

The Essentials:

ACLU, "State-by-State Workplace Drug Testing"

Joseph Yastrow, A Survey of Medical Marijuana Laws Impacting the Workplace

What types of drug tests do employers use? How are they different?:

"Drug Tests - Methods of Detecting Cannabis Use"

Overview of federal employment drug testing:

Executive Order 12564: Drug-free Federal workplace

Omnibus Transportation Employee testing Act of 1991

 Case Law about employment discrimination and medical marijuana:

James v. City of Costa Mesa, 700 F.3d 394 (9th Cir. 2012) 

Coats v. Dish Network, LLC, 350 P.3d 849 (Colorado 2015)

Noffsinger v. SSC Niantic Operating Company LLC, --- F.Supp.3d ----, 2017 WL 3401260 (D. Conn. August 8, 2017). 

Ohio's law and challenges: not much protection to employees, while employers who struggle to fill positions due to high drug test failure rates:

Ohio Revised Code Section 3796.28: Rights of employer

"Failed drug tests keep Ohio jobs unfilled"

"Opioid Crisis Looms Over Job Market, Worrying Employers And Economists"

"Economy Needs Workers, but Drug Tests Take a Toll"

"National Unemployment Rate at 4.1 Percent through October 2017"

December 3, 2017 in Business laws and regulatory issues, Employment and labor law issues | Permalink | Comments (0)

Saturday, December 2, 2017

Looking at the environmental impact of illegal marijuana cultivation and import of legalization

As my Marijuana Law, Policy & Reform seminar is approaching its final class, a final set of students are scheduled to deliver presentations on the marijuana-related topics of their choosing.  One such student has decided to "focus on the environmental impact of illegal marijuana cultivation, and how/why legalization can mitigate these effects." 

Here are readings she has suggested as background on this topic:

5 Reasons Legalizing Pot Is Good for the Planet

Everything you need to know about pot's environmental impact on the planet

December 2, 2017 in Assembled readings on specific topics, Business laws and regulatory issues, History of Marijuana Laws in the United States, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Friday, December 1, 2017

Examining banking challenges in the marijuana industry

Sunday, November 26, 2017

Taking a close look at "Big Pharma's Anti-Marijuana Campaign"

As mentioned in a prior post, my Marijuana Law, Policy & Reform seminar is hitting its homestretch and the last group of students are delivering presentations on a marijuana-related topic of their choosing. One student for the next class will be looking at what she is calling "Big Pharma's Anti-Marijuana Campaign."  Here is how she has explained her plans, following by links to background information regarding the topic:

My presentation will reveal how Big Pharma contributes to the Opioid Epidemic, how marijuana can be used as a substitute for opioids, how the legalization of medical marijuana threatens the bottom lines of pharmaceutical giants, and how these corporations have subsequently opposed pro-pot legislation.

NIH data on "Overdose Death Rates"

"Can Medical Marijuana Help End the Opioid Epidemic?"

"Patients Are Ditching Opioid Pills for Weed: Can marijuana help solve the opioid epidemic?"

"Is Big Pharma Out to Stop — Or Take Over — Marijuana Legalization?"

"The Real Reason Pot Is Still Illegal: Opponents of marijuana-law reform insist that legalization is dangerous — but the biggest threat is to their own bottom line."

November 26, 2017 in Business laws and regulatory issues, Medical community perspectives, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Tuesday, November 7, 2017

A look at marketing and advertising in the marijuana industry

A pair of students in my Marijuana Law, Policy & Reform seminar are this coming week to be discussing marketing and advertising in the marijuana industry. In preparation for the discussion, they suggested review of Leafy's "State-by-State Guide to Cannabis Advertising Regulations," which gets started this way:

As the cannabis industry continues to grow at a rapid pace, it can feel overwhelming to keep up-to-date with the constantly-changing federal and state regulations.  Advertising regulations are especially strict, as many marketing platforms restrict or outright ban cannabis advertisements due to the substance’s federal status.

We put together a state-by-state guide to cannabis advertising regulations that should help cannabis businesses adhere to the guidelines set forth by both the state they’re operating in as well as any states in which they want to advertise.  

November 7, 2017 in Assembled readings on specific topics, Business laws and regulatory issues | Permalink | Comments (0)

Considering the pros and cons of starting a cannabis-related businesses

As mentioned repeatedly in recent posts, students in my Marijuana Law, Policy & Reform seminar are every week delivering presentations on a marijuana-related topic of their choosing. I am professorially giddy about the large number of presentations planned for the next few weeks, and the first student presentation planned for this coming week aspires to "give insight into the pros and cons of starting a cannabis-related business." And here are links the student provided as background for the discussion:

"US Patent Office Issuing Cannabis Patents To A Growing Market"

"Here Are The Top 5 Financial Leaders In The Cannabis Industry"

"Colorado marijuana shops make $28,000 each on the FIRST DAY of legalized pot"

Ohio Medical Marijuana Control Program information on dispensaries

November 7, 2017 in Assembled readings on specific topics, Business laws and regulatory issues | Permalink | Comments (0)

Saturday, November 4, 2017

"Can Los Angeles repair the damage done by the war on marijuana?"

The title of this post is the headline of this notable new Los Angeles Times editorial.  Here are excerpts:

Make no mistake, the war on marijuana has not been colorblind. Despite national surveys showing that white people and black people use marijuana at approximately the same rates, blacks have over the years been nearly four times more likely to be arrested for marijuana possession than whites.

That disparity is as true in Los Angeles as it is elsewhere in the country. African Americans comprise less than 10% of the population in L.A. Yet between 2000 and 2017, blacks represented 40% of marijuana-related arrests.  Latinos made up 44% of arrests.  Whites made up only 16% of arrests, according to a city consultant’s analysis of Los Angeles Police Department data.  And even as Los Angeles and other cities allowed the growth of a quasi-legal, hugely profitable medical marijuana industry run mostly by white entrepreneurs, police arrests for marijuana possession and sales continued to target African Americans and Latinos overwhelmingly.

A drug arrest — especially if followed by a conviction — can have terrible consequences.  Even after a person has completed his or her sentence, it remains harder to get a job, get into college, rent an apartment or get a loan.  A drug conviction is a barrier to economic opportunity.

Now that California has voted to legalize marijuana for adults, a crucial question is whether there a way to repair the damage created by decades of unequal enforcement practices.  The answer being considered by the Los Angeles City Council is to make it easier for people who were arrested or otherwise affected by the disparate enforcement of marijuana laws to get in on the ground floor of the emerging multibillion-dollar cannabis industry.

The idea behind the proposed “social equity” program is that the people most affected should now be helped to partake in the profits and benefits of legalization.  The challenges of opening a marijuana business are so great — there are huge upfront costs, serious impediments to getting bank loans and extremely intricate regulations — that many would-be entrepreneurs would be locked out without government assistance.

Without question, Los Angeles ought to use a portion of future marijuana tax revenue to help communities that have been disproportionately targeted for marijuana enforcement. Tax money could fund drug education and treatment, legal clinics to help people expunge their marijuana conviction records, and reentry programs for individuals leaving prison.

The city could also help encourage entrepreneurs from communities that have had disproportionate numbers of marijuana arrests to enter the business by offering training, compliance assistance and priority licensing. Priority licensing is important because, due to zoning restrictions, only a limited number of applicants will ultimately be granted the right to host a marijuana business.  The first batch of licenses will be offered to medical marijuana shops that have operated since 2013 in L.A. with limited immunity under Proposition D.  Under the city’s proposed rules, the second batch of licenses would be divided equally between general applicants and social equity applicants — giving the latter a better shot at snapping up those opportunities. The third batch of licenses would be open to all applicants.

But here’s where the social equity program raises concern: The current proposal gives special advantages, waives fees and offers the most assistance to low-income people who themselves have marijuana-related convictions.  It’s one thing to target assistance broadly to communities that have felt the impacts of unequal enforcement. It’s another thing to reward people who broke the law and got caught by giving them priority over people who did not break the law.  That doesn’t seem fair.  Nor does it seem like a great idea to incentivize people with convictions for selling or possessing marijuana to return to the drug trade — why not help them enter other businesses instead?

To be sure, people with nonviolent drug convictions shouldn’t be barred from owning marijuana businesses or from working in them.  But they shouldn’t be pushed to the front of the line either.

November 4, 2017 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Wednesday, November 1, 2017

"FDA warns companies marketing unproven products, derived from marijuana, that claim to treat or cure cancer"

ThThe title of this post is the heading of this press release from the U.S. Food and Drug Administration.  Here is how the release begins:

As part of the U.S. Food and Drug Administration’s ongoing efforts to protect consumers from health fraud, the agency today issued warning letters to four companies illegally selling products online that claim to prevent, diagnose, treat, or cure cancer without evidence to support these outcomes.  Selling these unapproved products with unsubstantiated therapeutic claims is not only a violation of the Federal Food, Drug and Cosmetic Act, but also can put patients at risk as these products have not been proven to be safe or effective. The deceptive marketing of unproven treatments may keep some patients from accessing appropriate, recognized therapies to treat serious and even fatal diseases.

The FDA has grown increasingly concerned at the proliferation of products claiming to treat or cure serious diseases like cancer. In this case, the illegally sold products allegedly contain cannabidiol (CBD), a component of the marijuana plant that is not FDA approved in any drug product for any indication.  CBD is marketed in a variety of product types, such as oil drops, capsules, syrups, teas, and topical lotions and creams. The companies receiving warning letters distributed the products with unsubstantiated claims regarding preventing, reversing or curing cancer; killing/inhibiting cancer cells or tumors; or other similar anti-cancer claims. Some of the products were also marketed as an alternative or additional treatment for Alzheimer’s and other serious diseases.

“Substances that contain components of marijuana will be treated like any other products that make unproven claims to shrink cancer tumors. We don’t let companies market products that deliberately prey on sick people with baseless claims that their substance can shrink or cure cancer and we’re not going to look the other way on enforcing these principles when it comes to marijuana-containing products,” said FDA Commissioner Scott Gottlieb, M.D. “There are a growing number of effective therapies for many cancers. When people are allowed to illegally market agents that deliver no established benefit they may steer patients away from products that have proven, anti-tumor effects that could extend lives.”

The FDA issued warning letters to four companies – Greenroads Health, Natural Alchemist, That’s Natural! Marketing and Consulting, and Stanley Brothers Social Enterprises LLC – citing unsubstantiated claims related to more than 25 different products spanning multiple product webpages, online stores and social media websites. The companies used these online platforms to make unfounded claims about their products' ability to limit, treat or cure cancer and other serious diseases.

November 1, 2017 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)

Monday, October 30, 2017

A look at the law and business surrounding industrial hemp

As I mentioned in this recent post, students in my Marijuana Law, Policy & Reform seminar are now gearing up for and delivering presentations on a marijuana-related topic of their choosing.  The first of the student presentations planned for this this coming week is exploring industrial hemp, and here are the links my student has assembled in preparation for her presentation this coming week:

1)  This is a state-by-state list of statutes regulating industrial hemp.

2)  This is a detailed statement to "inform the public how Federal law applies to activities associated with industrial hemp."

3)  This is the newest bill that has been introduced asking to change the definition of hemp.

4)  This is a market projection based on a report by the Hemp Business Journal that discusses the growth of hemp product sales in the coming years.

October 30, 2017 in Assembled readings on specific topics, Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices | Permalink | Comments (0)

Sunday, October 29, 2017

US distributor of Corona beer making big investment in Canadian marijuana grower

Download (8)As reported in this new Wall Street Journal article, headlined "Big Brewer Makes a Play for Marijuana Beverages," the "U.S. distributor of Corona beer is chasing a new type of buzz." Here are the details from a story giving new meaning to "Corona Extra" :

Constellation Brands Inc. has agreed to take a 9.9% stake in Canopy Growth Corp. , a Canadian marijuana company, and plans to work with the grower to develop and market cannabis-infused beverages.  Canopy Growth is the world’s largest publicly traded cannabis company, with a market valuation of 2.2 billion Canadian dollars on the Toronto Stock Exchange.   The C$245 million (US$191 million) deal gives Constellation a toehold in an industry that the brewer expects to be legalized nationwide in the U.S. in the coming years.

“We think that it’s highly likely, given what’s happened at the state level,” Rob Sands, chief executive of the Victor, N.Y.-based beer, wine and spirits company, said in an interview.  “We’re obviously trying to get first-mover advantage.”

Constellation — flush with cash after posting a 13% increase in beer sales in its latest quarter — is interested in developing drinkable cannabis products that don’t contain alcohol, he said.  Products currently on the market in U.S. states where they are legal include buzz-inducing sodas, coffees and fruit elixirs.

Constellation doesn’t plan to sell such a product in the U.S. before marijuana is legalized there nationwide, Mr. Sands said, but could sell it in Canada, where edible and drinkable cannabis products are expected to be legalized by 2019, or other countries where recreational marijuana is permitted....

U.S. beer-industry executives have been debating whether legalized marijuana could cannibalize sales of beer, even as other consumers migrate from beer to wine and spirits. Some brewers have experimented with cannabis-infused beers, not containing THC but instead a marijuana flavor.  “Wine and spirits are not sitting still, and marijuana is being legalized in many states,” Heineken USA Chief Executive Ronald den Elzen said at a beer wholesalers conference earlier this month. “We have to act now, and we have to do it together.”

Mr. Sands said he doesn’t see pot as a threat to booze. But if a consumer is going to choose a can of beer, a glass of wine, a shot of liquor or a weed-laced elixir, he wants to be able to offer all four, he said.  “Could it be a threat? Yes, I guess it could be,” he said.  “We’re not going to stand around twiddling our thumbs.”...

Canopy Growth, based in Smiths Falls, Ontario, is ramping up capacity ahead of next summer’s legalization in Canada and said it would use the new capital to expand its production and storage facilities throughout the country.  The deal, expected to close by early November, gives Constellation board-observer status and the option to increase its stake to just under 20%. Canopy

Growth CEO Bruce Linton said Constellation’s expertise in alcohol distribution would be helpful for the cannabis company as it determines how to distribute and package recreational cannabis. Canada’s provincial regulators are still considering how to handle the selling of marijuana, he said.  Mr. Linton said he hoped the deal could be the turning point for the nascent industry, signaling to institutional investors “that a cannabis company that fully complies within legal jurisdictions would be the right place to invest."

October 29, 2017 in Business laws and regulatory issues, International Marijuana Laws and Policies, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Looking at some of the (mature?) legal issues now arising in marijuana industry

A growth in lawsuits might well be seen as a sure sign that the marijuana industry is reaching a new level of development.  For that reason, supporters of marijuana reform might see these two detailed articles from Marijuana Business Daily about  legal issues facing marijuana companies as a positive sign.  And students in my marijuana reform seminar might see these articles as a preview of what legal practice in this field can involve:

October 29, 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)

Monday, October 16, 2017

Examining taxation issues and economic development surrounding the marijuana industry

I am excited to realize and report that, after spending the first half the current semester preparing various presentations for the students in my Marijuana Law, Policy & Reform seminar, this week begins the part of the class in which students are to begin making presentations to each other. The first of the student presentation planned for this this coming week is exploring "tax liability."  Here are the links the presenting student has assembled in preparation for his presentation this coming week:

Relevant Internal Revenue Code Provisions:

26 U.S. Code § 280E - Expenditures in connection with the illegal sale of drugs

26 U.S. Code § 162 - Trade or business expenses

26 U.S. Code § 62 - Adjusted gross income defined

Three Short Articles on the Economic Impact of Marijuana

"What If Marijuana Were Legal? Possible Outcomes"

"Dose of Reality: The Effect of State Marijuana Legalizations"

"The Economic Impact of Marijuana Tax and Regulation in Colorado"

October 16, 2017 in Assembled readings on specific topics, Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Taxation information and issues | Permalink | Comments (0)

Thursday, October 12, 2017

Thanks to Prez Trump(?!?), marijuana sales hit new milestone in Colorado

As reported in this local piece, headlined "Colorado’s 2017 marijuana sales reach $1 billion in just eight months," sales of recreational marijuana hit a new benchmark in Colorado. Here are the details:

Legal marijuana is a bona fide billion-dollar industry in Colorado. And it’s hitting the mark faster than ever. In 2017, Colorado eclipsed $1 billion in marijuana sales in eight months; in 2016, it took 10 months.

Colorado’s marijuana retailers logged upward of $1.02 billion in collective medical and recreational sales through August, according to The Cannabist’s extrapolations of state tax data released Wednesday. Year-to-date sales are up 21 percent from the first eight months of 2016, when recreational and medical marijuana sales totaled $846.5 million.

This year’s cumulative sales equate to more than $162 million in taxes and fees for Colorado coffers.

During the month of August, sales of flower, edibles, concentrates and accessories were nearly $137 million — $100.3 million from recreational cannabis sales and $36.5 million from medical marijuana — according to The Cannabist’s calculations....

The special sales tax rate for recreational marijuana increased to 15 percent from 10 percent in July, as the result of a new law that also exempted recreational marijuana products from the 2.9 percent standard state sales tax. Medical marijuana and accessories are still subject to that 2.9 percent sales tax rate. The Cannabist’s calculations for July and August 2017 recreational sales are based on revenue reported for the new 15 percent sales tax.

Economists and state officials have projected that the annual growth rates for Colorado’s cannabis sales will eventually moderate as the local market matures and other states adopt recreational cannabis measures.

Here’s a look at Colorado’s previous cumulative yearly sales totals:

2014: $699,198,805

2015: $996,184,788

2016: $1,313,156,545

As the title of this post suggests, I think the marijuana industry in Colorado can and should in some sense thanks Prez Trump for the ever increasing sales. The Trump Administration has not yet decided to crack down legally on the industry, but it also has hinted in various ways that a crackdown might be coming. That combination likely contributes to a view among consumers that they ought to be sure to purchase marijuana through "legal" channels while they still can.

October 12, 2017 in Business laws and regulatory issues, Recreational Marijuana Data and Research, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Sunday, October 8, 2017

Reviewing the newest recreational marijuana markets to be coming on-line

CNN Money has this new article focused on the three states about to have their recreational marijuana markets up and running in the wake of 2016 legalization votes.  The piece is headlined "Retail marijuana is spreading to California, Massachusetts and Maine," and here is how it gets started:

The mainstreaming of marijuana is about to get huge boost. Recreational marijuana sales will launch in three states next year, including the biggest one of all: California.

It's already for sale in five states, but the addition of a legal retail marijuana market in California, with its massive economy and population, will dramatically change the landscape. California is aiming to open retail marijuana stores by January 1, Massachusetts and Maine plan to open stores next summer.

"We obviously still have a lot to do, but yes, we're going to be ready to go on January 1," said Alex Traverso, spokesman for the Bureau of Cannabis Control in California. "We will be issuing new regulations in November, so we're hard at work on those at the present time."

Among the checklist of expected regulations is new oversight on water usage -- like drip irrigation and reusing waste water -- that could prove expensive for marijuana businesses. Other rules will require licensing and background checks for distributors and safety and education training for consumers.

Dispensaries like Green Alternative, which has 10,000 patients in San Diego, are getting ready to add non-medical customers to their clientele. "We are in the process of stockpiling cannabis in order to fulfill the market needs," said Zach Lazarus, COO of the Green Alternative. "We believe there will be a huge rush. We go through two to four pounds [per day] on average, and we anticipate going through three to four times as much when we open the doors for recreational." This requires not only stockpiling pot, but negotiating hurdles on the state and local level, for licensing, zoning, taxation and other issues.

Erik Altieri, executive director of the pro-legalization group NORML, said it might take longer than January "to set up the regulation process and to work out how the new recreational market will exist alongside its already quite large medical market."

The Bureau of Cannabis Control in California put its proposed regulations up for public review and began holding community workshop meetings in Long Beach, Fresno and Sacramento in September.

Massachusetts will implement retail marijuana sales on July 1, once state officials finalize whether certain localities will be able to maintain a marijuana ban in their respective towns, said Altieri. "We are committed to make that deadline," said Steven Hoffman, chairman of the Cannabis Control Commission in Boston, which held its first meeting on September 12 on developing and implementing regulations.

Maine would have the smallest market, and it's unclear when they'll get it off the ground. Dan Tartakoff, clerk for the Marijuana Legalization Implementation Committee of state lawmakers, said draft regulations were released in September proposing a 20% tax rate.

October 8, 2017 in Business laws and regulatory issues, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms | Permalink | Comments (1)

Thursday, October 5, 2017

"Cannabis Industry Struggles With Hiring People With Past Pot Convictions"

The title of this post is the headline of this notable new Forbes article, which includes these passages:

As the cannabis industry continues to grow, a debate is brewing over whether those with drug convictions should be allowed in the industry. Marijuana businesses are in a position of uncertainty amid U.S. Attorney General Jeff Sessions' anti-drug rhetoric. Meanwhile, the fast-growing, multi-billion-dollar industry is drawing investors and entrepreneurs.

Indeed, there is a hypocrisy evident in some corners of the newly legal marijuana market. Earlier this year, Massachusetts medical marijuana provider Patriot Care drew controversy after it opposed a proposal to remove the ban on felony drug convictions from the state's medical cannabis program. "Permitting those who have demonstrated the interest and willingness to ignore state and federal drug laws sends the wrong signals to those who would participate in the legal, regulated industry," wrote Robert Mayerson, CEO of Patriot Care, in a letter to the Massachusetts Public Health Council.  While companies like Patriot Care operate legally under state law, all state-legal cannabis companies are violating federal drug laws.

Many states have marijuana laws that bar drug offenders from entering the cannabis industry in an effort to legitimize the trade and help prevent out-of-state diversion. In practice, the ban does not prevent trafficking.  But it does shut out individuals with marijuana-related convictions, who are disproportionately black and Latino. And in a twist of absurdity, many of these felony bans apply only to drug-related crimes.

“You can go to a cannabis investment conference and no one is talking about the fact that just down the road there are people who are incarcerated for smoking or dealing or growing this very same product,” said Ryan Anslin, who has been investing in the industry for nearly four years.  “To entirely leave that out of an investment conversation is fundamentally wrong.” Anslin believes that those in the industry are obligated to put resources towards changing drug laws. "There's a level of complacency that has emerged in the early industry," he said.  While that may be the case for many investors and operators, other players are working towards creating an equitable industry.

Derek Peterson, the CEO of Terra Tech, thinks it's a "disaster" that there are executives in the marijuana space who oppose social justice reforms. Terra Tech is a publicly traded cannabis company that operates in California and Nevada, and has a cultivation facility in Oakland, Calif. with minority interest.  Peterson says the company supports equity programs like that in Oakland, and it is working with lobbyists to insert criminal justice-reform language into legalization legislation in New Jersey. "We don't feel very comfortable about the opening up of markets and economic development [while] watching people sit in prison," he said. "There needs to be allowances in new legislation that allows for people who have been incarcerated for drug crimes to [enter] this industry."

Barring those with experience in the illicit market could also shut out people with relevant expertise. "[It's] doing a disservice to some of the best knowledge base in the cannabis industry. These are the guys who paved the way," said Rob Hunt, principal of the consulting firm ConsultCanna who was formerly a founding partner of the cannabis private equity firm Tuatara....

For Anslin, the key to crafting reforms is focusing on record expungement. "As an employer in the space… I would always be really careful to hire people who have knowingly done things against the letter of the law," he said. But when it comes to certain marijuana offenses, "they shouldn't have been convicted of anything to begin with."

October 5, 2017 in Business laws and regulatory issues, Criminal justice developments and reforms, Employment and labor law issues, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Wednesday, October 4, 2017

"Out-of-state companies making a run for Ohio’s medical marijuana licenses"

Medical-marijuana-ohioThe title of this post is the headline of this notable new Marijuana Business Daily article that might be of special interest to my Ohio-based students and really to anyone thinking about how the laboratories of democracy in the marijuana reform space still have inter-state elements despite the persistence of national prohibition. Here are excerpts from the article:

Out-of-state medical cannabis companies are jumping into the nascent Ohio market because the state lacks a residency requirement for business owners. While a majority of the applicants are listed as Ohio-based companies, at least a dozen either have an out-of-state business address or are connected to companies based elsewhere.

That’s according to the business information of 185 applications for 24 available cultivation licenses recently released by the Ohio Medical Marijuana Control Program....

Regulators decided against a residency requirement when they drafted the law. Tom Haren, a Cleveland cannabis attorney, said the state went back and forth on the residency issue. “This was the subject of a lot of debate as the rulemaking process moved forward,” he said. “Ultimately what the regulators decided was to err on the side of experience operating in other regulated markets.”...

 While there isn’t a strict residency provision, regulators scoring applications can take into account whether a company’s principal place of business is in Ohio. “What we’ve seen is a lot of the out-of-state investment was done in partnership with Ohio residents,” Haren said.  According to Haren, a majority of applicants were Ohio citizens who partnered with out-of-state groups to help strengthen the experience section of their applications. “It’s hard to have experience in a market that’s been illegal here for the last 70 years,” he added.

October 4, 2017 in Business laws and regulatory issues, Medical Marijuana State Laws and Reforms | Permalink | Comments (0)