Cannabis Law Prof Blog

New Jersey's Latest Marijuana Act Could Mean Weed Delivery and Public Consumption

State lawmakers in New Jersey have just sent the latest bill that would legalize marijuana and lay the foundation for a commercial weed industry in New Jersey to the state's Governor Phil Murphy.

A recent article by NJ.com covers some of the highlights from the latest bill.

Businesses with a marijuana retail license would be able to apply to have a consumption space on the same premises as, but separated from, their dispensary. Retailers would have to get local approval for the consumption space in addition to getting permission from the state, the bill says.

If passed, this aspect of the bill would set New Jersey apart from most states which have legalized marijuana but have yet to legalize public consumption. 

The article also discuss the bill's allowance for weed delivery services by licensed retailers.

Businesses with a marijuana retail license would be able to get permission from the state to deliver cannabis products to customers. Not all states allow marijuana to be delivered, but California, Nevada and Oregon do.

The bill could pass as early as October and licensing approval would begin shortly after--with cultivation to follow closely behind. Accordingly, New Jersey may have a marijuana market in place by next September. 

--Gabrielle Rennie

The Latest US Territory to Legalize Marijuana Use Makes History

On Friday, a small US territory made a big splash in the country’s marijuana legalization history. According to Forbes.com, the Governor of the Commonwealth of the Northern Mariana Islands signed a bill into law that provides

adults over 21 years of age will be able to legally possess up to one ounce of marijuana, as well as infused products and extracts. Regulators will issue licenses for cannabis producers, testing facilities, processors, retailers, wholesalers and lounges. Home cultivation of a small number of plants will be allowed.

The article further points out that this is the first US jurisdiction “to go from having cannabis totally illegal to allowing recreational use without first having a medical marijuana program.” It was “unclear if the governor was going to sign or veto the legislation, as he had previously expressed concerns about the public safety implications of legalizing marijuana.”

Though the governor signed the recreational scheme into law, he also used his “line-item veto powers to cancel some provisions of the proposal, including one to allow a government entity to be licensed to grow cannabis, as well as a provision requiring recreational marijuana consumers to obtain $5 permits.”

Legalization advocates are hopeful about the effect this may have on other US Jurisdictions.

"This is the first legislatively enacted law in the U.S. that taxes and regulates marijuana for adults’ use, but it will be far from the last," Karen O'Keefe, state policies director for the Marijuana Policy Project, said in an interview. "New Jersey could follow suit within weeks, and as many as five more state legislatures could do so within the next year. Public support for legalizing marijuana is strong and growing, and elected officials are increasingly getting the message."

Other advocates are hopeful that the “building momentum will add pressure on the federal government to modernize its approach to cannabis.”

 --Ashleigh Morgan Williams

SEC Charges a Texas-based Investment Fund with Fraud, Warning About Marijuana-Related Investments

Retail investors have officially been warned about marijuana-related securities offerings according to a press release recently issued by the Securities and Exchange Commission (the "SEC"). A Texas-based investment fund and its founder allegedly exploited investor interest in the marijuana industry by lying about high returns, and has been charged with "defrauding investors with false promises of massive returns in cannabis-related businesses."

Even though the investment fund was based in Texas, the fraudulent activity was widespread. In the complaint, the SEC alleges that, from August 2017 through at least March 2018, the investment fund and its founder "orchestrated an unregistered securities offering fraud that victimized more than 60 investors across 26 states." The founder promised massive returns, but actually misappropriated more than $3.3 million of investor funds for designer clothes, luxury cars, and payments to earlier investors to prolong the fraud scheme.

The press release quoted Shamoil T. Shipchandler, Director of the SEC's Fort Worth Regional Office, stating that "Investors must remain vigilant and not let the fear of missing out dupe them into making bad investment decisions." In an effort to warn potential scam victims, the SEC's Office of Investor Education and Advocacy (OIEA) and Retail Strategy Task Force (RSTF) issued an alert for investors earlier this month which stated that "[S]cam artists often exploit 'hot' industries to trick investors, including by making false promises of high returns with low risks. The OIEA and RSTF are warning investors about these kinds of investment schemes involving marijuana-related companies." The SEC's alert further provides:

"OIEA regularly receives complaints about marijuana-related investments, and the SEC continues to bring enforcement actions in this area. If you are thinking about investing in a marijuana-related company, you should beware of the risks of investment fraud and market manipulation. Fraudsters may try to use media coverage about the legalization of marijuana to promote an investment scam."

Although the victims may have believed in promises of high returns on their investments, in reality, the fund "had no track record and its sole investment of $400,000 was in a cannabis company that had yet to harvest a crop," according to the SEC press release. The complaint alleged that the investment fund and founder misrepresented that the fund "had a management team with a ten-year track record of profitably investing more than $100 million in cannabis-related businesses; (2) provided outsized returns to more than 200 investors; and (3) investors could expect a 24% annual return." 

Those who are interested in investing in a cannabis-related business should heed the SEC's advice to "ask questions and understand the risks involved. Carefully research the investment and read any recent reports that the company has filed with the SEC." Company reports can be found by searching the SEC's Electronic Data Gathering, Analysis, and Retrieval System (also known as EDGAR).

--Kindal Wetuski

Nevada cannabis industry shatters revenue projections; state expects more growth to come

Nevada is the latest state to feel the economic boom of legalized cannabis, and so far it is smooth sailing for state regulators. The state fully legalized the drug beginning in January 2017 and total industry sales soared over $500 million, $425 million of which came from recreational sales alone. These numbers drastically outperformed both state projections, and first year sales of other states. The Las Vegas Review-Journal has the story: 

Including recreational and medical marijuana as well as marijuana-related goods and accessories, Nevada stores
eclipsed a half-billion dollars in sales, just under $530 million, according to figures released Tuesday by the Nevada Department of Taxation.

 

Bill Anderson, executive director of the Tax Department, said that the industry “has not only exceeded revenue expectations, but proven to be a largely successful one from a regulatory standpoint.”

 

“We have not experienced any major hiccups or compliance issues,” he added. “As we move into fiscal year 2019, we expect to see continued growth in the industry by way of additional businesses opening up, and we expect revenues to continue to be strong.”

This stunning performance translated into $70 million in tax revenue for the state. To give some context to these metrics, state regulators projected $265 million in sales and $50 million in tax revenue, according to the Review-Journal. Furthermore, the states of Colorado, Washington, and Oregon–largely considered to be trailblazing states in the cannabis industry, and all with larger populations than Nevada by at least 1 million citizens–recorded first-year cannabis sales of $303 million, $259 million, and $241 million, respectively, putting them far behind Nevada's first year numbers. Perhaps most surprisingly, despite being home to Las Vegas, Nevada only collected $49 million in intoxicating beverage taxes from 2016-2017, signaling that marijuana may be a greater source of revenue for the state than alcohol moving forward.

Nevada's "sinful" tourist economy can likely be thanked for such astounding numbers, although the state's casinos have come out against marijuana use in their facilities, out of fear of losing their gaming licenses. Additionally, the state's marijuana law prohibits consumption anywhere but in private residences. State Senator Tick Segerblom told the Las Vegas Sun: “The numbers are kind of leveling off, and we need to reach the tourist market a little more. We need a venue where people can come and enjoy marijuana properly."

These results suggest a few things: first, that tourism economies can drive marijuana sales even in states with lower populations and where marijuana use is not widely supported by dominant businesses. Second, that as more states legalize cannabis they may take cues from states that have previously approved legalization in order to more efficiently bring the drug to market. Finally, that there is still much progress to be made with respect to laws surrounding marijuana consumption in states where it has been made legal. Perhaps as more states begin venturing into legalization, they will use Nevada as a model of how best to regulate, tax, and sell cannabis.

--John Robinson

Restaurant Wants to Use Marijuana to Ease Lobsters’ Pain. Slow Your Roll, Maine Says.

Your death is imminent.  It will be painful. Minutes beforehand, your executioner hands you . . . a joint.

Charlotte Gill, the owner Charlotte’s Legendary Lobster Pound in Southwest Harbor, contemplated that very idea when thinking about how lobsters are cooked. It is fair to say that no reasonable person would want to be thrown into boiling water while still alive (or dead for that matter) so Charlotte, a self-proclaimed animal lover, decided to use the recently legalized recreational marijuana use for more than her own satisfaction.

She decided to get the lobsters high before cooking them in order to ease their pain and suffering. While, scientifically, questions still remain as to whether lobsters can even feel pain or get high, Charlotte contends that,

it is undeniable that the marijuana is having the intended effect. In a series of tests, restaurant employees put a lobster in a small container and added a few inches of water. They channeled marijuana smoke through a tube until the container was filled with it, and kept the lobster there for about three minutes.

Before the lobster went into the container, it would flap its tail and click and wave its claws. After being exposed to the smoke, the lobster was docile and serene.

It’s still a very alert lobster, but there’s no sign of agitation, no flailing of legs, no trying to pinch you. So calm, in fact, that you’re able to freely touch the lobster all over without them trying to strike at you or to be aggressive in any way.

This method is preferable, she said, to dropping a live crustacean into boiling water without the marijuana.

A more important question, to the Maine government at least, is whether getting lobsters high before cooking them leads to the consumer getting high; essentially, whether a high lobster turns into an edible post-cooking. Charlotte and her employees conducted their own experiments to find out those results,

staff members have tested their urine after eating the marijuana-treated lobsters, she said, and no trace of the drug has been found. In the latest experiment, Ms. Gill’s 82-year-old father has been eating copious amounts of marijuana-sedated lobster every day; he will soon take a blood test.

She said she hoped her tests could prove to the state that the lobsters were not absorbing the marijuana.

It is a unique and creative way of utilizing the legalization of marijuana, undoubtedly. While questions to remain as the effects on humans; whether lobsters feel pain; and whether lobsters can even get high; this use has garnered plenty of publicity for the restaurant -- yet another way marijuana legalization has helped boost business.

For now the Maine government is still skeptical as to whether this use should be allowed.

 

-Fernando Lira Gomez

Cannabis cafe coming soon to Oklahoma

With Oklahoma's changing view towards cannabis, Cannafe, a cafe in Norman, Oklahoma, plans to open soon with a line of food and beverages containing CBD. OU Daily has the story:

A new cafe will open on Campus Corner selling coffee, tea, brownies, cheesecake and other snacks  — all containing cannabis compounds.

Co-founders of Cannafe, Jim Castor and Joel Jacobs, envision the cafe as a place for students to study and relax. This will be aided by cannabidiol, known as CBD, and other molecules from the cannabis plant that can help reduce anxiety and improve focus, said Jacobs.

CBD is a cannabinoid, or a compound found in cannabis plants. However, unlike the mind-altering compound THC, also found in cannabis, CBD does not get people high and is non-psychoactive, according to Medical News Today.

...

“It doesn’t alter how you can function,” said Castor. “You can still do your job and go to work and go to school and study and relax, and it just kind of takes the edge off.”

...

The owners also want to provide a non-alcoholic space where students too young to go to bars can hang out during the daytime or between parties.

You may now be curious as to if the sale of products containing CBD is even legal in Oklahoma. Oklahoma established the Oklahoma Medical Marijuana Authority (OMMA) to regulate medical marijuana (MMJ) in response to its legalization in June. However, the OMMA only regulates MMJ and does not speak to CBD products. Thus, without specific regulation against CBD products, Oklahoma tolerates the sale of these products, according to MarijuanaBreak.

--Wyatt Hinson

Public use of marijuana now results in citation rather than custody in Washington D.C.

In an effort to make better use of public safety resources, Mayor Muriel E. Bowser and D.C. Chief of Police Peter Newsham have directed that arrests for public use of marijuana must be noncustodial. However, some groups may still be arrested in connection with their public pot use: "Those not eligible include juveniles, people with outstanding warrants or those who cannot be identified positively. Also included among those ineligible are people whom police think will not answer the citation or people subject to another charge that does not provide for a noncustodial arrest."

If a person is issued a citation for public marijuana consumption, they are required to report to a police station within 15 days to either pay a $25 fine or appear in court. According to Mayor Bowser, this new policy aims to aid officials in creating a "safer, stronger D.C.," by allowing them to reallocate their resources and efforts to other areas by reducing the number of residents taken into custody. 

This new policy of issuing citations rather than taking individuals into custody took effect on Friday, September 21, 2018. 

-Andrew Goodwyn

This article originally appearing in the Washington Post.

California 5-Year-Old Can Bring Cannabis to Kindergarten Classroom

A California judge ruled that a kindergartner can continue bringing her cannabis-based drug to school. The 5-year old at the center of this ruling is Brooke Adams, a Santa Rosa student who is living with a rare form of epilepsy, treatable with an ointment that contains the same active ingredient found in marijuana. The oil is applied three times a day by a nurse who accompanies Adams to school. 

FoxNews.com reporter Christopher Carbone provides the full story: 

The Rincon Valley Union School District had sought to ban the ointment from the school because it contains the active ingredient in marijuana.

 

Officials said allowing Adams to use the drug at school would violate state and federal laws barring medical marijuana on school grounds.

. . .

 

The judge's temporary order permitted the young girl to start school in August while the district's objections were considered. . .

 

Judge Charles Marson made the order permanent on Friday.

California law currently allows for the use of medical marijuana in private spaces with a doctor's recommendation. Additionally, California's Medical Marijuana Law provides, "Patients should avoid possession of marijuana in school zones, as there are typically additional penalties for the possession, use, and cultivation of marijuana near schools, whether it is for medical or recreational use." 

Adams' situation demonstrates the need for guidance in regards to cases similar to hers, as medical marijuana is proving to be a viable solution for numerous illnesses and diseases. 

Joe Rogoway, attorney for the Adams family, stated he "hopes the ruling opens the door for other students who say they need to use a cannabis-based drug on campus for medical reasons."

Assistant Superintendent, Cathy Myhers shared a similar sentiment stating, "We are happy to have a decision that supports our ability to educate and serve this student in our public schools."

 

-- Gianna Redeemer

Amsterdam to begin experimenting with legal marijuana production

The legalization of marijuana production in Canada and a few U.S. states may soon be taking root across the Atlantic. The Dutch government will soon begin experimenting with legal marijuana production, according to CNBC.

Amsterdam has long been viewed as a model for the legalization of marijuana. In the 1970’s the Dutch government adopted a toleration policy for marijuana consumption. When visiting Amsterdam, it is common to see recreational use of marijuana in the many famous Dutch coffee shops that line the streets. Although tightly regulated, the Dutch government allows coffee shop customers to purchase up to 5 grams of marijuana for consumption.  

Though consumption of marijuana is allowed, producing and acquiring marijuana is not. It's illegal for coffee shops to purchase their supply of marijuana. Cannabis production is also forbidden. “This has led to an illicit market for cannabis in the Netherlands,” Stijn Hoorens, associate director at RAND Europe, told CNBC.

The prohibition on production is largely overlooked by authorities, however, it poses many difficulties for the coffee shops who must procure marijuana illegally. "The most difficult thing about having a coffee shop in the Netherlands is that it's allowed to sell it, but it's not allowed to buy it," Joachim Helms, co-owner of Green House Coffeeshops in Amsterdam and chairman of the Dutch Cannabis Retailers Association, told CNBC.

Now, as Canada and several U.S. states have legalized various schemes of marijuana production and distribution, the Dutch government has taken notice. According to CNBC, the Dutch government is planning an experiment with legal marijuana production in a handful of municipalities. But it's a small step in an increasingly growing legal weed market.

With the Dutch government actively experimenting with the legalization of production, many coffee shop owners are optimistic that the legal quagmire they continually face could soon be a thing of the past. Like Canada, they hope that Dutch companies will be allowed to produce marijuana. "To walk around in those companies and facilities for us is really a dream come true because it's growing weed in a 100 percent legal way," Helms told CNBC.

 

--Colin Heinrich

New Jersey Legislature Considers How to "Right the Wrongs" of the War on Drugs

"What will happen to the people arrested for marijuana possession while it was still illegal?" In New Jersey, the answer might be complete removal of the criminal record for "hundreds of thousands of convictions" according to an article in the the Asbury Park Press, one of the state's""largest newspapers. The article continues:

Gov. Phil Murphy has been a vocal marijuana legalization proponent since the 2017 campaign trail, citing social justice concerns and the racial disparity among marijuana arrests.

"You can’t incarcerate somebody who did something on Friday and allow somebody who did it on Monday to do it legally," Murphy said during an appearance on WHYY radio in July.  "That doesn’t work for me. Frankly it doesn’t work for most folks who look at this. It’s got to be a part of it."

The article explains that as of October 1st, "Offenders who complete a drug court program will be eligible to have charges expunged immediately." Additionally, the legislature is considering an "Automatic Expungment Program" that will shift the burden of the lengthy expungment process on the state instead of the convicted persons.

"Marijuana arrests disproportionately involve offenders from low-income communities who could balk at the price of an attorney. One of the proposed amendments to the New Jersey marijuana legalization bill is to use part of the state marijuana tax revenue to defray some of the costs associated with seeking expungement for a marijuana possession charge."

The desire of some states to form a cost-shifting program may derive from observing other approaches to pre-legalization marijuana charges. The article points out that "According to the Drug Policy Alliance, only 5,000 people in California applied for an expungement in 2017 despite an estimated 1 million people who were eligible." 

Given the daunting statistic, the Drug Policy Alliance reported that recently "San Francisco’s district attorney announced that the city will clear or reduce thousands of marijuana convictions dating back decades. Seattle then made a similar announcement the following week, and [in March] the Sonoma County district attorney’s office said it will begin clearing or reducing nearly 3,000 marijuana-related convictions."

With barriers on housing, employment, education, and citizenship  the Drug Policy Alliance believes the move toward automatic expungment programs "removes thousands of barriers that allow people to fully reenter their community and society."

It will be interesting to see which states actually take on this burden and if the federal government reacts, but for now those with prior marijuana convictions may have hope for relief. 

 --Kylee Debler

 

Legalization of Marijuana Bad for Trucking Industry?

State-level legalization of medical and recreational marijuana has affected the US truck driving industry. For example, according to Marty Cook of Arkansas Business, the legalization of medical marijuana in Arkansas seems to have sparked a conflicting trend, a decrease in applicants for truck driving jobs. 

Cook notes that J.B. Hunt, a kingpin of the Arkansas transportation industry, said that "the advance of legalized medical and recreational marijuana could dry up [our] driver pool even more." J.B. Hunt uses hair-follicle testing for drugs, an effective method for detecting longterm drug use, that dissuades many "would-be drivers" from applying.

J.B. Hunt and other Arkansas employers that use such drug testing methods are in compliance with Act 539. The Arkansas legislature established workplace guidelines for medical marijuana after Arkansas voters approved it in July 2017. With the legislature's passage of Act 539 in March 2017, state occupations were divided into two categories: safety-sensitive and non-safety-sensitive. The act provided that "job applicants or workers in safety-sensitive positions who failed a drug test could be terminated or reassigned."

But as Cook's article points out, a study by Quest Diagnostics, the national drug testing lab service, reported that overall drug use within the Arkansas workforce decreased in 2017. The national rate held steady at 4.2 percent of the workforce, while Arkansas's rate dropped from 6 percent in 2016 to 5 percent in 2017. 

--Emily Bowlin 

 

Will Canada's New Cannabis Laws Create a New Border Problem?

With Canada legalizing adult-use marijuana, effective October 17, 2018, it is expected that Canadian citizens will partake in this new industry, either through consumption or investment means. While the substance may be legal in Canada, and a few U.S. states that border Canada, crossing the border could become difficult. 

In an interview with The Star Vancouver, Len Sanders, a Washington based immigration attorney, explained how the federally controlled U.S.-Canada border has begun to classify those in the marijuana industry as "drug traffickers." He went on to say that this enforcement applies to people involved with the actual plant, such as growers, users, and dispensary owners, to people who have either directly invested or their investment will be used in the cannabis industry. He mentions how the CEO and two employees of Keirton Inc. (a large agriculture equipment manufacturer)  were stopped at the border and moved to a secondary location only to be told that they were banned for life from entering the United States. Keirton Inc. was not the only group to face this punishment. In an interview with the Financial Post, Sam Zneimar was banned for life simply for investing in U.S. based marijuana companies. 

 In this current administration, U.S. citizens have seen a big push for more enforcement at our Southern border and a new wave of keeping America "safe". But will the same hold true on the other side of the country? In both interviews the offending party expressed sympathy for the poor border patrol agent that was made to enforce this law. These articles both mention a civil interaction between a "drug trafficker" and a border patrol agent and an unfortunate outcome. The U.S. has yet to tweet about the "drug traffickers" that are attempting to get into the U.S. through Northern points of Entry. 

 --Loren D. Elkins

 

With the legalization efforts coming out of Mexico, it should be interesting to see how those investors will be greeted at the border.                         

A Federal Court Win for Connecticut Employees Who Use Medical Marijuana

Medical marijuana users in Connecticut now receive extended employment-related protections under the state’s medical marijuana law as a federal court rejects an argument that the state laws conflict with federal laws and are therefore preempted. Dale L. Deitchler and Elizabeth R. McKenna, employment lawyers with national firm Littler Mendelson, report:

A Connecticut federal court has issued another decision in the case of Noffsinger v. SSC Niantic Operating Company LLC, further expanding protections to individuals who are qualified under Connecticut's Palliative Use of Marijuana Act (PUMA) to use marijuana. . . . [T]he parties filed cross-motions for summary judgment. These motions presented the court with another opportunity to address the extent to which PUMA protects qualified medicinal marijuana users—even though marijuana remains illegal as a matter of federal law. On September 5, 2018, the court granted partial summary judgment in the plaintiff's favor and concluded that she had successfully asserted a PUMA discrimination claim, and discussed the damages available. Significantly, the court considered and rejected additional arguments that federal/state law conflicts preempted enforcement of the Connecticut law, concluding that state law can co-exist with federal laws criminalizing marijuana use.

In an earlier decision, known as Noffsinger I, the Connecticut federal court held, “that various federal laws prohibiting use and sale of marijuana do not prohibit employers from hiring individuals who use marijuana in compliance with state law.” According to Deitchler and McKenna,

The case involves claims brought by an applicant who accepted a job offer contingent on passing a drug test. Before taking the test, the plaintiff informed her potential employer she was qualified under PUMA to use marijuana to treat post-traumatic stress disorder (PTSD). The plaintiff reportedly used marijuana "in the evenings" and provided current dosage information.

The employer rescinded the job offer after the plaintiff tested positive for cannabis. The plaintiff sued, alleging that the employer violated PUMA's anti-discrimination provision, claiming her rejection was discriminatory because she was qualified to use marijuana under PUMA.

The Noffsinger II court concluded the employer violated PUMA by rescinding the plaintiff's job offer on the basis of a positive pre-employment drug test when it knew she was using marijuana as permitted under Connecticut law.

The employer bases its position on, among other authority, the federal Drug Free Workplace Act and the federal False Claims Act.

Reading the DFWA narrowly to prohibit only the possession and use of illegal drugs at work, the court concluded that the DFWA did not require the defendant to rescind the plaintiff's job offer because she reportedly used marijuana for medicinal use after work during off-hours.

The court reached the same conclusion in response to the employer's argument that the federal False Claims Act barred it from hiring the plaintiff. . . .[T]he court concluded that "there is no federal law that bars defendant from hiring plaintiff on account of her medicinal use of marijuana outside work hours.

The court also found the employer’s argument that the employment decision was based on the positive drug test result, not on the employee’s status of a PUMA-qualified medical marijuana user unpersuasive. The authors explain:

The court disagreed, in effect finding action based on a positive workplace drug test for marijuana constitutes status-based discrimination when an employer knows the result was caused by marijuana use lawful under Connecticut law. The court explained, "[there] would be no reason for a patient to seek PUMA status if not to use medical marijuana as permitted under PUMA.

According to Deitchler and McKenna, “[t]he takeaway is that the DFWA is not a "free pass" to justify or defend the application of a "zero tolerance" policy in jurisdictions that have adopted protections for medical marijuana users.”

As 30 states in the US have legalized medical marijuana use, it is likely worthwhile to follow the development of this case as it could have a lasting effect on the relationship between state and federal laws in the labor and employment arena.

--Ashley Goldman

One in 11 US Teenagers Has Vaped Cannabis

According to a new report published in the Journal of the American Medical Association Pediatrics, Prevalence of Cannabis Use in Electronic Cigarettes Among US Youth, roughly one in 11 American middle and high school students have used a battery powered vaping device, or e-cigarette, to consume marijuana or other cannabis products. The report was based on a 2016 National Youth Tobacco survey, which found that about 9% of the 20,000 youths surveyed had vaped cannabis at least once. Applied across the US, this means that nearly 2 million teens have used e-cigarettes to vape cannabis. 

Although using cannabis through an e-cigarette does not have the same risks of smoking it, there are still health risks to be concerned about. Lead study author Katrina Trivers of the U.S. Centers for Disease Control and Prevention in Atlanta told The Verge:

"The use of marijuana in these products is of particular concern because cannabis use among youth can adversely affect learning and memory and may impair later academic achievement and education."

Earlier this month, the U.S. Food and Drug Administration (FDA) responded to what regulators have described as an "epidemic" of teen vaping. The FDA's proposed crackdown gives vaporizing companies two months to demonstrate efforts to keep vaping devices out of the hands of the youth population, or risk being shut down. 

 --Taylor Allan

 

California's Senior Citizens Ride the Canna-Bus

Marijuana is not just popular for the "young people" anymore.  In Orange County, California, the Bud & Bloom dispensary in Santa Ana has partnered with a bus company to allow senior citizens easier access to dispensaries, according to an article by Stephanie O'Neill for NPR's Morning Edition. The bus drives the patrons thirty minutes from the Laguna Woods Village retirement community to the nearest Bud and Bloom location.  

Though the idea of reliving Woodstock in retirement communities may be an entertaining one, the article notes that many senior citizens are visiting the dispensary to learn about the pain relieving properties of marijuana and "fear of getting high is the biggest concern expressed by senior consumers . . . What they don't realize is there's so many different ways to medicate now that you don't have to actually get high to relieve all your aches and pains."

Bud and Bloom tries to bridge the education gap by providing food and drinks to the elderly customers as the dispensaries' community outreach advisor gives a presentation on the "potential benefits of cannabis as a reliever of anxiety, insomnia and chronic pain and the various ways people can consume it. . . Then, the seniors are invited into the dispensary where they're able to buy."

The "Canna-bus" may be a response to a growing problem Caitlin Morgan Insurance recognized June of last year regarding nursing home and retirement community liability for marijuana. The article notes, 

Marijuana . . .  is banned by federal law even while legally approved for medical use in 29 states . . . This presents senior living facilities with the need to address what some call the elephant in the room: safety and accessibility. Even in states where medical marijuana is legal, older people who stand to benefit often cannot get it. Most nursing homes and assisted living facilities do not openly sanction its use, and many physicians are reluctant to endorse pot use, saying not enough is known about the risks in the oldest age groups.

Though research on how marijuana effects specific age groups is still scarce, "Some assisted living facilities have developed formal medical marijuana policies in response to demands from their residents. The Washington Health Care Association, an industry group, has posted a sample medical marijuana policy on its website, for example."

The article notes that "This is an issue that all facilities should weigh carefully, including any liability they may have as a result of marijuana use by their patients or residents." 

--Kylee Debler

 

 

Massachusetts Cannabis Cash Finds a Home at Federal Credit Union

It's no secret that recreational marijuana is a cash cow, but until recently, retailers have had no piggy bank in which to deposit all their earnings. However, thanks to the efforts of Gardner Federal Credit Union, marijuana dispensaries in Massachusetts may have found a home for their earnings. The Boston Business Journal has the story:

The bank said Friday afternoon that it would begin banking for the industry, working with Safe Harbor Services, a
wholly-owned affiliate of Partner Colorado Credit Union that is the leader in compliance-based cannabis banking services.

 

“As a credit union committed to helping people and serving the underserved, we found in Safe Harbor a partner who offered a viable and proven compliant-based cannabis banking option and a way to keep our communities safe. Our board of directors recognizes the need to provide banking services for the safety of our citizens in reducing the ‘cash on the streets’ and I applaud them for their vision and commitment to providing public safety," said GFA Federal Credit Union’s CEO, Tina Sbrega.

Banking has long been a thorn in the side of recreational marijuana retailers. Because marijuana is still illegal at the federal level, if a bank were to accept funds derived from marijuana sales, that would constitute money laundering. The resulting friction between state legalization and federal drug policy has created an business ecosystem where cash is king. Colorado marijuana entrepreneur Babak Behzadzadeh told The New York Times: "If we had bank accounts, it'd be much easier."

Safe Harbor Services began helping local banks and credit unions in Colorado accept marijuana money in 2014, serving a vital–and very profitable–role in the cannabis industry. The company has expanded its reach outside of Colorado, now offering its services to credit unions like Gardner Credit Union in Massachusetts. The company is able to help its customers deposit their cannabis profits "legally" by ensuring that none of the money is derived from activities specifically prohibited by the Cole memorandum, and that the banks who accepted cannabis cash were careful about what they did with it–specifically ensuring that it did not migrate outside of states in which marijuana was legal. However, with the recent rescission of the Cole memorandum by Attorney General Jeff Sessions, it is not clear that Safe Harbor will be able to continue offering their services to financial institutions. 

Polls show that the majority of Americans favor legalization of marijuana, and 30 states have legalized the drug in some form. With this increasing momentum in favor of legalization, states have expressed an interest in allowing banks to accept money derived from marijuana sales in order to quell threats of violence and robbery to marijuana businesses, who generally carry large amounts of cash on hand. Whether the current administration will crack down on organizations like Safe Harbor and their partners like Gardner Credit Union in Massachusetts remains to be seen, but something will have to be done with all of the cash currently being generated by the marijuana industry.

 -John Robinson

Utah may soon legalize medical marijuana

A public event supporting legal medical marijuana organized by the Utah Patient Coalition has attracted hundreds of supporters. The bill being considered, Proposition 2, would allow patients with doctor recommendations to legally obtain medical marijuana from privately owned dispensaries. 

According to an article by Kathy Stephenson of the Salt Lake Tribune, the event included music, food trucks, bounce houses, T-shirts and lawn signs. 

Not all Utahns are in favor of the bill in its current form, though. The article explains that despite empathy for suffering children, some groups don't support Proposition 2 due to a perceived lack of sufficient procedural safeguards. 

A Dan Jones and Associates poll, conducted for UtahPolicy.com, found 64 percent of likely voters to be “somewhat” or “strongly” in support of the measure.

However, several groups, including the The Church of Jesus Christ of Latter-day Saints and the Drug Safe Utah Coalition — made up of medical experts, clergy, law enforcement, educators and business leaders — are opposed and say the initiative as written lacks procedural safeguards.

“We are aware of many in our neighborhoods who seek relief from pain and suffering and are moved with empathy by stories of children who endure debilitating seizures and other medical conditions," said Marty Stephens, the church’s director of community and government relations. “The church supports medicinal use of marijuana, so long as proper controls and safeguards are in place.

“In the spirit of compromise,” he added, "we urge a timely, safe and compassionate approach to providing medical marijuana for those in need without the harmful effects that will come if Proposition 2 becomes law.”

The upcoming elections in November will show whether events like this are enough to sway the voters of Utah to become the 32^nd state to legalize medical marijuana. 

--Alex Bennett

Sixth Circuit Defers to State Cannabis Law in Insurance Dispute

Federalism might bolster insurance coverage for commercial landlords who choose to rent to legal marijuana grow operations if the landlord ensures their insurance policy does not contain a broad exclusion for “criminal acts.” An insurance claim for damage to a rental unit may not bring a commercial landlord any relief, especially when the tenant was growing cannabis illegally under both state and federal law. K.V.G. Properties, Inc. v. Westfield Ins. Co. (hereinafter KVG), a recent case out of the Sixth Circuit, begs the question: Would an exclusion in a first-party insurance contract for criminal acts apply if the tenant had complied with state law when growing marijuana?

Michael S. Levine and Geoffrey B. Fehling of Hunton Andrews Kurth recently weighed in on the K.V.G. decision, which was handed down in late August and, according to Levine and Fehling, “previews ‘federalism’ arguments that are likely to reappear in future cannabis coverage disputes where state law permitting all or limited use of cannabis conflicts with federal law.”

This dispute began when the DEA raided KVG’s commercial tenants for growing marijuana in rental units, but not before the tenants had already done substantial damage, like wall removal, holes in the roof, altered ductwork, and severe damage to HVAC systems. KVG evicted the tenants and sought coverage for nearly $500,000 in related losses from its insurers. KVG sued after the insurer denied its claim because the damages resulted from acts contained in the “Dishonest or Criminal Acts Exclusion” in the policy. The exclusion states that the insurer “will not pay for loss or damage caused by or resulting from any dishonest or criminal act by you, any of your partners . . . employees (including leased employees) . . . authorized representatives or anyone to whom you entrust the property for any purpose.”

Cultivating marijuana is a crime under federal law, but it is protected by Michigan law under the Michigan Medical Marihuana Act (the “MMMA”). The Court noted that “under different circumstances, KVG might have a strong federalism argument in favor of coverage.” However, KVG’s tenants did not comply with Michigan law, which KVG admitted in eviction pleadings. KVG claimed that the “tenant illegally grew marijuana” and it was a “continuous health hazard.”

Moreover, when raiding the premises, the DEA operated under guidance from the Deputy Attorney General James Cole stating that they should not prioritize “individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.” The Court reasoned that “the fact of the raid itself has some tendency to show that the tenants were not in ‘clear and unambiguous compliance’ with Michigan law.” Since pleadings are binding legal documents, KVG admitted its tenants engaged in a criminal act and never argued legality under the MMMA. Instead, KVG argued that the Dishonest or Criminal Acts Exclusion only applied if the tenants had been convicted. The Court rejected this argument because the policy says “criminal act,” not “crime” or “criminal conviction.”

Levine and Fehling concluded that two of the biggest takeaways from KVG are that:

"Policyholders should look for narrow criminal acts exclusions—that are, for example, triggered only by a 'crime' or 'conviction'—that do not apply broadly to alleged 'criminal acts.'" If KVG had not admitted the acts were 'illegal,' a court would be required to interpret exclusions narrowly and in favor of coverage, which may have led to a different outcome in KVG. Also, as the Sixth Circuit recognized, federal courts "act as faithful agents of the state courts and the state legislature," meaning that federal courts sitting in diversity emulate state courts that will enforce applicable state law.”

This deference to state law, including legalized cannabis use through ballot initiatives, may result in different outcomes on “criminal acts” arising from different facts.

--Kindal Wetuski

Wine and Weed?

A recent lawsuit illustrates that perhaps wine does not pair well with weed. Earlier this month, M. Shanken Communications, Inc., the publisher of Wine Spectator e-magazine, filed a complaint alleging trademark infringement against  Modern Wellness, Inc., the operators of the Weed Spectator website.

Reuters reporter, Jonathan Stempel has details of the lawsuit:

M. Shanken Communications Inc, the publisher of Wine Spectator magazine, has filed a lawsuit accusing the northern California-based operators of Weed Spectator of infringing its trademarks, and copying its familiar 100-point rating scale for wine to rate cannabis.

In a complaint filed on Tuesday (September 4, 2018)^, M. Shanken said Sacramento-based Modern Wellness Inc, “in a classic case of ‘passing off,’” created a website and social media pages for Weed Spectator that bear “striking similarities” to Wine Spectator’s own website and e-magazine.

“M. Shanken has no interest in associating Wine Spectator and the Wine Spectator marks with cannabis, a largely illegal drug,” the complaint said. “Any association of this type is likely to tarnish the reputation and goodwill that has been built up in the Wine Spectator marks and business for decades, resulting in dilution of the brand.”

The lawsuit comes at a time when the unusual relationship between the wine and cannabis industries is becoming apparent due to the legality of marijuana in more jurisdictions.

Dave McIntyre's article for the Washington Post entitled Could Marijuana Give Wine a Run for its Money? states that the lawsuit "reflects the wine industry's unease about the legalization of marijuana." McIntyre's article discusses the threats that the rise of marijuana present to the wine industry, including the stigma of alcohol as a drug, labor and employment issues, and the "limited amount of 'inebriation dollars' in the economy."

The article also includes insights from industry experts:

Tom Wark — the Napa-based author of the Fermentation wine blog, as well as publicist and advocate for wineries — stated that he believes there will be a number of people who will switch from wine to cannabis as a result of the limited "inebriation dollars" and the legalization of a new way to become inebriated, namely marijuana. 

The migration of spending from wine to cannabis may explain why some prominent companies in the alcohol industry have begun to invest in cannabis. Earlier this month Breakthru Beverage, one of the largest U.S. distributors of alcoholic beverages, signed an agreement to be the exclusive distributor for CannTrust, a Canadian marijuana producer. On a similar note, Constellation Brands, a leading alcoholic beverage producer, has invested more than $4 billion in Canopy Growth, a Canadian firm that plans to disrupt the marijuana market by producing weed-infused beverages for the Canadian market. 

As legalization becomes more widespread in the United States, perhaps the proactivity of U.S. alcoholic beverage companies in the Canadian marijuana market will allow for a more seamless transition into the domestic cannabis market. Ideally, their international position will facilitate the development of a unified channel for licensing and regulation, allowing the U.S. alcohol and cannabis industries to coexist. 

--Gianna Redeemer

tudies suggest that marijuana users have better sex more often

According to an article on Forbes.com, two studies reveal that Marijuana consumption is correlated with increased sexual frequency and an enhanced sexual experience.

The first study had a stated goal of “elucidat[ing] whether a relation between marijuana use and sexual frequency exists using a nationally representative sample of reproductive-age men and women.”

To get a representative sample for the study, researchers Dr. Michael Eisenberg and Dr. Andrew Sun of Stanford University studied the responses of 8,176 women and 22,943 men nationwide via a Center for Disease Control questionnaire. The study demonstrates that “marijuana is independently associated with increased sexual frequency.” The study further finds that daily smokers across all demographic groups report having 20% more sexual encounters than those who do no smoke marijuana.

 A second study sought to  “determine if marijuana use before sex affects the sexual experience, by how much, and which domains of sexual function are affected.” The study polled 289 adult women who reported using marijuana prior to intercourse. Among the 289 women, “65% [reported] it enhanced their sexual experience, 23% said it did not matter one way or the other, 9% had no significant feedback and 3% said it sabotaged their sexual experience.”

 The two studies offer scientific backing to a common claim from the marijuana community of the drug’s effects on sexual experiences. For researchers like Dr. Eisenberg, the study results demonstrate that “doing more research in this area is important.”

--Ashleigh Williams (Morgan)