Cannabis Law Prof Blog

An interview with marijuana attorney Nadav Aschner

I recently had the privilege of interviewing Nadav Aschner of McAllister Garfield, P.C., a full-service law firm focused on serving the cannabis industries in the states of Colorado, Washington, Oregon, and Florida. In his legal career, Mr. Aschner has worked in both criminal and civil positions, as well as serving in a judicial clerkship in the state court system in Colorado. Currently, his practice focuses on all civil and regulatory aspects of marijuana law, including business development, licensing, regulatory compliance, and litigation. He regularly drafts contracts and agreements for dispensaries and has represented dispensaries in administrative proceedings. He is an avid rock climber, skier, and soccer player, and is the co-founder of a Denver-based record label that manages artists throughout Colorado & US. I asked him some questions about topics related to both the business side of marijuana legalization, and the policy questions surrounding criminal law inherent in marijuana legalization.

Q: Tell me about your educational and professional background, and how you became involved in the field of marijuana law?

A: I graduated from Vanderbilt University in 2010, spent the summer working at a summer camp just to clear my head and then moved to Denver to attend DU law. I sort of fell into marijuana. I went to DU for environmental law, but found it boring. Colorado passed Amendment 64 (retail marijuana) in 2012, and I started working for Sean McAllister as a law clerk around that same time in 2012. The firm’s practice had an emphasis on criminal defense, but as retail marijuana dispensaries began to open up in January 2014, the firm really shifted its focus away from criminal and towards business and regulatory work.

 

Q: Describe your day to day life in the practice of cannabis law.

A: Every day is different. On any given day I do work for anywhere between 10-30 clients, depending on various deadlines and the urgency of matters. Today I worked on some litigation motions, worked on a purchase agreement through which a client will buy a cannabis business, had settlement discussions for a few pending litigation actions and a few matters that may head towards litigation, and worked with a client on responses to demands for business records for a client who is facing regulatory enforcement for violation of state regulations, among other things. There’s no normal, which is nice, but also frustrating because I never know what emergency I’ll wake up to. I try to schedule one day a week with no client meetings and no other deadlines, just so that I can respond to emergencies that have come up that week. Sometimes there are after-work events with trade associations, regulators, etc.

 

Q: Colorado is widely considered to be a trailblazing state with respect to its legalization and commercialization of recreational marijuana. What collateral effects–good or bad–has the marijuana business had on the state?

A: I think Colorado is over-regulated. We were the first and possibly the most restrictive. In part, that’s because all eyes were on us. Some of our “over-regulation” is good because it helps keep marijuana out of childrens’ hands, etc. But it’s hard to run a business and stay compliant when the rules are so restrictive and change so often. The over-regulation has also contributed to the black market, in that some people who can’t afford to pay the high costs of daily compliance will choose to illegally grow and sell marijuana (often across state lines) because it is far less expensive and far more lucrative.

 

Q: Would you suggest that Colorado be considered a model for state legalization? Why or why not?

A: See previous answer. We are definitely a model for most other states, which is both good and bad. One big ticket item that many other states have chosen not to adopt is CO’s restrictions on out-of-state resident ownership of a marijuana business. Colorado has loosened its residency requirements in the last 2 years, but we are still far more restrictive than most states.

 

Q: In terms of legislative policy and cultural shift, was there a specific moment in time when you could tell that full legalization of marijuana in Colorado was imminent, and if so, how did you prepare for it as a professional? 

A: It all happened while I was in school. I didn’t live here until 2010, and marijuana was easy to get but it was only medical. The retail/recreational component came on strong in 2011/2012 but I honestly didn’t pay much attention to it until it came time to vote and I was working for Sean.

 

Q: We have discussed decriminalization of marijuana and retroactive clemency for low-level offenders in our class on several occasions; has Colorado adopted such a policy?

A: Decriminalization, yes. Retroactive clemency, no. There were some cases pending appeal that were dismissed but those who had marijuana felonies on their record prior to legalization still have those.

 

Q: How has it been implemented and have there been any societal issues resulting, and if not, have there been calls for such a policy in light of the state’s full marijuana legalization?

A: Those with felonies on their records for an act (like possession of a few ounces) that would not be a felony now are left high and dry.

 

Q: We have also discussed marijuana’s classification by the UN as a major reason the US has not pursued federal legalization. Do you believe it would be a good idea for the US to act as a leader in this field by legalizing marijuana, and do you think that federal legalization would result in more widespread legalization by other nations? 

A: Of course! My concern is that federal legalization will not be rolled out properly. We already see favoritism with respect to FDA studies, etc. (see Epidiolex https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm611046.htm)

 

Q: What do you know about the struggles faced by marijuana businesses due to their inability to deposit cash in banks? Is it a problem that is being addressed by the state government in any way?

A: It is a huge problem and will take congressional action to resolve. Banks that do handle marijuana accounts charge exorbitant fees. Clients lose accounts because their money smells like weed, or they deposit too much cash or have to many cash deposits in too short a time. It is only being addressed through legislation that hasn’t passed yet.

 

Q: In a field where many products are essentially fungible, and there is a dispensary on every street corner, how do marijuana businesses differentiate themselves to become and stay successful?

A: That’s a free-market issue. Everyone has different preferences. Some want a high-end store, some want a seedy store that reminds them of buying weed from a dealer in high school. A lot of businesses work hard on their branding and marketing. There are more dispensaries in Denver than Starbucks and McDonalds combined. Most marijuana businesses aren’t money-making machines. Most businesses break even, barely. Many fail. Only a few are making the kind of cash that most people think. The reason for that is IRC 280(E), which prohibits certain tax deductions that other industries are allowed to take. That results in a much higher tax bill for cannabis businesses, and a much lower take-home for the owners who work their asses of every day. This will require federal legislation to alter.

 

Q: Do you have any advice for law students interested in marijuana law & policy?

A: Take classes that teach you about corporations, taxes, employment law, intellectual property, etc. Get courtroom and litigation experience if you want to handle any kind of litigation. Marijuana law is a misnomer. Marijuana law is just a dozen different areas of law rolled into one, with an emphasis on the plant and the businesses who cultivate it, extract it, and sell it. The best thing you can do is have a broad knowledge of the law, and apply what you know to the unique situations that come up every day in the cannabis world.

Greenwood v. Green Leaf Lab LLC suggests federal protections apply to cannabis employees

A marijuana testing facility recently argued that the federal ban on marijuana allowed the company to escape obligations under the Fair Labor Standards Act (FLSA).  In Greenwood v. Green Leaf Lab LLC (Greenwood) the District Court of Oregon did not agree and cited the protective purpose of the FLSA due to the absence of on-point precedent. The District Court of Oregon in Portland (District Court) found that the FLSA did apply to employees in state-legal marijuana companies.

Greenwood was brought to court by a courier who transported marijuana samples for the defendant (Plaintiff). The defendant operates a marijuana testing facility in Portland (Defendant). Defendant classified Plaintiff as an independent contractor, despite controlling all aspects of his work. Plaintiff complained that due to his employee misclassification, he made significantly less than minimum wage. Plaintiff questioned his status as an independent contractor, and Defendent started to pay him an hourly wage. Plaintiff was fired a month later, and Defendant gave no explanation except that the business was "going in another direction."

Plaintiff brought Defendant to court, claiming Defendant violated provisions of the FLSA and Oregon wage and hour statutes. Defendant moved to dismiss the FLSA claims because it believed the claims were barred by the federal Controlled Substances Act (CSA). The District Court corrected the motion as a motion for failure to state a claim under FRCP 12(b)(6). 

Defendant essentially argued that Plaintiff could not "invoke the power of a federal statute to enforce an alleged employment relationship that was based entirely on an occupation that is federally illegal." Plaintiff responded that marijuana's legality was not relevant to his claims under the FLSA because the two did not inherently conflict. 

The District Court recited that “Dismissal is proper when the complaint does not make out a cognizable legal theory or does not allege sufficient facts to support a cognizable legal theory.” The District court also recognized that, "As to the specific issue raised here, the parties have not cited, and I have not found, any judicial decision addressing whether the FLSA covers employees working for state-sanctioned medical marijuana businesses."

Because the District Court had no precedent to rely on statutory interpretation of the FLSA guided its decision:

In resolving this issue of statutory interpretation I start with the premise that the FLSA is a remedial statute “to be construed liberally in favor of employees; exemptions are narrowly construed against employers." Haro v. City of Los Angeles, 745 F.3d 1249, 1256 (9th Cir. 2014). "The FLSA requires that employers comply with minimum labor standards to promote “the health, efficiency, and general well-being of workers." 29 U.S.C. § 202(a).

The District Court concluded that, due to the remedial nature of the FLSA, any possible violations of the CSA should not bar state-legal marijuana company employees from protection. The District Court reasoned that it was not comfortable "categorically excluding" workers in the medical marijuana industry when there is no express exclusion in the FLSA. 

Further, the court found a legal advice memorandum written for the National Labor Relations Board (Wellness Memo) persuasive. The Wellness Memo concluded that the National Labor Relations Board had jurisdiction over labor disputes in the medical marijuana business despite federal illegality. In relevant part the wellness memo provides:

[I]t is appropriate for the Board to assert jurisdiction here even though the Employer's enterprise violates federal laws. DOJ . . .  has indicated that it will not prosecute medical marijuana companies such as the Employer . . . This federal policy. . . creates a situation in which the medical marijuana industry is . . .  employing thousands of people, some of whom are represented by labor unions . . . despite the industry's illegality. Moreover, another federal agency, OSHA, has exercised jurisdiction over employers in the medical marijuana industry, including the Employer, notwithstanding that such enterprises violate federal law. . . . Just because the Employer is violating one federal law, does not give it licence to violate another.

The court echoed the statement that an employer violating a law should not have a licence to violate another. It further cited the Ogden Memorandum "authorizing the medical use of marijuana" as evidence that the federal government was moving toward tolerance and that the CSA and FLSA did not inherently conflict.

Ultimately, the District Court denied Defendants motion to dismiss on these grounds. It did not make any decisions about the merits of Plaintiffs FLSA claims, and the case was eventually settled. 

Greenwood is a victory for employees in the legal marijuana industry because it suggests the federal government is not going to be completely hands-off in the marijuana industry and may offer other protections over time. The Greenwood decision has already been cited in two other district court decisions (Kenney v. Helix TCS, Inc, and Tarr v. USF Reddaway, Inc.), which suggests its holding will continue to be applied. The cases that cited the opinion were in Oregon and Colorado, so we will have to wait to see if other districts continue to apply the Greenwood court's ruling. 

--Kylee Debler

OPINION: Marijuana Legalization Could Curb Opioid Abuse

Since 2000, over 500,000 Americans have died from opioid overdoses--equating to more American lives lost from this epidemic than World War II.

According to the CDC, opioids are currently the most common cause of accidental death in the United States. With this drug taking so many American lives every day, measures need to be taken to lessen opioid use. Experts have proposed that medical marijuana may be a solution to help Americans struggling with opioid addiction.

In a recent student conducted by the journal JAMA Internal Medicine, researchers found that states with legalized medical marijuana (MMJ) report 2.21 million fewer daily doses of opioids prescribed per year under Medicare Part D, compared with those states without MMJ. Opioid prescriptions under Medicaid also dropped by 5.88% in states with medical cannabis laws compared with states without such laws, according to the studies.

David Bradford, professor of public administration and policy at the University of Georgia and a lead author of the JAMA study, notes the study's significant findings.

"We found that there was about a 14.5% reduction in any opiate use when dispensaries were turned on -- and that was statistically significant -- and about a 7% reduction in any opiate use when home cultivation only was turned on," Bradford said. "So dispensaries are much more powerful in terms of shifting people away from the use of opiates.

Further, the recent JAMA study is not the first set of research indicating a link between marijuana legalization and decreased opioid use. Another JAMA conducted study from 2014 revealed that states with MMJ had 24.8% fewer opioid overdose deaths between 1999 and 2010. And perhaps even more convincing evidence was set forth in a 2017 study published by the American Public Health Association, which found that the legalization of recreational marijuana in Colorado in 2012 reversed the state's upward trend in opioid-related deaths.

Even with the evidence provide by numerous studies and epidemiologic research, medical marijuana still has its skeptics, such as Attorney General Jeff Sessions, who recently commented, "we think a lot of this [opioid use] is starting with marijuana and other drugs." 

If marijuana were actually a dangerous gateway drug, as Sessions suggested, it would be at least somewhat evident across the data gathered. We would find that states with MMJ laws have an increase of opiate drug use and overdose deaths, when in fact just the opposite has been evidenced. 

Despite the relatively minimal side-effects associated with marijuana use, such as cognitive impairment, these risks are nearly obsolete when compared to the often-deadly impact resulting from opioid abuse.

Again according to Bradford, unlike opioids, marijuana has little addiction potential.

"No one has ever died of cannabis, so it has many safety advantages over opiates," Bradford said. "And to the extent that we're trying to manage the opiate crisis, cannabis is a potential tool."

If we as a nation want to successfully remedy the current opioid crisis, this type of comparative research needs to continue--and federal regulations needs to adapt accordingly. Senselessly ignoring medical marijuana as an alternative pain treatment to opioids will continue to be a detriment to the public health and welfare of America's citizens. 

 

--Gabrielle Rennie

Crossing the Canada–United States Border: Business Travelers Might Need Training on What Not to Say

Business travelers crossing the Canada–United States border should be mindful of what they say to immigration authorities. Canada legalized recreational marijuana use and cultivation this month.

Under the Cannabis Act, adults are allowed to possess, carry and share with other adults up to 30 grams of dried cannabis. They will also be permitted a maximum of four homegrown marijuana plants per household in most provinces. However, the substance is still illegal under federal law in the United States. If an immigration authority suspects someone at the border of illegal activity, which includes possession of marijuana in the United States, the authority may stop the person and refuse entry.

Stefanie Di Francesco, a Canadian employment attorney at McMillan LLP, reports that companies that require employees to regularly cross United States-Canada border would benefit from specific training for those employees regarding how to handle port of entry questioning with immigration authorities.

Both Canadian and American immigration authorities at the ports of entry , she notes, must assess whether a traveler is admissible for entry, which includes assessing whether a traveller is criminally inadmissible. According to Di Francesco:

“Generally, a traveller is considered to be criminally inadmissible to Canada if the person was convicted of an offence in Canada, or was convicted of an offense outside of Canada that is considered a crime in Canada, or committed an act outside of Canada that is considered a crime in the country where it occurred and would be punishable under Canadian law.

A traveller is considered to be criminally inadmissible to the United States if the person violated any law or regulation of any state, the federal government, or a foreign country relating to a controlled substance, which includes cannabis and cannabis related products. As in Canada, an actual conviction for a crime is not required for a traveller to be found inadmissible. Admitting to the essential elements of an American crime will render a person criminally inadmissible to the United States even if that conduct is legal in Canada.”

As with any law enforcement matter, a traveler’s experience may vary depending on the officer. It should be noted that immigration authorities employed by the United States government are required to enforce federal law, especially with respect to illegal drugs. However, according to Di Francesco, “[U]nless there is directive from the federal government, travelers’ experiences may vary significantly depending on the particular officer responsible for reviewing their status at the port of entry.” In the case of business travelers, it is best not to take chances. Not only is a business traveler likely a valuable member of a company’s team, they also represent the company and affect the company's reputation even outside of normal work parameters. For this reason, it is advisable that such business travelers know how to handle any situation that could arise at the border due to new cannabis laws.

For example, an immigration authority could simply ask, “Have you ever used marijuana either prior to or following its legalization in Canada?” Given the agent’s broad latitude for decision-making at the border, if the traveler answers yes, the admission could be used as a basis to determine that they are inadmissible. Not surprisingly, there are risks for those employed in Canada’s cannabis industry. Authorities can question a business traveler about the purpose of their proposed entry, their employer’s business, and whether the traveler has aided in the production or sale of cannabis as part of their employment. The answers given could be viewed by an officer as providing a basis for a finding of inadmissibility.

Di Stefano advises employers whose businesses rely on cross border travel to draft clear employment policies to address requirements around cannabis use for employees who travel internationally on business; ensure employees are adequately prepared for port of entry questioning, which may include conducting training on best practices; and include contractual provisions in employment agreements concerning termination where international travel is required and the employee is found inadmissible to the United States (or another country).

--Kindal Wetuski

Q&A: Officer Jane Doe on Handling of Marijuana Possession

I recently interviewed police officer Jane Doe to get her take on how her police department and the greater Dallas County area handles illegal marijuana usage.  Officer Doe thought it would be easier to be candid if should could speak without attribution.

Whether there are policies in place at the local level, whether there are “unwritten rules” on how to handle marijuana, if she has seen changes on how marijuana usage is handled throughout the years, her opinion on allocating police resources towards illegal marijuana usage, and her thoughts on the future of marijuana in the criminal sphere.  

Jane Doe has been working for the department for several years. She started off as an emergency dispatcher and transitioned into becoming a police officer. Due to her roles in the police department, she had the opportunity to see how other police officers handled marijuana related cases, see any changes made on a wide-spread level, and has practiced those regulations as an officer herself.

Q: Can you tell me a little about your background and what got you interested in becoming a police officer?

A: I have always wanted to be a police officer. I grew up in Pleasant Grove [a neighborhood in Dallas, Texas; an area with one of the highest crime rates in the country and full of drug dealers]. I saw how often people would slip through the cracks or just were not given a fair chance as well as bad people who wanted to cause harm so I wanted to do something on a local level to help. Becoming a police officer was a method to help keep the streets safe from actual bad people but also help those that just made a mistake and need a kick in the right direction. Too often the police officers working in high crime rate areas do not understand the issues people face and have difficulty building a relationship with the community.

Q: During your training to become a police officer was there any focus on dealing with marijuana users?

A: Minimal, the training focused on the difference of driving under influence and driving while intoxicated. Substances would be more subjective tests – eyes, smell, speak, stuff like that. When dealing with marijuana, the officer has more discretion on whether fines, arrests, or sobriety tests are performed. Dallas County has more lenient rules for marijuana.

Q: Was there anything different about your marijuana training compared to other crimes?

A: Not really; we mostly follow the same procedures for all possibilities. There are some different levels of caution, calling-in, discretion, and other procedures but there was not anything that stuck out about dealing with possible marijuana possession.

Q: Once on the job, did you find any differences in dealing with marijuana users compared to that in your training?

A: Not really, no. Of course with experience and field work all things change for the better but the training was definitely a good and accurate starting point on how to handle such calls. However, I did come in contact with a lot more marijuana possession instances than I thought I would. It is definitely not segregated to a certain class or type people as a lot of sources might make it seem. The interactions are daily; about two out of every five traffic stops, I can smell or tell that the person or someone in the car has been using marijuana or has it on them. On highway stops, it increases to about 90% of them are marijuana users; again ranged in all type of people.

Q: Do people caught with marijuana say anything or how do they address it?

A: Scared and worried; ignorance of the legal process – they do not know that just because it looks like they have been smoking weed, it still needs to be proven. Their response really has a lot to do with how officers deal with the person.

Q: How would you describe your interactions?

A: More of a personal interaction – like a friend. They react a lot more relaxed and straight forward.

Q: Any large differences on how other cops act with them, compared to yourself?

A: New officers, less experienced officers, or those sheltered growing up are awkward about their role and often it does not go as smoothly. Also seen other officers who are great in interacting with people and communicating with general public – makes the people feel comfortable.

Q: What happens when they admit to having MJ?

A: If it is a usable amount then it is an arrest but I explain to people what is going to happen (class B misdemeanor). I try to be very helpful as far as let them call their moms or spouses, whatever they need to alert someone of what is about to happen.

Q: From your experience on the job and from what you hear from other officers has the amount of marijuana users changed in the past few years?

A: People are a lot more comfortable smoking out in public or in their cars or everywhere whereas before they were trying to hide. Depends a lot on the officer – a lot of officer discretion. I always find myself asking why I should arrest someone over such a small amount when I could be arresting someone on meth or committing a violent crime.

Q: Has legalization of adult use of marijuana in other states had any impact in Texas?

A: Feel like Texas is doing its own thing regardless of other states; don’t see it changing anytime soon.

Q: Has legalization of adult use of marijuana in other states impacted how people defend their marijuana use?

A: Absolutely, for people, a lot of people do not know the laws so for example people order stuff online and don’t know it is a felony. Higher charge than a bag of weed. THC pens and gummies and all sorts of things. The FedEx security unit calls the cops if they see anything or smell anything regarding marijuana usage. We do not arrest the buyer or seller, the item is just put under a “found property report” and then people call in, mad that their item never arrived. We only arrest if the item is found on the person.

Q: Have there been any changes in orders from the chief of police on how to deal with marijuana users?

A: No, there has been no comment on it from chief of police. Our department is a lot smaller however so maybe the chief for Dallas has said something about it.

Q: Compared to other drug related offenses, how prevalent is marijuana?

A: Marijuana comes across a lot more often but partly because of smell but it is just as much of an issue as other substances. People under the influence of marijuana are a lot more relaxed and chill, easier to explain, easier to deal with because of nature of substance. Cocaine, alcohol, and crack and other substances make them a lot harder to handle because of nature of the substance. There is also the chance that whatever they used might be mixed with something else.

Q: For other substances, is there also officer discretion?

A: Yes, different because it is a lot easier to test, bigger charge, marijuana alone is its own safety code under the Health and Safety Code - a definite arrest.

Q: Do you come across a large amount of dealers?

A: No, “big time” dealers just some dude with scales and wad of money. They vary from nerdy looking kid to guy who resisted and fought officers. It’s a never know.

Q: Do you see any changes coming to how your department or police departments in general handle marijuana related crimes in the next five to ten years?

A: Probably not; I think things stay about the same in Texas. No drastic changes coming anytime soon.

 --Fernando Lira Gomez