Cannabis Law Prof Blog

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The employer rescinded the job offer after the plaintiff tested positive for cannabis.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

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

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

College in Canada now offering marijuana program

With the legalization of recreational use marijuana around the corner, Niagara College in southern Ontario is now offering a one-year certificate in commercial cannabis production. CBC News interviewed Professor Bill MacDonald, head of this new marijuana program, who outlines what students should expect:

Some of the classes take place in a facility MacDonald says is nicknamed "the cannabunker": a series of shipping containers linked together to form a high-tech, high-security production lab for growing marijuana.

Students will get intensive hands-on training in growing pot with classes that focus on topics like plant nutrition, climate control, pest control and plant selection.

There are also courses about the regulations governing cannabis in Canada. The program ends with a field placement for students at a cannabis producer in the region.

The CBC article goes on to describe the growing need for more workers in marijuana industry:

In the Niagara region of Ontario alone, there are currently more than 1.8 million square feet (nearly 550,000 square metres) of greenhouse space dedicated to producing marijuana. As that number grows, more and more skilled greenhouse workers will be needed.

"Every week, it's a new head count," says Michael Ravensdale, the vice president of quality and production at CannTrust, a local medical marijuana producer. "The last update I had, we had over 200 people in Niagara. We think we will be about 350 by the end of the year and that's just the second phase of expansion."

CannTrust has a perpetual harvest facility in Niagara, meaning plants are always in bloom and workers are always busy. The company has jobs in cultivation, processing, manufacturing, quality control and other areas, including product development and research. Ravensdale says the pot economy is evolving at a rapid pace.

CBC stated that the program only accepted 24 of their over 300 applicants, but with the rising need for skilled workers, this program is likely to expand.

--Wyatt Hinson

Adult Use Marijuana Industry Swallowing Up Medical Marijuana Market?

As more states legalize adult marijuana use (recreational use), the medical marijuana industry may begin losing revenue.  Iris Dorbian for Forbes reports that:

According to estimates by leading cannabis researchers ArcView Market Research in partnership with BDS Analytics, the latest revenue projections for the U.S. medical cannabis industry in 2018 is $4.3 billion versus $6.7 billion for adult use. Last year, medical racked up $5.9 billion while adult use snagged $2.6 billion.

Much of the steep drop in the medical market and surge in recreational use has to do with users gaining wider access to the substance, says Tom Adams, managing director of industry intelligence at BDS Analytics.

Adult use is currently legal in nine states and D.C., while medical use is legal in 30 states.  While some analysts believe that the surge in adult use sales over medical sales is due in part to being in its “honeymoon stage” and predict that both markets should see double-digit compounded annual growth rates across the next seven years, others predict that the two systems (medical and recreational) will merge into one comprehensive system in the coming years. Dorbian quotes Diane Czarkowski, a founding partner of Canna Advisors in Colorado:

It is too burdensome for businesses--whether cultivation, processing, or dispensary--to maintain two separate business structures . . . [and] as long as medical programs specify which conditions are recognized, there will always be patients who are excluded from access.

The article also quotes Ryan Kocot, a cannabis lawyer/consultant from Sacramento, California, who offers another theory on the challenges for growing the medical marijuana industry and implications that big business investments have on the market:

Even if we hypothetically put aside the countless legal hurdles companies face due to cannabis’s classification as a Schedule 1 drug, it’s much more expensive to bring a medicinal product to market when it comes to clinical testing and dealing with the FDA--not to mention patents. . .

Bigger companies getting involved translates into more lobbying dollars being spent on federal legalization[.] When federal legalization inevitably occurs, the question becomes: Will larger companies be interested in targeting the medicinal market? One may also argue that the medical market could be the next frontier for Big Pharma, particularly since federal law changing will open the intellectual property floodgates, with patents, for example. Reasonable minds could certainly disagree, but my guess is that the recreational market will be the main target of big business.

It will be interesting to see which of these theories reign supreme as more states open the gates for adult use.

 -Ashley Goldman

Coca-Cola eyeing cannabis beverages

They took out alcohol in 1886 and cocaine in 1929, but the makers of Coca-Cola--America's "Real Thing"--are now looking at adding cannabis to their beverages.  Bloomberg is reporting:

Coca-Cola says it’s monitoring the nascent industry and is interested in drinks infused with CBD -- the non-psychoactive ingredient in marijuana that treats pain but doesn’t get you high. The Atlanta-based soft drinks maker is in talks with Canadian marijuana producer Aurora Cannabis to develop the beverages, according to a report from BNN Bloomberg Television.

 

“We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world,” Coca-Cola spokesman Kent Landers said in an emailed statement to Bloomberg News. “The space is evolving quickly. No decisions have been made at this time.” Landers declined to comment on Aurora.

 

. . .

 

Coke’s possible foray into the marijuana sector comes as beverage makers are trying to add cannabis as a trendy ingredient while their traditional businesses slow. Last month, Corona beer brewer Constellation Brands Inc. announced it will spend $3.8 billion to increase its stake in Canopy Growth Corp., the Canadian marijuana producer with a value that exceeds C$13 billion ($10 billion).

 

Molson Coors Brewing Co. is starting a joint venture with Quebec’s Hexo’s Corp., formerly known as Hydropothecary Corp., to develop cannabis drinks in Canada. Diageo PLC, maker of Guinness beer, is holding discussions with at least three Canadian cannabis producers about a possible deal, BNN Bloomberg reported last month. Heineken NV’s Lagunitas craft-brewing label has launched a brand specializing in non-alcoholic drinks infused with THC, marijuana’s active ingredient.

Soda pop sales in the U.S. have declined for a dozen years in a row.  This might just get them back on track. 

--Frank Snyder

Employment law and marijuana: The view from the Great White North

American states that have legalized marijuana have been wrestling with the question of how to deal with it in the workplace.  On the one hand,  employers have legitimate reasons to want employees to refrain from using it on the job.  On the other, medical marijuana raises issues regarding discrimination against those with medical conditions.

While the American courts have been addressing things in a piecemeal fashion, all Canadian provinces and territories will have to deal with the issue beginning on October 17, which is Day 1 of the new Marijuana Era there.  Employment lawyer Patrick Essaminy of Montréal's Stikeman Elliott LLP  discusses the looming issue on an interesting new podcast.  There is a lot of good discussion, but Essaminy points out some of the difficulties employers will have in dealing with employees who are impaired at work.  What should employers do?

This is a very interesting question and a great challenge for employers in that, unlike alcohol testing, testing for cannabis is tricky. The first priority for employers should be to ensure that their workplace is safe and that any employees that are demonstrating signs of impairment be managed accordingly.

In the world of law enforcement officers rely on the Standardized Field Sobriety Test, also called the SFST. Drug recognition experts are highly trained under the Drug Evaluation and Classification Program and employers can certainly decide to implement testing based on these sophisticated programs. However for now, we can talk about the standard signs of impairment which by the way can be the result of cannabis use, but also in other cases it can be when someone is simply fatigued or overworked.

Given that random testing or testing without proper justification is difficult in Canada, we recommend that employers manage situations of potential impairment by properly training their managers to recognize signs of impairment, whatever the cause is, and to act upon these signs by meeting with the employees, and if necessary removing the employees from the workplace in order to protect both the affected employee and any other people that may come into contact with that employee.

Some of the signs that employers need to be sensitive to in assessing whether someone is impaired include the following: glossy or red eyes; slurred speech; poor coordination; lack of focus or concentration; someone who is easily irritable or demonstrates inappropriate or emotional responses. Other signs may include an unsteady posture, someone whose personal hygiene or appearance is getting worse, someone who has a delayed reaction or appears to have an increased appetite while at work.

I want to emphasize that all of these signs should make an employer proactively react, but it does not mean that the employer can conclude automatically that an employee is impaired as a result of the use of cannabis. That said, the obligation of an employer is to ensure health and safety at the workplace and therefore the cause of the impairment is not the relevant immediate concern in this case. There may be other situations where an employer may be reacting to a near miss, an incident, or a serious accident, which will warrant specific testing and that is a whole different topic.

--Frank Snyder

 

 

Crackdowns of black market operations in legalized territory are amping up

Operating a dispensary without a license? Beware! Los Angeles and several other California cities are increasing efforts to stop cannabis operations that continue to operate without a license.

Officials initially issued warnings to the many perpetrators, but after many months of noncompliance, LA is now filing criminal charges against various retailers, growers, and delivery services. 

The Los Angeles Daily News reports that earlier this month, prosecutors there have charged 515 people for helping to run 105 illegal marijuana operations: 

“Our message is clear: If you are operating an illegal cannabis business you will be held accountable,” Los Angeles City Attorney Mike Feuer said.

It’s widely believed that Los Angeles has the world’s biggest marijuana market, and businesses have thrived for years under the state’s loose medical marijuana laws. But since the start of the year, new California laws have required all cannabis businesses to have both a state and city license to operate — licenses that can add costs to operations in the form of fees, testing requirements and hefty taxes.

The new laws also let cities regulate the marijuana industry, and many cities so far have opted against allowing such operations. Los Angeles, however, began licensing retail outlets in late January and most other types of marijuana businesses on Aug. 1. As of Friday, the city said 163 businesses have been given temporary licenses to operate.

But that represents just a fraction of the overall marijuana market, and for the past eight months, the City Attorney’s office coordinated with the Los Angeles Police Department to identify and investigate businesses that were operating without licenses. Most are retail shops, the City Attorney’s office said, but action also was also taken against marijuana growers, extraction labs and delivery services.

California and other legalized states, like Washington, and Colorado, continue to struggle with black market operations well after legalization has taken effect. In an effort to level the playing field, Los Angeles and other cannabis officials say they will take all measures necessary to crackdown on illegal operations. The 120 criminal cases recently filed in LA are intended as a loud and clear signal to all cannabis operators that they must follow the licensing regulations, or face the consequences. 

--Manda Mosley Maier

 

Advertising for Addiction: Cannabis Advertising in need of Regulation?

The marijuana legalization train is full steam ahead as more than half of the states have passed legislation legalizing marijuana for medical use and more than a handful allowing recreational use among adults. In states that have allowed recreational adult use, dispensary advertisements are relentlessly marketing the product to all parts of the adult population.

The Atlantic recently published an article by Annie Lowrey, America's Invisible Pot Addicts, describing the often mocked or ignored position that marijuana addiction is real, is prominent, and needs to be addressed.

For Keith Humphreys, a professor of psychiatry and behavioral sciences at Stanford University, the most compelling evidence of the deleterious effects comes from users themselves. “In large national surveys, about one in 10 people who smoke it say they have a lot of problems. They say things like, ‘I have trouble quitting. I think a lot about quitting and I can’t do it. I smoked more than I intended to. I neglect responsibilities.’ There are plenty of people who have problems with it, in terms of things like concentration, short-term memory, and motivation,” he said. “People will say, ‘Oh, that’s just you fuddy-duddy doctors.’ Actually, no. It’s millions of people who use the drug who say that it causes problems.”

Users or former users I spoke with described lost jobs, lost marriages, lost houses, lost money, lost time. Foreclosures and divorces. Weight gain and mental-health problems. And one other thing: the problem of convincing other people that what they were experiencing was real. A few mentioned jokes about Doritos, and comments implying that the real issue was that they were lazy stoners. Others mentioned the common belief that you can be “psychologically” addicted to pot, but not “physically” or “really” addicted. The condition remains misunderstood, discounted, and strangely invisible, even as legalization and white-marketization pitches ahead.

Despite medical professionals’ concerns and actual users’ testimony that marijuana addiction is real and has the potential to seriously damage the lives of addicts, advertisements continue to tout marijuana’s many uses and proclaim that it is safe. 

Advertisements for delivery, advertisements promoting the substance for relaxation, for fun, for health. “Shop. It’s legal.” “Hello marijuana, goodbye hangover.”

Sellers are targeting broad swaths of the consumer market—soccer moms, recent retirees, folks looking to replace their nightly glass of chardonnay with a precisely dosed, low-calorie, and hangover-free mint. Many have consciously played up cannabis as a lifestyle product, a gift to give yourself, like a nice crystal or an antioxidant face cream.

Lowrey addresses many other concerns about the growing support for marijuana legalization at the state level without federal involvement including: lack of food and drug testing and regulation, medical advice being issued by growers and retailers that are not medically trained, the ever-increasing potency of different strains of cannabis, and the potential consumer abuse that arises from business goals of maximizing profit regardless of whether heavy use by certain customers is actually safe.  She does not suggest that prohibition is a viable alternative. The strain on government budgets created by marijuana-related enforcement is not necessarily proportionate to the potential harm legalized marijuana use presents.

Billions of dollars are spent on the war on drugs and millions of individuals are prosecuted for petty marijuana offenses on the government’s dime while local, state, and the federal government bodies stand to generate billions of tax dollars in legalization. The savings in marijuana-related expenditures and potential tax gains means a great deal of revenue is at stake. But Lowrey suggests there should be limits imposed on advertising to prevent mass addiction that could prove detrimental to the welfare of consumers in the long run.

The tobacco industry has been down this road and its tale may be telling with regard to what the marijuana industry can expect in the future. Mandates to restrict advertisement activities, requirements for payments into compensation funds for injured consumers, and demands for FDA testing on products may be on the horizon if and when the federal government decides to step in and regulate the exploding cannabis industry.

- Ashley Goldman

Smartphone app lets users know they are too high to drive

A Massachusetts psychology professor has come up with an app he says can inform users when they are too impaired to drive.  Dr. Michael Milburn of UMass-Boston has come up with the DRUID ("Driving Under the Influence of Drugs") cellphone app which users, he says, can use to see if they can drive.  The Georgia Straight reports how the app works:

The five-minute test is accessible from a phone or tablet and requires users to complete four tasks to determine a level of impairment.

The app has three modes: “practice”, “baseline”, and “test”. Although the software mimics a simple, but tough, video game, users can’t technically fail the levels, but do need to set a baseline sober score, first. Users are encouraged to play around with the practice mode a few times before taking a stab at a sober score, which is calculated from the most recent ten scores achieved on baseline mode.

Once a sober score has been calculated, users can whip out their phone post-blaze and test their stoned results against their standard baseline.

Sound simple enough? Not quite. Druid measures every move, from the shake and wobble of the device during a balancing level to the user’s ability to follow complicated instructions—all of which are meant to emulate the demands of operating a motor vehicle.

Until the driver scores within approximately five percent of their sober baseline, the app urges users to find another mode of transportation.

Also note that this app will cost you a few dollars and its test scores do not establish a legal defense to driving impaired.

--Wyatt Hinson

US marijuana industry’s economic impact could hit $80 billion by 2022

The U.S cannabis industry could pump nearly $80 billion on an annual basis into the nation’s economy by 2022, according to the newly released Marijuana Business Factbook.  

MJB is selling the Factbook, but it's probably a great purchase for those interested in the industry.  The data is particularly valuable to marijuana businesses looking to show the benefits of legalization to legislators and policymakers.

That’s because it can help them understand the importance of the cannabis industry to the larger U.S. economy – and how much more important it will become.  Some of the interesting parts:

Estimates published in the newly released  show the total economic impact of legal marijuana sales increasing from $20 billion-$23 billion in 2017 to $63 billion-$77 billion by 2022 – a 223% increase.

By comparison, the $77 billion figure is similar to the 2017 gross domestic product of New Hampshire, which stands at $81 billion, according to the U.S. Bureau of Economic Analysis.

The estimates reflect the marijuana industry’s rapid transition out of the black market and into a mainstream economic juggernaut, generating thousands of new jobs, providing business opportunities and creating significant ripple effects across the country.

Based on sales of medical and recreational marijuana at the retail level – including flower, infused products and concentrates – the estimates use an economic multiplier of 3.5 to quantify the industry’s overall contribution to the economy, showing how revenue generated by cannabis businesses permeates through communities, cities, states and the nation.

In other words, for every $1 consumers/patients spend at dispensaries and rec stores, an additional $2.50 of economic value will be injected into the economy – much of it at the local level.

The book goes on to note some of the ways that marijuana businesses affect the economy:

• Tourists visit rec states to purchase and consume cannabis, while marijuana business professionals travel for meetings, conferences and market research – infusing tourism dollars into a state.
• The creation of cultivation sites, dispensaries/rec shops and infused product companies spurs real estate and construction activity. Many grows, for instance, occupy warehouse space that was previously vacant, while a fair share of retailers took over and renovated dilapidated storefronts.
• Marijuana businesses collectively pay hundreds of millions of dollars in state and local taxes, which fund projects including roads and rural hospitals and government programs such as education.

 -Fernando Lira Gomez

Cannabis stocks rally ahead of Canadian rollout

From Market Watch:  Cannabis stocks rally anew as analysts cheer latest tie-ups in growing sector:

U.S.-listed shares of Canadian cannabis companies rallied anew Wednesday, as analysts cheered the latest link-ups in the sector and remained bullish on a market expected to grow quickly once Canada fully legalizes the substance on Oct. 17.

Cronos Group Inc. CRON, -7.02% led the charge, climbing another 15% to put its one-month gain at 119%. The Toronto-based company climbed about 13% on Tuesday, after it announced what it called a “landmark partnership” with Boston biotech Ginkgo Bioworks Inc. that will seek to produce specific cannabinoids at scale.

Cannabinoids are specific molecules in marijuana that can produce effects in the human body, with the most commonly known subclasses being Tetrahydrocannabinol, or THC, and cannabidiol, or CBD. Cronois has pledged to fund about $22 million in research and development and issue up to 14.7 million shares to Ginkgo if the partnership meets certain milestones.

Some people are going to make a lot of money in cannabis-related stocks.  Others, not so much.  Do your homework.

--Frank Snyder

 

Big Pharma Collects Most Canadian Cannabis Patents

That's the title of a new look at the about-to-explode Canadian market for marijuana conducted by Grow Biotech and New Frontier Data.  In one sense this isn't surprising--big companies have big R&D budgets and big patent-prosecution operations.  On the other hand, there seem to be a lot of patents for something that's still highly illegal.  From the study:

Seven of Canada’s top 10 cannabis patent holders are major multi-national pharmaceutical companies, according to a joint research project between Washington D.C. based New Frontier Data, the global authority in data, analytics, and business intelligence for the cannabis industry, and London based cannabis bio-technology firm, Grow Biotech .

“Big Pharma’s inevitable entrance into the Cannabis space has arrived.  The top nine medical conditions for which Cannabis can be used as an alternative treatment could cannibalize as much as $20 billion in U.S. pharmaceutical sales in the next two years. As more medicinal applications for the plant are discovered, and more physicians and patients integrate cannabis into treatment regimes, the potential impact of cannabis on healthcare will continue to grow for years to come,” said New Frontier Data Founder & CEO Giadha Aguirre de Carcer.

Leading Canada’s Cannabis Patent Race

CIBA-GEIGY AG (Switzerland): 21
PFIZER PRODUCTS INC. (United States of America): 14
GW PHARMA LIMITED (United Kingdom): 13
TELEFONAKTIEBOLAGET LM ERICSSON (Sweden): 13
MERCK SHARP & DOHME CORP (United States of America): 11
SOLVAY PHARMACEUTICALS B.V. (Netherlands): 7
KAO CORPORATION (Japan): 7
OGEDA S.A. (Belgium): 7
SANOFI-AVENTIS (France): 6
UNIVERSITY OF CONNECTICUT (United States of America): 6

With Canada poised to be the first G-7 country to fully legalize cannabis, firms have been racing to secure protectable intellectual property (IP) before the market launches an adult use market later this year.  Notably, pharmaceutical firms are among the leading cannabis patent holders in Canada. These patents, which would have been difficult to enforce while cannabis remained illegal, will become enforceable post-legalization, giving the patent holders a key strategic advantage in an increasingly competitive market.

--Frank Snyder

THC Breathalyzer Could Help Ensure Road Safety

With recreational marijuana use being legal in nine states and the District of Columbia, companies are now creating technology to aid in removing drivers impaired by THC from the roads. A California-based company, Hound Labs Inc., has designed a marijuana-breathalyzer capable of detecting THC potentially present on a driver's breath. USA Today has the full story:

When an individual blows into the breathalyzer, it can determine within a couple minutes whether there is alcohol, THC or both in the person's system. Since THC is only present in someone's breath during that peak two-hour window, the driver is considered impaired when it's detected.

The breathalyzer would then display "Warning" if THC is detected and "Pass" if it is not. 

The device "will help ensure safety on our roads and in the workplace while also promoting fairness to people who use marijuana legally and responsibly," said Louisa Ashord, marketing manager for Hound Labs in a statement. 

Implementation of these devices would provide officers with an objective standard to test drivers and detect recent marijuana use that may lead to impairment. 

--Gabrielle Rennie

 

Federal Trademark Protection Unavailable for Cannabusiness Companies

The US Patent and Trademark Office allows for the registration of trademarks for goods used in "lawful" commerce.  The New York Times notes that this is bad news for owners of cannabis businesses hoping to protect their brand against infringement because they are operating their businesses outside of federal law.

Cannabis is still illegal under the Federal Controlled Substance Act resulting in the USPTO denying applications for federal registration of marks for cannabusiness companies. For now, cannabusiness owners must rely on more narrow protections for their marks such as state trademark protections, common law unfair competition protections, and other intellectual property protections such as copyrights and patents which lack the commerce requirement.

While these options do not provide as much protection as a federal trademark, business owners can (and should) seek out these protections and meticulously document the use of their marks in order to build a strong case for use in commerce in the hope that federal registration will be offered eventually. 

--Andrew Goodwyn

Fort Lauderdale to Limit Number of Marijuana Dispensaries in Opposition to State Law

Several medical marijuana dispensaries that have applied to open operations in Fort Lauderdale, FL face denial of their applications as officials have decided to enforce an ordinance that limits the number of medical marijuana dispensaries allowed to open in the city. According to a Sun Sentinel report, the actions by city officials seemingly violate state law:

[S]tate law prohibits cities from limiting the number of dispensaries. A city is allowed to ban them outright, but if a city chooses to allow the marijuana treatment centers, they must be treated like any ordinary pharmacy.

Fort Lauderdale says that's a problem, because its law prohibits more than one dispensary in each of its four districts. City officials plan to reject three of the dispensaries that applied.

City officials have acknowledged that a dispensary wishing to challenge its law can do so in court. And while officials recognize they will likely lose if such a challenge is brought, they are unwilling to forego enforcement of the city ordinance based solely on a potential courtroom battle. 

--Jason Carr

Cannabis-based Pet Products Popular in Canada Despite Limited Research and Testing

Veterinarians in Canada are wary of "anecdotal evidence" indicating that cannabis-based pet products are effective in treating anxiety, seizures, and arthritis pain in dogs and cats. The Calgary Herald reports that interest in cannabidiol products for pets is growing among Canadian pet owners even though no formal ads for the products are allowed on sites like Google or Facebook. Still, word of mouth among pet owners has proved powerful--pet supply stores like PAWSitively Natural Pet Food & Supplies have recently seen demand for cannabidiol pet products spike after customers reported that their pets have been able to go off hardcore painkillers. 

Dr. Alastair Cribb, the founding dean of the University of Calgary's faculty of veterinary medicine, is not so sure: 

Cribb is skeptical about these sorts of testimonials, saying there are just too many questions surrounding the use of cannabidiol in pets. He says the recommended dose is vague (PETtanicals recommends 0.01 millilitres per pound the animal weighs), there is little known about how cannabidiol interacts with other drugs and the conditions is it said to be effective in combatting—particularly anxiety and osteoarthritis — “tend to wax and wane, so how do you know when the CBD is effective?”

However, there may soon be answers to some of these questions surrounding cannabidiol pet products--University of Calgary's third-year veterinary students will take on a year-long research project on the subject during the 2019-2020 academic year. For now though, pet owners may want to err on the side of caution in giving their pets cannabis-based products that have not yet been properly tested. 

--Taylor Allan

Getting high may cost you a job selling weed

Marijuana industry employers are rejecting job applicants who regularly smoke. Particularly in states where only medical use is permitted, employers tend to disqualify roughly 9 out of every 10 applicants. A main reason why is the criminal history of many users, and the reluctance of employers to hire felons, even if the felony was directly related to marijuana. 

In Florida, where the state’s medical marijuana market is just now starting to build some momentum, cannabis operations are in a frenzy to hire budtenders, cultivation experts and various other team members to assist in serving the hundreds of thousands of patients expected to participate in the program. The state already has around 147,000 patients in the pool, so finding quality, reliable talent to run the show is top of mind for most human resources managers.

However, the process is not going as smoothly as expected. Many of these businesses are simply refusing to hire marijuana users and people with drug-related blemishes on their record -- regardless of their qualifications. Such high standards have disqualified the majority of job applicants. Roughly only about “10 percent” of those who apply for positions in Florida's cannabis market are employable, according to the Orlando Sentinel.

Employers tend to be more lenient in states that have legalized adult use of marijuana, but marijuana related job recruitment firms recommend not bragging to your interviewer about any intense passion for weed or prior criminal activity. 

-- Alex Bennett