Tuesday, April 6, 2021
Lauren A. Newell (Ohio Northern University, Pettit College of Law) has posted Hitting the Trip-Wire: When Does a Company Become a "Marijuana Business"? (101 Boston University Law Review, Forthcoming (2021)) on SSRN. Here is the abstract:
Like the alcohol industry during Prohibition, the marijuana industry is a profitable one. And, like bootlegging was then, selling marijuana in the United States now is illegal. Despite the number of states that have legalized or decriminalized the sale of marijuana for medical or recreational use under state law, marijuana sales remain illegal as a matter of federal law under the federal Controlled Substances Act of 1970 (CSA). Individuals and entities that violate the CSA face substantial potential criminal and civil liability, including prison time and fines, alongside a host of additional negative consequences arising in business law, tax, bankruptcy, banking, and other sources. The negative consequences marijuana businesses face have been discussed in detail elsewhere. This Article asks a different question: not, what are the negative consequences, but rather, when do those negative consequence attach? In other words, when does a company become a “Marijuana Business”?
For purposes of this discussion, a Marijuana Business is an entity that participates, contributes, or assists, directly or indirectly, in the retail and/or medical marijuana industry to an extent that exposes it, its owners, and its agents to potential criminal and civil liability and other negative business consequences. In short, these are the companies that should be worried about the fact that they are engaging in an industry that is illegal under federal law. To identify the circumstances that result in a company’s being a Marijuana Business, this Article analyzes seven hypothetical companies that directly participate in the marijuana industry or support others that do. For each, it asks whether the facts are sufficient to establish criminal liability either directly under the CSA or indirectly under criminal conspiracy or aiding and abetting liability theories. Part I briefly introduces criminal liability under the CSA, along with the two complicity theories. Part II analyzes the hypothetical companies’ actions and determines whether they are Marijuana Businesses. Part III concludes with factors that courts and companies can look toward to determine whether those companies are indeed Marijuana Businesses.