Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Monday, October 11, 2021

"Menthols and Racial Capitalism: A History of Tobacco Profiteering in Black Urban Spaces"

Download (11)The title of this post is the title of an exciting event sponsored by the Drug Enforcement and Policy Center at The Ohio State University Moritz College of Law.  Here is a description of the event from this registration page:

Long seen by the tobacco industry as a consumer segment of consumers ripe for exploitation, urban communities of color have endured vicious decades of deceit and disregard for their health as the targets of menthol cigarette advertising.  Menthols comprise some 30 percent of a shrinking tobacco market in the United States.

As the industry and its supporters in public office move to protect their profits from a federal ban, Dr. Wailoo offers a detailed account of how advertising firms explicitly capitalized on poverty, alienation, and drug use to carve a menthol market out of urban space.   This effort, which started in the 1950s and lasted decades, followed the tobacco industry’s false framing of menthol cigarettes as a safer, even healthful alternative for smokers beginning in the 1920s. 

Join the Drug Enforcement and Policy Center for a moderated discussion with Professor Keith Wailoo, author of Pushing Cool: Big Tobacco, Racial Marketing, and the Untold Story of the Menthol Cigarette, Dr. Amy Fairchild, dean of The Ohio State University College of Public Health, and DEPC Visiting Assistant Professor Sarah Brady Siff.

Again, registration for this event is available at this link.

October 11, 2021 in Business laws and regulatory issues, Race, Gender and Class Issues | Permalink | Comments (0)

Monday, October 4, 2021

"The Blunt Reality of Cannabis Advertising: State-by-State Restrictions & the TCPA"

The title of this post is the title of this new paper recently posted to SSRN and authored by Elle Gerwig, a recent graduate of The Ohio State University Moritz College of Law.  (This paper is yet another in the on-going series of student papers supported by the Drug Enforcement and Policy Center.)   Here is this latest paper's abstract:  

In today’s world, individuals are surrounded by marketing and advertisements.  The alcohol and tobacco industries have long faced advertising restrictions, and now cannabis businesses are beginning to see similar restrictions.  Unlike other industries, cannabis is still illegal under federal law which creates confusing restrictions for companies who are located in states where medical or adult-use cannabis is legal.  This split in ideology between the federal and state governments, along with the confusing state regulations written more for policymakers than industry workers, has set a crash course for cannabis.  This paper will examine several marketing areas where the cannabis industry is currently facing strict regulations, such as billboards, social media, and text messaging, as well as the public policy aspects that have influenced the rules on cannabis advertisements.  The paper also focuses on the Telephone Consumer Protection Act (TCPA) and the current rise of class actions associated with text-message marketing in the cannabis industry.  The primary goal of this article is to discuss the current regulations for cannabis advertising and why these regulations are hurting the growing cannabis industry.

October 4, 2021 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Friday, September 24, 2021

Is the marijuana industry where everyone is going back to work?

Download (10)The question in the title of this post is prompted by this notable lengthy new Washington Post article, fully headlined "Greener pastures: Marijuana jobs are becoming a refuge for retail and restaurant workers: An estimated 321,000 Americans now work in the legal cannabis industry, outnumbering the country’s dentists, paramedics and electrical engineers." Here are excerpts:

After a year on the front lines, Jason Zvokel traded in his 15-year career as a Walgreens pharmacist for a different kind of drugstore: a marijuana dispensary.

Now instead of administering vaccines and filling prescriptions, he’s helping customers make sense of concentrates, tablets and lozenges. His pay is 5 percent lower, he says, but the hours are more manageable. “I am so much happier,” said Zvokel, 46, who’s worked in retail since he was 18. “For the first time in years, I’m not miserable when I come home from work.”

The cannabis industry is riding a pandemic high: Marijuana dispensaries and cultivation facilities — deemed “essential” by many states at the beginning of the coronavirus crisis — became an early refuge for retail and restaurant workers who had been furloughed or laid off. The industry has continued to grow, adding nearly 80,000 jobs in 2020, more than double what it did the year before, according to data from the Leafly Jobs Report, produced in partnership with Whitney Economics.

An estimated 321,000 Americans now work in the industry, a 32 percent increase from last year, the report found, making legal marijuana one of the nation’s fastest-growing sectors. In other words: The United States now has more legal cannabis workers than dentists, paramedics or electrical engineers....

That surge in cannabis hiring has put pressure on traditional employers — particularly in the 18 states and the District where recreational marijuana use is legal — to ease drug testing requirements. Amazon, the nation’s second-largest private employer, said in June that it would stop screening employees for cannabis use and would support federal legislation to legalize marijuana. A number of other employers, including retailers, restaurants and city governments have also dropped such requirements in an effort to attract workers in a labor market where job openings outpace the number of unemployed Americans 10.9 million to 8.4 million.

Workers’ rights groups are pressing for broader unionization in the cannabis industry, calling it a critical time to establish well-paying jobs with proper protections. With the right policies, they say, the industry could become a pipeline to middle-class jobs, much like the manufacturing industry used to be....

Brianna Price recently left a job as a grocery stocker to become a “budtender” — an industry term for a sales associate — at a dispensary. She’s been promoted three times in the year she’s worked there, and now oversees all purchasing and a staff of nine.

“It’s the best job I’ve ever had,” said Price, 31, of Midland, Mich., who worked as a paralegal for eight years before she was laid off early in the pandemic. She took a part-time job at the supermarket chain Aldi, but says it paid so little that she had to move back in with her parents. There were other downsides, too: Her shifts often started at 5 a.m. and sometimes consisted of standing outside, wiping down shopping carts for hours on end....

At the Hempire Collective in Loomis, Mich., where she works, sales have more than doubled in the last year, to roughly $500,000 a month, according to co-owner Mario Porter. He’s expanded his dispensary staff from seven to 12, and expects to hire more this year. Many of his new employees, he said, come from retail jobs that they left during the pandemic.

September 24, 2021 in Business laws and regulatory issues, Employment and labor law issues, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Thursday, September 23, 2021

"The Cannabis Conundrum: Constitutional & Policy Concerns in Taxation of the Marijuana Industry"

The title of this post is the title of this notable paper that I just saw via SSRN which is authored by Beckett Cantley and Geoffrey Dietrich.  Here is its abstract:

The cannabis industry has greatly expanded over the last few years, with a majority of states legalizing cannabis in some form.  However, despite the growing popularity of the cannabis industry and more companies entering the market, the Internal Revenue Service (“IRS”) has remained steadfast in denying business deductions for cannabis companies.  Under Internal Revenue Code (“IRC”) § 280E, the IRS can disallow all ordinary and necessary business expenses by companies trafficking in illegal drugs.  The disallowance of ordinary and necessary business expenses greatly hinders cannabis companies, especially for companies legally operating under state law. Several cannabis companies have also attacked the harsh effects of IRC § 280E on constitutional and public policy grounds.  Despite a general shift in medical, legal, and public opinion supporting the full legalization of marijuana, legislation still lags far behind. There is currently pending legislation to address the deductions allowed for marijuana companies and reflects a shift in public policy.

One recent attack on IRC § 280E is that the provision violates the Sixteenth Amendment. Under this theory, cannabis companies argue the definition of income under the Sixteenth Amendment requires gain, and thus the disallowance of ordinary and necessary business expenses imposes a tax on more than a company’s income. For example, the Sixteenth Amendment permits a taxpayer to reduce gross receipts by cost of goods sold before a tax may be imposed.  The correct method in calculating cost of goods sold also provides another point of contention between the IRS and cannabis companies. Courts continue to classify cannabis companies as “resellers” instead of “producers,” which reduces the amount that cannabis companies can deduct as cost of goods sold.

Despite the growing popularity of cannabis companies and a growing number of states legalizing marijuana, courts are unlikely to invalidate IRC § 280E as unconstitutional until a sufficient groundswell of support for the policy benefits such a change would permit arises.  This article will discuss: (I) a brief evolution of the public support, policies, and rationales behind marijuana legalization and the conflicts arising under the Sixteenth Amendment; (II) competing state and federal laws concerning cannabis regulation; (III) and the constitutionality of IRC § 280E under both the Sixteenth Amendment and the Eighth Amendment; and conclude with (IV) a public policy argument for legislation removing marijuana from the purview of IRC § 280E.

September 23, 2021 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Taxation information and issues | Permalink | Comments (0)

Tuesday, September 14, 2021

"Cannabis, Consumers, and the Trademark Laundering Trap"

The title of this post is the title of this notable new paper now available via SSRN and authored by Viva Moffat, Sam Kamin and Timothy Maffett.  Here is its abstract:

At the moment, cannabis companies cannot get trademark protection for their marijuana and marijuana-related products because the “lawful use” doctrine limits federal trademark protection to goods lawfully sold in commerce.  Given that the drug remains illegal under federal law, this may not sound like much of a problem, but it has serious consequences for consumers of marijuana.  Without trademark rights, a cannabis company in one state can simply use the brand name of a prominent company in another state and consumers will assume that they are getting the products they have come to rely on, with potentially dangerous results.  As the cannabis industry has grown, this issue has only become more acute; the current approach of the United States Patent & Trademark Office (PTO) and the federal courts undermines trademark law’s consumer protection and fair competition goals.

Several years ago, we proposed a solution to the unavailability of trademark protection during federal prohibition, one we suggested would help cannabis companies and cannabis consumers bridge the gap from the current period of legal ambiguity through full marijuana legalization.   We coined the phrase “trademark laundering” to describe the practice of applying for federal trademark protection for a mark placed on legal products and then using that mark on both legal and illegal goods – on both t-shirts and marijuana, for example.  As we anticipated, the practice has indeed taken off, but it has been a success only on the surface.

This article examines how the PTO and the courts have mishandled marijuana marks and identifies how they have interpreted and deployed the lawful use doctrine in ways that undermine and conflict with trademark’s stated goals.  Given that the PTO is unlikely to abandon the lawful use doctrine any time soon, we propose changes to the way the PTO applies that doctrine in the trademark registration process, as well as changes to the courts’ consideration of trademark disputes involving cannabis companies.  These changes will ensure that both consumers and marijuana businesses are protected as the United States transitions from marijuana prohibition to a post-prohibition federal regulatory regime.

September 14, 2021 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Friday, August 27, 2021

"Fair Lending for Cannabis Banking Justice"

The title of this post is the title of this new piece authored by Benjamin Seymour now on SSRN. Here is its abstract:

This Comment offers a fair lending solution to promote racial equity in federal cannabis banking reform: amend the Equal Credit Opportunity Act to ensure individuals previously arrested, charged, or convicted for selling, cultivating, or possessing marijuana will not therefore be precluded from loans to start legal cannabis businesses. Given disparities in the criminal enforcement of marijuana laws, this amendment would provide racial justice benefits, while also encouraging entrepreneurship.  As a market-based social justice effort, this amendment offers a bipartisan approach to one of the most vexing and contentious issues in marijuana banking reform.

This Comment briefly surveys the federal statutes that have led to an under-banked cannabis industry and discusses the costs of cash for marijuana businesses.  It then examines prior reforms proposed by academics, executive-branch officials, and legislators.  Finally, this Comment explores the racial equity concerns that these proposals fail to address and develops a fair lending approach for justice in marijuana banking reform.

August 27, 2021 in Business laws and regulatory issues, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Wednesday, July 14, 2021

Great early coverage of US Senate Leader Chuck Schumer's "discussion draft" of new Cannabis Administration and Opportunity Act

6a00d8341bfae553ef0223c85155dc200c-320wiSince nearly the start of this year, Senate Majority Leader Chuck Schumer, along with  Senators Ron Wyden and Cory Booker , has been talking up the introduction in the US Senate of a new comprehensive federal marijuana reform bill.   That talk has suggested that reform efforts from these Democratic Senators would be similar to, but still quite distinct from, the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, that has moved forward in the House of Representatives in recent years.

Today, in mid July 2021, these Senators have scheduled a press conference to unveil what is being described as a "discussion draft" of a lengthy federal bill titled the Cannabis Administration and Opportunity Act (CAOA).  The full text of this CAOA "discussion draft" is available here and it runs 163 pages(!).  In other words, CAOA give marijuana reform advocates (and opponents) a whole lot to discuss.  Helpfully, the cannabis press core is already doing great job covering the basic:

From Marijuana Moment, "Here Are The Full Details Of The New Federal Marijuana Legalization Bill From Chuck Schumer And Senate Colleagues."  Excerpt:

Perhaps the most immediately consequential provision would be a requirement that the attorney general to remove marijuana from the Controlled Substances Act within 60 days of the bill’s enactment.  But it’s important to keep in mind that this legislation—like other federal legalization bills moving through Congress—would not make it so marijuana is legal in every state. The proposal specifically preserves the right of states to maintain prohibition if they way. It stipulates, for example, that shipping marijuana into a state where the plant is prohibited would still be federally illegal.

However, the measure would make it clear that states can’t stop businesses from transporting cannabis products across their borders to other states where the plant is permitted.  FDA would be “recognized as the primary federal regulatory authority with respect to the manufacture and marketing of cannabis products, including requirements related to minimum national good manufacturing practice, product standards, registration and listing, and labeling information related to ingredients and directions for use,” according to the summary.

From Politico, "Schumer launches long-shot bid for legal weed." Excerpt:

The discussion draft of the Cannabis Administration and Opportunity Act includes provisions that cater to both “states rights” Republicans and progressive Democrats. While the proposal seeks to remove all federal penalties on weed, it would allow states to prohibit even the possession of cannabis — along with production and distribution — a nod to states’ rights.  It would also establish funding for a wide range of federal research into everything from drugged driving to the impact cannabis has on the human brain. The measure aims to collect data about traffic deaths, violent crime and other public health concerns often voiced by Republican lawmakers.

On the flip side, the proposal also includes provisions that are crucial to progressives.  That includes three grant programs designed to help socially or economically disadvantaged individuals, as well as those hurt by the war on drugs and expungements of federal non-violent cannabis offenses.  States and cities also have to create an automatic expungement program for prior cannabis offenses to be eligible for any grant funding created by the bill.

A few of many prior recent related posts:

July 14, 2021 in Business laws and regulatory issues, Campaigns, elections and public officials concerning reforms, Federal Marijuana Laws, Policies and Practices, History of Marijuana Laws in the United States, Political perspective on reforms, Who decides | Permalink | Comments (0)

Tuesday, July 13, 2021

"Higher Me: Marijuana Regulation in the Workforce and the Need for State Legislated Employee Protections"

The title of this post is the title of this new paper recently posted to SSRN and authored by Lily Boehmer, a recent graduate of The Ohio State University Moritz College of Law.  (This paper is yet another in the on-going series of student papers supported by the Drug Enforcement and Policy Center.)   Here is this latest paper's abstract:  

Although illegal under federal law, states have increasingly pushed the cannabis legality boundary by legalizing the use of recreational and medicinal marijuana at the state level. In the space between diverging federal and state law, such actions have created a dire situation for employees; employees in states that have legalized the use of marijuana can be fired for arguably legal conduct. Legalization of hemp and cannabidiol (CBD) products increase the risk of termination and litigation for employees and employers. State legalization is not what it purports it to mean.

This paper examines the current legal framework of cannabis regulation, discusses the historical, legal precedent of an employer’s right to terminate an employee in contrast to recent case law providing protection and hope to employees, and analyzes why some employers have stopped marijuana drug testing in response to faulty testing and diminished applicant pools.  Ultimately, this paper argues that, absent federal legalization of marijuana, states must protect employees’ off-duty marijuana use through express state legislation.  Legalization cannot be fully actualized until employees can use marijuana without employment repercussions.

July 13, 2021 in Business laws and regulatory issues, Employment and labor law issues, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Sunday, June 27, 2021

"Seeds of Change: Strategies to create an equitable cannabis industry"

Download (9)The title of this post is the title of this notable new report authored by Janessa Bailey with Leafly.  I recommend the full report's explanation, accounting and scoring of various aspect of social equity in cannabis reform.  Here is how the report gets started:

Over the past decade, cannabis legalization has offered new economic opportunities to hundreds of thousands of people across the United States.  But those opportunities have not been extended to all Americans.

In the nine years since Colorado and Washington first legalized marijuana for all adults, we’ve learned that past inequities and current barriers aren’t erased by simply declaring cannabis legal.

The systems of discrimination built into 80 years of prohibition won’t be erased by hope and wishful thinking. Their dismantling requires proactive steps on the part of state and municipal policymakers.

Cannabis is the nation’s fastest-growing industry.  As of June 2021, 38 states have some form of legalized cannabis, with 19 states and Washington, DC, allowing legal use for all adults.  The $18.3 billion dollar industry now supports 321,000 full-time American jobs, and cannabis entrepreneurship and employment have exploded over the past five years.

But as legalization and the growing cannabis industry have expanded, it has become increasingly clear that opportunities in cannabis are not fairly accessible to all Americans.

Seeds of Change offers eight strategies to create a fair and equitable cannabis industry, assesses each legal adult-use state on its implementation of those strategies, and illuminates the often-hidden barriers that contribute to the current disparities in cannabis.

In other words: Here’s what’s needed, here’s how legal states are doing, and here’s why these strategies are necessary.

June 27, 2021 in Business laws and regulatory issues, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Tuesday, June 1, 2021

Rounding up some recent marijuana news and reform notes as the calendar turns

The Memorial Day weekend serves as the unofficial start to summer and today is the official start of June, and so I figured it was a good time to catch up with a bunch of recent notable stories from major outlets that I have not found time to blog about recently.  So here goes:

From CNBC, "Uber and the delivery war could be headed to cannabis dispensaries"

From Forbes, "Republican Voter Suppression Is Canceling Marijuana Legalization"

From Pew Research Center, "Religious Americans are less likely to endorse legal marijuana for recreational use"

From Politico, "Why Covid rules on liquor, pot and telemedicine might last past the pandemic"

From the New York Times, "Why the Pandemic Was a Breakout Moment for the Cannabis Industry"

From the New York Times, "Yes, Pot Is Legal. But It’s Also in Short Supply."

From NPR, "After 50 Years, U.S. Opens The Door To More Cannabis Crops For Scientists"

From the Wall Street Journal, "Positive Marijuana Tests Are Up Among U.S. Workers"

 

Also, the always great Marijuana Moment has these two notable recent op-eds:

By Shaleen Title, "Congress Only Has One Chance To Legalize Marijuana The Right Way"

By Matthew Schweich, "The War On Ballot Initiatives Has Marijuana In The Crosshairs"

June 1, 2021 in Business laws and regulatory issues, Employment and labor law issues, Recreational Marijuana Commentary and Debate, Religion, Who decides | Permalink | Comments (0)

Friday, May 28, 2021

"Marijuana Tax Revenue in States that Regulate Marijuana for Adult Use"

DownloadThe title of this post is the title of this notable new report and accounting from folks at the Marijuana Policy Project.  Here is how it gets started (with my highlight):

Legalizing marijuana for adults has been a wise investment.  Since 2014 when sales began in Colorado and Washington, legalization policies have provided states a new revenue stream to bolster budgets and fund important services and programs.  As of May 2021, states reported a combined total of $7.9 billion in tax revenue from legal, adult-use marijuana sales.  In addition to revenue generated for statewide budgets, cities and towns have also generated hundreds of thousands of dollars in new revenue from local adult-use cannabis taxes.

Eighteen states have enacted laws legalizing, taxing, and regulating cannabis for adults 21 and older.  Eight of the laws passed in 2020 or 2021, and in seven of those states, licensing and tax collections have not yet begun.  This document reviews each state’s adult-use cannabis tax structure, population, and revenue from legalization.  It does not include medical cannabis tax revenue, application and licensing fees paid by cannabis businesses, additional income taxes generated by workers in the cannabis industry, or corporate taxes paid to the federal government.

The report provides a helpful overview of all the basic tax structures in place for adult-use marijuana as of May 2021, as well as reports on total collections in these states to date. Notably, while Colorado is often thought about as the first legalization state and California is rightly seen as the biggest legalization state, this report details that Washington is as of now the richest state in tax revenues with over $2.5 billion collected.  (But California's tax revenue in 2020 was nearly twice that of Washington's according to this report, so by 2022 we should expect the Golden State to have collected the most tax gold from adult-use marijuana legalization.)

May 28, 2021 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Recreational Marijuana Data and Research, Recreational Marijuana State Laws and Reforms, Taxation information and issues | Permalink | Comments (0)

Monday, May 10, 2021

Guest-post: "Tax Provisions in State Constitutions May Hinder Marijuana Legalization Efforts"

6a00d83451574769e20224df387165200bI was very pleased to have received the following guest post content from Professor  Andrew D. Appleby of Stetson University College of Law:

Although the recreational marijuana movement has gained momentum at the state level, several states may be unable to legalize recreational marijuana because of tax limitations in their state constitutions.  A primary motivation for legalization is increased tax revenue, and every state that has legalized recreational marijuana also taxes it.  Many states, however, have broad constitutional provisions designed to make tax increases more difficult, most notably provisions that require supermajority approval to create or increase any tax.  There appears to be a third wave of these tax supermajority provisions proliferating. Florida voters approved a constitutional provision in 2018 and several other states, including New York in 2021, have considered supermajority approval provisions.  These provisions have several unintended consequences, as discussed in my forthcoming article, "Designing the Tax Supermajority Requirement."

These provisions impact recreational marijuana in several ways.  Most state tax supermajority provisions apply only to the legislative process, so many states are forced to use the voter approval process for marijuana legalization efforts.  Prior to 2021, only two states had legalized recreational marijuana through the legislative process.  Neither state has a tax supermajority requirement, and neither state would have satisfied the requirement.  Vermont was unable to include a tax provision in its initial legalization bill and needed to enact a separate tax statute two years later.  Three states legalized recreational marijuana through the legislative process in 2021.  None of the legislation passed with two-thirds supermajority approval.

Recreational marijuana is still divisive in many states for many reasons, particularly as it remains illegal federally, so achieving supermajority approval is difficult.  Even in politically liberal states, recreational marijuana legalization voter initiatives have passed by narrow margins.  In the 2016 election year, for example, the Massachusetts initiative passed with 53% of the vote and the California initiative garnered only 57% approval.  Four states legalized recreational marijuana through ballot initiatives in 2020.  Only New Jersey achieved supermajority approval, and just barely, with 67% voting in favor.  South Dakota, which has a tax supermajority provision and “one subject” provision in its constitution, had its legalization initiative declared unconstitutional, with the South Dakota Supreme Court currently considering the appeal.

Florida is also grappling with constitutional hurdles in its marijuana legalization efforts, as the Florida Supreme Court struck down a proposed ballot measure because of misleading language.  Even if the measure were to appear on the ballot, Florida has an additional tax supermajority provision that requires two-thirds supermajority approval for voters to amend the constitution to create or increase a tax.  The experiences in South Dakota and Florida illustrate how tax supermajority provisions have the unintended consequence of impeding recreational marijuana efforts.

May 10, 2021 in Business laws and regulatory issues, Political perspective on reforms, Recreational Marijuana Commentary and Debate, Taxation information and issues , Who decides | Permalink | Comments (1)

Tuesday, May 4, 2021

"Equity in Cannabis Agriculture"

The title of this post is the title of this notable new article now available via SSRN and authored by Ryan Stoa. Here is its abstract:

Cannabis legalization is celebrated by many as a long-overdue rectification of a drug policy that has oppressed and incarcerated vulnerable people and communities for decades.  But as the legalization era continues and the legal cannabis industry starts to take shape, legalization advocates and industry stakeholders must reckon with a sobering reality: the benefits of legalization are not being equitably shared, and vulnerable communities that were hit the hardest during the war on drugs are not well represented in legal cannabis markets.

This reality is as true for stakeholders of cannabis agriculture as it is for other sectors of the cannabis industry.  As the first step in the supply chain, the cultivation of cannabis sets the tone for the industry as a whole.  A well-regulated, equitable, and sustainable cannabis agriculture industry has significant catalytic potential for downstream market participants.  Unfortunately, however, the cannabis agriculture industry suffers from many equity shortfalls.

This Essay will explore three of these shortfalls: (1) access to agricultural lands and start-up capital, (2) cultivation licenses and state distribution of benefits, and (3) labor standards and farmworker protections.  While there are many more equity issues facing cannabis agriculture, this Essay shines a light on these three while identifying areas of concern for future research.  It is clear that stakeholders of cannabis agriculture, including regulators and business owners, can and should prioritize equity and participation in the development of their industry.

May 4, 2021 in Business laws and regulatory issues, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Tuesday, April 20, 2021

"Hitting the Trip-Wire: When Does a Company Become a 'Marijuana Business'?"

The title of this post is the title of this new article authored by Lauren Newell recently posted to SSRN.  Here is its a 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.

April 20, 2021 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Monday, April 19, 2021

After strong bipartisan approval in US House again, will US Senate finally take up SAFE Banking Act?

1555342460244A big week for discussion of marijuana reform got off to a big start thanks to a vote in the US House of Representatives.  This effective Marijuana Moment piece, headlined "U.S. House Approves Marijuana Banking Bill For Fourth Time, Setting Up Senate Consideration," provides these details:

The U.S. House of Representatives on Monday approved a bill to protect banks that service state-legal marijuana businesses from being penalized by federal regulators.  After receiving an initial voice vote earlier in the afternoon, members passed the legislation by a final recorded vote of 321-101.

The legislation, which was reintroduced by Rep. Ed Perlmutter (D-CO) and a long bipartisan list of cosponsors last month, was taken up under a process known as suspension of the rules, which does not allow for amendments and requires a 2/3rd supermajority to pass....

Because marijuana businesses are largely precluded from accessing traditional financial institutions and have to operate on a mostly cash-only basis, that makes them targets of crime — a point that advocates, regulators and banking representatives have emphasized.  “Even if you are opposed to the legalization of cannabis, you should support this bill,” Perlmutter added.  “American voters have spoken and continue to speak — and the fact is, you can’t put the genie back in the bottle.  Prohibition is over.”...

Rep. Patrick McHenry (R-NC) spoke in opposition to the legislation, stating that “regardless of your position on this bill, I do think the fact remains that cannabis is a prohibited substance under Schedule I of the Controlled Substances Act — and let me further state, by enacting this legislation, we’re effectively kneecapping law enforcement enforcement and legalizing money laundering.”

But in a sign of the bipartisan nature of this reform, Rep. David Joyce (R-OH) took to the floor to defend the legislation. He said “I’m proud to help lead this common sense and overdue effort.”

“At a time when small businesses are just beginning to recover from the economic destruction caused by COVID-19, the federal government should be supporting them, not standing in their way,” he said.

McHenry was the only lawmaker to rise against the bill on the floor, yielding all additional opposition time to other Republican members who actually spoke in support of it.

Just before the debate started on Monday, the governors of 20 states and one U.S. territory — as well as bankers associations representing every state in the country and a coalition of state treasurers — sent letters to House leadership, expressing support for the reform legislation.

The vote marks the fourth time the House has approved the Secure and Fair Enforcement (SAFE) Banking Act. Lawmakers passed it as a standalone bill in 2019 and then twice more as part of coronavirus relief legislation.  At no point did the measure move forward in the Senate under Republican control last session, however.

But this time around, advocates and industry stakeholders are feeling confident that the bill’s path will not end in the House.  With Democrats now in control of both chambers and the White House, there are high expectations that the proposal will make its way through the Senate and onto the president’s desk.

I am hopeful, but not at all optimistic, that this bill will move forward in the Senate with Democrats now in control of the chamber.  Senate leader Chuch Schumer is expected to release a comprehensive marijuana reform bill "soon" and that bill will likely be a priority for Senators and advocates most eager to see federal marijuana reforms.  Senators and others backing broader reforms could potentially view the SAFE Banking Act as an insufficient reform that could undercut momentum for bigger reforms.

April 19, 2021 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Monday, April 12, 2021

"Nowhere to Now, Where? Reconciling Public Cannabis Use in a Public Health Legal Framework"

The title of this post is the title of this notable new paper authored by Daniel Orenstein now available via SSRN. Here is its abstract:

States continue to legalize recreational cannabis, but most have heavily restricted where consumption of newly licit cannabis is permitted.  Every legalizing state has thus far prohibited open, outdoor public use, either limiting lawful use to private property or allowing a small number of licensed indoor venues for consumption outside of public view, an approach borrowed from alcohol control.  In contrast, some non-U.S. jurisdictions have adopted a tobacco control approach, allowing limited outdoor public use while prohibiting indoor public use.  Each approach presents individual and population health risks that reflect the complex intersection of health, social inequities, and community norms.

Cannabis consumers face uncertain but potentially significant health risks from use, and the relative availability of use locations also implicates existing inequities in policing practices and housing.  Those who do not use cannabis but are exposed to others’ use face possible harms from secondhand smoke and from intoxicated behavior, with such risks likely to be inequitably distributed due to existing employment and housing patterns.  Communities as a whole also face risks, including that changing cannabis norms may increase use prevalence or intensity and that concentration of cannabis outlets in under-resourced communities may prove as detrimental as the concentration of other disfavored businesses has been.

Each public use approach carries attendant risks, but a regulatory framework based on the tobacco control model best balances the protection of public health and the promotion of equity and social justice.  This model recognizes the parallels between cannabis and tobacco (in addition to those between cannabis and alcohol).  This approach also provides a pathway to mitigating the public health risks of cannabis legalization by leveraging an approach that has proven effective at reducing secondhand exposures and denormalizing smoking behavior in the tobacco context.

April 12, 2021 in Business laws and regulatory issues, Medical community perspectives, Recreational Marijuana Commentary and Debate, Recreational Marijuana Data and Research, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Sunday, April 11, 2021

"New Market Entrants and Uncertain Drug Policy in the United States"

The title of this post is the title of this new paper recently posted to SSRN and authored by Nathaniel Wilson, a student at The Ohio State University Moritz College of Law.  (This paper is yet another in the on-going series of student papers supported by the Drug Enforcement and Policy Center.)   Here is this latest paper's abstract:  

This article covers two substances that are becoming particularly prevalent in consumer markets across the country, Delta-8 THC and kratom.  It introduces each substance and provides an analysis of the legal landscape that each substance currently faces in the United States, including an overview of relevant statutory law and regulatory efforts at both the federal and state level.  Finally, the article provides policy concerns that legislatures and regulatory agencies should take into consideration when approaching the regulation of these substances, as well as, other novel substances that share similar qualities.

April 11, 2021 in Business laws and regulatory issues, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Wednesday, April 7, 2021

"American Edibles: How Cannabis Regulatory Policy Rehashes Prohibitionist Fears and What to do About It"

The title of this post is the title of this notable new paper now available via SSRN authored by Jay Wexler and Connor Burns.  Here is its abstract:

Why can’t we buy a cannabis muffin with our morning coffee?  For much of the past century, the answer was simple: cannabis was illegal.  Now, however, with more and more states legalizing cannabis for adult use, the answer is far less clear.  Even in those states that have legalized cannabis, the simple action of buying and eating edibles at the same location has somehow remained a pipe dream despite consumer demand.  Digging a little deeper, we can see how contemporary alarmism, by rehashing the same prohibitionist rhetoric demonizing cannabis for over eighty years, has once again arisen with a new target: cannabis-infused edibles.  From journalists to policymakers to legal scholars, the rekindling of prohibitionist arguments against edibles has had real world impacts on the regulation of cannabis edibles, to the harm of all involved.

This Article explores contemporary cannabis edibles regulation using historical, scientific, and legal frameworks to explain why current edibles regulation is so problematic, and what to do about it.  By delving into the history of cannabis prohibition, this Article shows how the very same arguments propping up prohibitionist edibles policies are rooted in bad-faith arguments made decades ago that themselves were merely thin veils for racism.  Applying this historical perspective and a rational understanding of contemporary cannabis edibles, this Article explores how states have used prohibition-inspired regulations to address two main concerns — overconsumption and inadvertent consumption — and how such regulations need to be revisited and revised.  This Article then argues that social consumption sits at the crux of edibles regulation, and that states must implement social consumption imminently to address the harms that current regulations do not address, or even worse, perpetuate.

April 7, 2021 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)

Saturday, April 3, 2021

Senate majority leader shrewdly emphasizing "freedom" in his push for federal marijuana reform

11119_Weed_Legalize_Freedom_Decal_Sticker_DM__26064.1538472841.1280.1280The federal marijauan reform bill that passed through the US House late last year was the "Marijuana Opportunity Reinvestment and Expungement Act" (the MORE Act).  But the marijuana reform bill that Senator Chuck Schumer first introducted in the US Senate in 2018 was called the "Marijuana Freedom and Opportunity Act."  I find the names of these bills particularly notable upon seeing this new Politico interview with now-majority-leader Schumer headlined "Schumer: Senate will act on marijuana legalization with or without Biden."  As highlighted by these excerpts, Senator Schumer seem especially eager to play up the freedom theme in explaining his reasons for supporting reform (my ephasis added):

Schumer: In 2018, I was the first member of the Democratic leadership to come out in support of ending the federal prohibition.  I'm sure you ask, “Well what changed?” Well, my thinking evolved.  When a few of the early states — Oregon and Colorado — wanted to legalize, all the opponents talked about the parade of horribles: Crime would go up.  Drug use would go up.   Everything bad would happen.

The legalization of states worked out remarkably well.  They were a great success.  The parade of horribles never came about, and people got more freedom. And people in those states seem very happy.

I think the American people started speaking with a clear message — more than two to one — that they want the law changed.  When a state like South Dakota votes by referendum to legalize, you know something is out there.

Was there a specific moment or a specific experience that you can point to and say, “This is when I started to see this issue differently?”

A while back — I can't remember the exact year — I was in Denver.  I just started talking to people, not just elected officials, but just average folks.

[They said] it benefited the state, and [didn’t] hurt the state.  There were tax revenues, but people had freedom to do what they wanted to do, as long as they weren't hurting other people.  That's part of what America is about.  And they were exultant in it.

Perhaps because it plays well to my libertarian instincts, I find this focus on "freedom" to be appealing and shrewd as a central part of a pitch for federal marijuana reforms.  I find the freedom focus appealing because I like the general notion that the federal government generally ought not be prohibiting personal freedoms, and especially ought not be using the weighty tools of the federal criminal justice system to advance prohibitions, unless and until we can be generally confident that federal prohibition is doing more good than harm.

Perhaps more importantly, I find the freedom focus shrewd because it lines up with a lot of the smaller-government rhetoric, past and present, often coming from GOP policians and activists.  Whether it is the congressional Freedom Caucus or opposition to gun control or COVID rules or a host of other issues, there are lots of Republican who loudly claim to be ever eager to shrink the size and power of the federal government in order to increase the freedom of individuals (and/or states and localities). Against this political backdrop, I think Senator Schumer is already trying to position any vote against federal marijuana reform as a vote against freedom.

April 3, 2021 in Business laws and regulatory issues, Campaigns, elections and public officials concerning reforms, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Thursday, April 1, 2021

New Mexico on the verge of marijuana legalization only hours after New York legalized

New-mexico-300x199Though we sometimes have to wait until 4/20 for a lot of marijuana discussions, this week is proving historic as the New Mexico legislature last night passed two big marijuana reform bills just hours after New York's Governor officially signed that state's historic marijuana legalization bill (NY basics here).  This AP piece, headlined "New Mexico primed to join US recreational pot wave," reports on the basic details of the new laws just passed in the Land of Enchantment (yes, that is the official NM nickname):

New Mexico is joining a wave of states that are legalizing recreational marijuana as its Democrat-dominated Legislature sent a package of cannabis bills Wednesday to a supportive governor. Lawmakers used a marathon two-day legislative session to push through marijuana legalization for adults over 21 and a companion bill that automatically erases many past marijuana convictions, overriding skeptical Republicans.

By signing the bills, Gov. Michelle Lujan Grisham would extend legal recreational pot sales in the American Southwest by April 2022, when the New Mexico legislation kicks in, and join 16 states that have legalized marijuana, mostly through direct ballot initiatives. California and Colorado were among the first in the U.S. to legalize marijuana, with Arizona becoming one of the latest in the region to follow suit earlier this year. New York Gov. Andrew Cuomo signed a legalization bill Wednesday, and a proposal in Virginia is awaiting the governor’s signature.

The New Mexico initiative would reconsider criminal drug sentences for about 100 prisoners, and give the governor a strong hand in licensing the industry and monitoring supplies.

New Mexico flirted with cannabis legalization in the 1990s, when then-Gov. Gary Johnson challenged taboos against decriminalization in defiance of Republican allies. The state’s medical marijuana program founded in 2007 has attracted more than 100,000 patients. The Legislature was reticent to legalize until now. Several hardline opponents of legalization in the state Senate were voted out of office by Democrats in 2020 primary elections, in a shift that paved the way for Wednesday’s historic vote.

Under the advancing legalization package, New Mexico would levy an initial excise tax on recreational marijuana sales of 12% that eventually rises to 18%. That’s on top of current gross receipts on sales that range from roughly 5% to 9%. Possession of up to 2 ounces (57 grams) of marijuana would cease to be a crime, and people would be allowed six plants at home — or up to 12 per household. The reforms would eliminate taxes on the sales of medical marijuana and seek to ensure adequate medicinal supplies.

“The United States of America is in the midst of a sea change when it comes to this,” said Democratic state Rep. Javier Martinez of Albuquerque, lead sponsor of the legalization bill. “This bill begins to repair the harms of prohibition.”

State oversight would largely fall to the governor-appointed superintendent of the Regulation and Licensing Department that would issue licenses for a fee to marijuana-related businesses. The agency initially would have the authority to limit marijuana production levels by major producers — a lever over market supplies and pricing.... The legalization bill creates a cannabis control division to oversee 10 types of industry licenses. Those include micro-licenses with low annual fees for small producers to grow up to 200 marijuana plants and also package and sell their products.

Bill sponsor Martinez says that provides an important measure of equity, within a bill designed to support communities that suffered from criminalization of marijuana and tough policing. Past drug convictions don’t automatically disqualify applicants for marijuana business licenses. The odor of marijuana or suspicion of possession are no longer legal grounds to stop, detain or search people.

Legalization bill co-sponsor Rep. Deborah Armstrong says New Mexico will respond to early pitfalls of legalization in other states as it mandates child-proof packaging for marijuana products. Public health advocates condemned provisions that allow public consumption lounges for recreational cannabis, citing the dangers of second-hand smoke and vapor to workers and patrons.

Lawmakers discarded a Republican-sponsored bill from Sen. Cliff Pirtle of Roswell that emphasized low taxes in an effort to stamp out illicit weed and would have provided low-cost licenses to small pot farmers by linking fees to the number of plants in cultivation. Local governments cannot prohibit pot businesses but can regulate locations and hours of operation, under the proposal. Bill sponsors say that sheriffs and police want consistency from town-to-town on rules and enforcement.

Republican state Sen. Gay Kernan of Hobbs voted against legalization and said she was amazed that legislative colleagues would support the freedom to buy mind-altering drugs amid New Mexico’s struggles with poverty and opioid overdoses. “I just think it’s terribly unfair to impose this kind of significant change in our way of life and areas of the state that clearly do not welcome this,” Kernan said.

April 1, 2021 in Business laws and regulatory issues, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)