Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Sunday, October 6, 2019

Tobacco historian makes case for why and how "Marijuana Reform Should Focus On Inequality"

The quoted part of the title of this post is the headline of this new Atlantic commentary authored by Sarah Milov.  The piece caught my eye in part because the piece's author, a history professor at the University of Virginia, is also the author of an interesting sounding new book, The Cigarette: A Political History.  Here are some excerpts from this new Atlantic commentary:

Especially because Americans of color have borne the brunt of the drug war, they deserve to share in the marijuana boom now taking hold across the country.  And if America’s long history with another smokable intoxicant — tobacco — is any guide, government rules will decide who can profit from growing the crop.  At the moment, though, those rules favor well-connected corporate growers rather than independent farmers, much less independent farmers of color....

Making up for the brutal inequalities of the drug war should be a major goal of marijuana reformers — but so far, the reality isn’t working out that way.  state that reforms its marijuana laws must decide how it will allocate production rights.  Right now, states severely restrict the number of licenses awarded to cannabis growers, ensuring corporate domination of the industry.  In New York, where medical marijuana is legal, just 10 companies own licenses to cultivate and dispense marijuana.  Competition is fierce over the licenses, which can sell for tens of millions of dollars — even before an ounce of marijuana is sold.  For this reason, licenses tend to go to well-financed pot conglomerates that own cultivation facilities in multiple states.

That outcome should not come as a surprise.  A federally supported program set rules for tobacco growers from the Great Depression until early this century.  Its history suggests that production regulations, when done right, can be a powerful tool to spread wealth — but also that, when done wrong, they are a highly efficient way of excluding people from an industry....

But for all its flaws, the tobacco program succeeded at what it was meant to do: endowing a designated class of Americans with a way of life that buoyed entire regional economies.  Because of strict production restrictions, tobacco farms were among the smallest for any staple commodity, which forestalled the consolidation of farms and an exodus of residents from rural areas.  And there were many tobacco farmers in the middle stratum of the farm income ladder, and relatively few at the top.  Small tobacco farms could still provide for a decent standard of living because tobacco was a high-value crop.  Growing even a small amount could be lucrative.  In 1980, an acre of cigarette tobacco was worth $2,700, as opposed to $150 for corn or $250 for soybeans.  “There is absolutely nothing on this Earth that can compete with tobacco money,” a USDA economist told The Washington Post in 1980.  Except, he added, “illegal smoking material.”...

Now that “illegal smoking materials” are legal in many states, the licensure system for marijuana cultivation is poised to replicate some of the oligopolistic features of the tobacco program, while thwarting its genuinely redistributive ones.  Instead of charging would-be cannabis growers for the privilege of growing, states should award licenses to a larger number of applicants from communities that have been hit hard by the War on Drugs.  Much as small-scale tobacco farms anchored entire communities across the Southeast, cannabis cultivation on a human scale, rather than a corporate one, can build wealth within communities of color where opportunities to amass property have been denied—  frequently at the hands of the government.

Indeed, the excesses of the drug war aren’t the only reason to enact more inclusive policies for marijuana farming.  U.S. agricultural policy, too, has throughout its history been skewed against African Americans.  When black farmers have availed themselves of government programs, they have frequently found discrimination and, ultimately, dispossession.

But those same tools can be put to work in the opposite direction.  The tobacco program was devised to address the emergency of the Great Depression, and it did so in a way that sustained the livelihoods and communities of a targeted group of Americans.  The effects of the War on Drugs are no less severe for communities of color, and the need for opportunity is no less urgent.

October 6, 2019 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Medical Marijuana Commentary and Debate, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Thursday, October 3, 2019

Noticing how some major cannabis players are responding to vaping crisis

I have notices a number of new stories and reports about a number of marijuana reform groups and marijuana industry players responding to the recent worrisome vaping illnesses and deaths.  Here is a partial round-up:

From Americans For Safe Access, "ASA Creates Patient-Focused Recommendations in Light of the Vaping Crisis"

From Marijuana Policy Project, "Nation’s Largest Marijuana Policy Reform Group Releases Report on Cannabis Vaping Regulations"

From Marijuana Moment, "Hundreds Of Companies Sign Letter Calling For Marijuana Descheduling To Prevent Vaping Injuries"

October 3, 2019 in Business laws and regulatory issues, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Wednesday, September 25, 2019

US House of passes SAFE Banking Act by a vote of 321-103, but Senate vote still seems unlikely

Safe-banking-horizontal-1-800x419As reported in this MarketWatch piece, headlined "House passes cannabis-banking bill, but getting Senate’s OK still looks tricky," one piece of significant federal marijuana reform moved a step forward today.  Here are the details:

The Democratic-controlled House of Representatives late Wednesday voted to pass a bill protecting banks that work with the marijuana industry, but some analysts are warning that the measure isn’t likely to become law in 2019 as it faces a tough road in the Republican-controlled Senate.

The chances of enactment this year for the bill — known as the Secure And Fair Enforcement (SAFE) Banking Act — have risen to 1 in 3, up from 1 in 5, reckons Ian Katz, an analyst at Capital Alpha Partners. Those still aren’t great odds, however.  “We remain skeptical for now,” Katz said in a note before the House vote, though he added that the chances could get better “if we see meaningful signals from the Senate in the next few weeks.”

The bill aims to give clarification to banks and credit unions that serve cannabis companies with, for instance, business accounts for bill paying. Currently, financial institutions face legal problems because marijuana remains illegal on the federal level, even as more states legalize it.  Lobbyists have emphasized that many cannabis businesses end up “unbanked” and operating largely in cash, and that makes them targets for robberies and other crimes.

Influential Republican Sen. Mike Crapo gave some hope to the SAFE Banking Act’s supporters earlier this month, as the Senate Banking Committee chairman told Politico that he wanted to hold a committee vote before the year’s end on a cannabis banking bill. There are no additional details on the potential timing for such a vote, said a spokeswoman for the Idaho lawmaker on Monday.  Crapo had sounded noncommittal on the issue at a July hearing.

The SAFE Banking Act “has been sweetened for Republicans,” Katz said. One provision would prevent the return of Operation Choke Point, an Obama-era program that Crapo mentioned at the July hearing and that involved investigating banks for doing business with payday lenders and firearms dealers. Another new provision aims to protect financial firms that serve the hemp industry, which is a force in Kentucky, the home state of Senate Majority Leader Mitch McConnell.

But McConnell continues to look like he could serve as a big roadblock to the bill. He described marijuana last year as hemp’s “illicit cousin which I choose not to embrace.” “There’s a line of thinking that McConnell could go along with a pot banking bill to help Republicans in the 2020 elections,” Katz said.  “The tough re-election prospects of Republican Sen. Cory Gardner [a co-sponsor of the bill] of marijuana-friendly Colorado are often cited.  But the benefit to Republicans, especially in the West and South, of supporting a bill that’s at least superficially pro-marijuana, is debatable.”

At the other end of the political spectrum, the bill had faced opposition ahead of Wednesday’s House vote from several progressive groups, such as the Center for American Progress, the American Civil Liberties Union and others.  In a letter to top House Democrats, the groups criticized the efforts to advance a bill that just addresses banking issues, but does not help “communities who have felt the brunt of prohibition,” yet have been “shut out” of the growing industry.  Their concerns didn’t end up stopping the House from passing the measure.

Wednesday’s vote happened under a suspension of House rules that limited debate and meant that two-thirds of the lawmakers present and voting needed to back the measure.  The vote tally was announced as 321 in favor vs. 103 against....

Many players in the cannabis industry say banking-related legislation will become law at some point in the next few years, even if 2019 doesn’t bring the action that they hope to see.  “I’m fairly confident that either the SAFE Act or STATES Act will be passed,” said Rob DiPisa, co-chair of law firm Cole Schotz’s Cannabis Law Group. “I think the industry has come too far.  The cat’s out of the bag, and it’s not going to disappear, so banking needs to happen.”

September 25, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, History of Marijuana Laws in the United States | Permalink | Comments (0)

Tuesday, September 24, 2019

"Achieving Diversity in the Marijuana Industry: Should States Implement Social Equity into Their Regimes?"

The title of this post is the title of this new paper recently posted to SSRN and authored by Jared Kriwinsky, a recent graduate The Ohio State University Moritz College of Law.  This paper is the twelveth in an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The eleven prior papers in this series are linked below.)  Here is this latest paper's abstract:

As states across the country continue to legalize marijuana, in medical or recreational form, a new legal market is forming. As more and more companies begin to profit off the legalization of marijuana it begs the question: who is reaping the economic benefits of legalization?  Following decades of the War of Drugs, minority communities have been particularly devastated.  Consequently, states who have legalized marijuana both recreationally and medically have a duty to ensure equal access for the minority communities who were disproportionately impacted by the War on Drugs. 

This paper examines social equity regimes throughout the country and how states have attempted to induce minority participation in the marijuana industry.  It analyzes the arguments for and against social equity regimes.  The primary goal of this article is to address the arguments against social equity regimes in the marijuana industry, and induce states to implement common sense, economical regimes that give equal and just opportunities to those in the minority community.

Prior student papers in this series:

September 24, 2019 in Business laws and regulatory issues, Criminal justice developments and reforms, Race, Gender and Class Issues | Permalink | Comments (0)

Wednesday, September 18, 2019

Advocacy groups urge House leaders not to move forward with banking bill that "does not solve the underlying problems of marijuana prohibition"

As noted in this prior post, House Majority Leader Steny Hoyer is reportedly planning to put a marijuana banking bill on the floor of the House of Representatives for a vote in the  coming weeks.  But yesterday a set of advocacy groups sent this short and significant letter to House leaders urging a postponement of the floor vote because the SAFE Banking Act fails to address any criminal justice reform issues.  Here are excerpts from the letter:  

The Congress has a unique opportunity to address the myriad injustices created by this nation’s marijuana laws. For decades, people of color have suffered under harsh and racially-biased marijuana laws. Although marijuana use is equal between whites and Blacks, Blacks are 3.73 times more likely to be arrested for marijuana offenses. Despite many states legalizing marijuana, arrests have increased, with one arrest every 48 seconds.  Against this backdrop, we urge Congress to address the issue of marijuana prohibition holistically and inclusively, with timely Committee and Floor consideration of H.R.3884 – the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019.  Marijuana legislation must first address the equity and criminal justice reform consequences of prohibition.

The banking bill does not address marijuana reform holistically. Instead, it narrowly addresses the issues of banking and improved access to financial services, measures that would benefit the marijuana industry, not communities who have felt the brunt of prohibition.  To be clear, we recognize the challenges facing marijuana businesses that lack access to financial services.  However, we believe it is a mistake to move this issue forward while many of the other consequences of marijuana prohibition remain unresolved.  The banking bill does not solve the underlying problems of marijuana prohibition – namely, that many people of color have been saddled with criminal records for a substance that is now legal in many states, and that communities have been shut out of the emerging and booming marijuana industry....

Since the start of the 116th Congress, we have expressed concern to House Leadership, the House Financial Services Committee, and member offices, that if the banking bill moved to the Floor before broader reform, it would jeopardize comprehensive marijuana reform.  Therefore, we have pushed for a conversation among advocates, Committee leadership, and House Leadership to formulate a plan for moving marijuana legislation in a way that is comprehensive and does not result in carve-outs for the industry and leave behind impacted communities.

We ask that you delay any vote on the banking bill until agreement has been reached around broader marijuana reform.

September 18, 2019 in Business laws and regulatory issues, Campaigns, elections and public officials concerning reforms, Criminal justice developments and reforms, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Monday, September 16, 2019

Serious talk of marijuana banking bill moving forward in Congress

This new Politico piece, headlined "Hoyer plans cannabis banking vote this month," reports that there is new momentum behind a small but very important federal marijuana reform bill.  Here are the details:

House Majority Leader Steny Hoyer intends to put cannabis banking legislation on the floor this month, a historic step toward legitimizing the marijuana industry nationwide.

A Hoyer spokesperson said the Maryland Democrat was discussing the matter with members but hasn't scheduled the vote just yet. He shared his plans at a whip meeting yesterday.  Other House Democratic aides said they expected the bill to be on the floor during the week of Sept. 23.

The bipartisan legislation would shield banks from federal penalties if they serve cannabis-related businesses in states where the drug has been legalized. Banks have been lobbying for the bill because cannabis remains banned at the federal level.

The new movement in the House comes as the legislation appears to be getting unexpected traction in the Senate, where Banking Chairman Mike Crapo (R-Idaho) is planning to hold a vote on a cannabis banking bill this year.

This piece at Marijuana Moment, headlined "Marijuana Banking Bill Will Get A Full House Floor Vote This Month," provides more context and quotes concerning these developments. It also has this account why matters are now moving forward:

While sources told Marijuana Moment that Hoyer made his decision to allow cannabis banking vote following an earlier Wednesday meeting on the issue, it is likely that building momentum in the GOP-controlled Senate added to pressure on the House to act so that Democrats wouldn’t be seen as lagging behind Republicans on cannabis reform, an issue the party has sought to take political ownership of.

I have generally been pessimistic about the prospects for any form of federal marijuana reform primarily because Senate Majority Leader Mitch McConnell has seemed disinclined to allow any reforms to get to the Senate floor.  I fear that this remains a reality that will thwart passage of even a modest reform bill that might have considerable support on both sides of the aisle. But, as proved true with the sentencing reform legislation last year, it seems possible that Senator McConnell would be willing to move the bill if President Trump and a significant number of GOP Senators expressed support for it. Stay tuned.

September 16, 2019 in Business laws and regulatory issues, Campaigns, elections and public officials concerning reforms, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Monday, September 9, 2019

"The Good, the Bad, and the Ugly: Why IRC § 280E Is Not the Industry Killer It Is Portrayed to Be"

The title of this post is the title of  this new paper recently posted to SSRN and authored by Patrick Cleary, a student at The Ohio State University Moritz College of Law.  This paper is the eleventh in an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The ten prior papers in this series are linked below.)  Here is this latest paper's abstract:

Taxes implicate nearly every area of business.  The recent marijuana boom has thrust one tax code provision into the spotlight. IRC § 280E prohibits tax deductions and credits for expenses paid or incurred in the trafficking of Schedule I or II controlled substances.  This increases tax liability for marijuana businesses who commonly refer to the provision as an “industry killer.”  This paper intentionally goes against the grain to show how IRC § 280E is not the “industry killer” it is portrayed to be and explores ways in which slow growth may be marijuana’s best path forward. 

The argument in favor of IRC § 280E is made by explaining the provisions’ development and legal framework before applying it to the marijuana industry . Next, IRC § 280E must be contextualized within the marijuana industry’s rapid growth and the 2017 Tax Cuts and Jobs Act.  Lastly, the Oregon example is used to exemplify how IRC § 280E is helping the industry by providing a check on cash flow and preventing prices from being driven down further through saturation.

Prior student papers in this series:

September 9, 2019 in Business laws and regulatory issues, Taxation information and issues | Permalink | Comments (0)

Friday, September 6, 2019

"Hemp legalization is slippery slope, and that’s OK"

The title of this post is the headline of this new Columbus Dispatch commentary authored by Benton Bodamer, who is a member of the law firm Dickinson Wright and teaches a Cannabiz course here at The Ohio State University Moritz College of Law.  Here are excerpts from the piece:

Regulators and law enforcement have a wildly impractical task in attempting to regulate companies, plants and products using a distinguishing factor (hemp vs. marijuana) that is both arbitrary and mutable.  There are no federal guidelines on how dry cannabis must be to test for THC, nor guidelines for the stage of cultivation or processing at which testing should occur.  As cannabis dries, the THC content increases and that process can continue after harvest and testing.  This means that temperature changes during transportation could turn “hemp” into “marijuana” unless we have a federally standardized testing and transportation procedure and methodology, which we do not.

CBD and THC can be extracted from both federally noncompliant marijuana and federally legal hemp.  If it is the exact same substance at the molecular level, should we really care?

In the face of federal illegality, draconian tax burdens, Wild West banking and competition from black market illegal operations, the state-compliant cannabis industry in America has managed to build a base of sophisticated investors, informed customers, medical professionals and even Republican supporters (gasp!), cultivating a promising industry that has generated millions of tax dollars and thousands of jobs. This industry persists in 33 states (and growing) because the vast majority of the country knows that the federal law is wrong and largely unenforced....

When laws are irrational we lose faith in civil institutions.  The cannabis industry is filled with “efficient illegality,” meaning noncompliance meets with little risk of federal enforcement against state-compliant businesses. F ederal prosecutorial dollars for action against state-compliant cannabis businesses are throttled through federal legislative restraints and 33 states have now decided that they would rather generate tax dollars from cannabis than spend tax revenue persecuting its nonthreatening uses.  Continuing the charade of federal illegality is doing far more harm to public perception in the value of laws and law enforcement than full-scale legalization with sensible federal, state, and local regulation would do.

There’s a simple answer to the confusion over “hemp” and “marijuana,” and it’s one that happens to reflect popular opinion.  It’s time to fully legalize the cannabis plant and the cannabinoids extracted from it and build a data-driven industry from the existing state-sanctioned marketplaces.  The sooner we stop pretending that century-old uninformed hysteria constitutes a sound public health policy, the sooner we can heal and grow (cannabis) together.

September 6, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

"Ohio's Medical Marijuana Control Program: Online Survey of Consumer Satisfaction"

Image-of-report-1024x585The title of this post is the title of this new report authored by Nicholas Maxwell, who this summer served as a Research Fellow at Harm Reduction Ohio and who put together this report in conjunction with Ohio State's Drug Enforcement and Policy Center (which I help run).   The report will be one of a number of topics discussed at this DEPC event tonight, and here is its "summary and key findings":

An online survey of more than 600 Ohioans, most of whom reported being regular users of marijuana, revealed immense dissatisfaction with the Ohio medical marijuana system.  Consumers were surveyed on a range of topics, from their marijuana consumption habits to their experience with the Ohio MMCP.  The price of medical marijuana in Ohio was the primary driver of consumer dissatisfaction.  Contributing to this dissatisfaction was also reported inconvenience of registering for the program and traveling the sometimes-significant distance to the nearest dispensary.  The vast majority of respondents stated that they preferred to purchase marijuana from medical dispensaries, but reported that Ohio’s existing medical marijuana regime presented significant barriers that deterred them from doing so.
  • 78% of 647 surveyed Ohioans reported a qualifying condition under the medical marijuana program.  Most respondents reporting a qualifying condition reported that they had chronic, severe, or intractable pain, which is consistent with the population of Ohio enrolled in its medical marijuana program.

  • 81% of the 505 people who reported a qualifying condition also reported that they currently use marijuana.

  • Only 45% of the 407 people who reported a qualifying condition and to be currently using marijuana have received a doctor’s recommendation under the MMCP.

  • 67% of all 647 respondents reported being “very dissatisfied” or “somewhat dissatisfied” with the Ohio medical marijuana program, with only 16.7% of people reporting being somewhat or very satisfied.

  • 87% of all 647 respondents indicated preference for purchasing marijuana from a legal dispensary if product was similarly priced to product available via the unregulated market.

  • On average, people were willing to pay a 16.9% price premium to buy marijuana at legal dispensaries instead of the unregulated market.  At current levels, the premium stands at more than 100%.

September 6, 2019 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Medical Marijuana Data and Research, Medical Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)

Monday, August 26, 2019

"Cannabidiol (CBD) in the Therapeutics Industry"

The title of this post is the title of this new paper recently posted to SSRN authored by Sara Goots Blair, a recent graduate of The Ohio State University Moritz College of Law.  This paper is the tenth in an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The nine prior papers in this series are linked below.)  Here is this latest paper's abstract:

Use of Cannabidiol (CBD) in the therapeutics industry has become increasingly popular in the last few years.  CBD rode into public consciousness on the coattails of three booming consumer trends: the herbal supplement industry, the anxiety economy, and the growing legitimate cannabis industry.  However, many uncertainties remain about the legality, safety, and quality of CBD.  The passage of the 2018 Farm Bill legalized hemp production throughout the US, thereby removing hemp-derived CBD from Center for Disease Control and Prevention (CDC)-regulation.  However, the U.S. Food and Drug Administration (FDA) still stakes a claim on regulating dietary supplements and food additives containing CBD.  The sudden legality of CBD, coupled with uncertainty as to its safety, quality, and effectiveness, means it is imperative for states to support research and impose sufficient regulatory oversight over CBD-infused products.

Prior student papers in this series:

August 26, 2019 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)

Wednesday, August 21, 2019

Terrific new Pew issue brief highlights hazy nature of marijuana revenue for states

The fine folks at Pew have this very fine new brief about state marijuana tax revenues titled "Forecasts Hazy for State Marijuana Revenue."  I recommend this 16-page document (which is also available on-line here) for many reasons, and here is its astute conclusion:

Supporters of legalizing recreational marijuana expected a new revenue source for states, but market uncertainties continue to challenge revenue forecasters and policymakers.  The difficulty in forecasting revenue is compounded by the fact that states have only recently begun to understand the recreational marijuana market: the level of consumer demand for recreational marijuana products, the types of users and how much they might pay for the drug, and competition with the black market.  States have learned some lessons but continue to grapple with unknowns.

While forecasters and budget staff gain more information, state officials can avoid budget shortfalls and keep program funding stable by being prudent in how they use these new collections.  States should be careful to distinguish between marijuana revenue’s short-term growth and long-term sustainability.  While these new dollars can fill immediate budget needs, they may prove unreliable for ongoing spending demands.  Policymakers should look to other, more familiar sin taxes for lessons on how to manage marijuana tax revenue most effectively.

August 21, 2019 in Business laws and regulatory issues, History of Marijuana Laws in the United States, Recreational Marijuana Commentary and Debate, Recreational Marijuana Data and Research, Taxation information and issues | Permalink | Comments (2)

Tuesday, July 30, 2019

Is hemp really now going to become the number three crop in Ohio and can marijuana stay illegal if it does?

83b51efd-e309-441e-9f11-e3ada1158628-CBD_SeltzerI do not blog all that much about hemp reforms, even though I find them quite interesting and important, largely because I do not know that much about agriculture or about all the different ways the hemp plant might be used.  But this local article concerning Ohio hemp developments prompted both the question in the title of this post and some broader thoughts about the relationship between help developments and marijuana reform.  First, some excerpts from the article:

Gov. Mike DeWine signed Ohio's hemp legalization bill, Senate Bill 57, into law on Tuesday at the Ohio State Fair. The law takes effect immediately, freeing all embargoes on CBD inventory and moving hemp-derived cannabidiol off Ohio’s controlled substances list. It also means Ohio State University and other colleges can grow the state's first hemp this summer....

The law immediately allows hemp-derived CBD to flow into the state, but it will be a while before hemp can be commercially grown or processed in the Buckeye State. The U.S. Department of Agriculture plans to issue federal rules for hemp cultivation and processing in the coming weeks. In addition to CBD from hemp flowers, the plant is also harvested for its fiber and seed.

Ohio agriculture officials have six months to draft Ohio’s rules and regulations, which will then be submitted to the feds for approval. The goal: Have everything in place so farmers can get seeds in the ground next spring.... Ohio Department of Agriculture Director Dorothy Pelanda said the agency does not plan to limit the number of licenses issued to cultivate or process hemp.

Pelanda said the agency plans to craft regulations to ensure farmers plant seeds that are certified to be low in THC – hemp is defined as cannabis containing less than 0.3% THC. “We want to make sure that Ohio has the very best hemp program in the nation,” Pelanda told The Enquirer.

Ohio is the 46th state to allow hemp farming. A big part of Ohio’s program will be research, which will begin right away. Ohio State University plans to buy about 2,000 hemp plants in the next week. Gary Pierzynski, associate dean for research and graduate programs at OSU's College of Food, Agricultural and Environmental Sciences, said it’s too late to plant with the goal of harvesting. But Pierzynski hopes this first crop at four locations will position them for good research on growing methods, plant diseases, pests and more next year.

Industry analysts predict the U.S. hemp market will grow from about $4.6 billion to more than $26 billion by 2023. The Ohio Farm Bureau Federation has said hemp has the potential to be Ohio's No. 3 crop behind corn and soybeans.

The bill leaves the details of Ohio’s hemp program – like who can grow it and how much licenses will cost – to the Ohio Department of Agriculture. Those rules will be shaped by experts, lobbyists and public comment periods. Hours after Senate Bill 57 passed, a new hemp industry lobbying group was announced. Backing the group: Ian James and Jimmy Gould, who led the unsuccessful 2015 effort to legalize recreational marijuana in Ohio. Since Issue 3 failed, James and Gould have invested in hemp, in addition to obtaining licenses for medical marijuana businesses here.

Statehouse lobbyist Neil Clark, who has been tapped to lead the organization, said the association will serve businesses who are involved at several levels of the industry and who have “big ideas.” “Our goal is to make sure those restrictions aren’t prohibitive,” Clark said. “There’s a lot of farmland in Ohio and there has to be opportunities for everyone.”

The group joins others that pushed the bill along including the U.S. Hemp Roundtable, which largely represents CBD businesses, and the Ohio Hemp Association, comprised of Ohio businesses and entrepreneurs that want to grow hemp or manufacture hemp products.

Queen City Hemp has been gearing up to put its CBD Seltzer water back on the shelves at local retailers, including Hemptations and Clifton Natural Foods.  A large part of the Cincinnati-based manufacturer’s inventory of CBD-infused seltzer water was confiscated from those retailers and destroyed by the local health department during their crackdown in February, according to president and co-founder Robert Ryan.

A number of national chain stores are already selling CBD products across the country.  Kroger, the nation's largest grocery retailer, announced in June it would sell hemp-derived CBD creams, balms and other topical products in nearly 1,000 stores in 17 states – but not its home state of Ohio.  That will change with the new law, but a Kroger spokeswoman said it was too early to provide details.

As this article highlights for Ohio, many folks here and throughout the nation with an affinity for marijuana reform are involved with hemp reform and the hemp industry.  If (when?) this crop becomes a huge part of agriculture in Ohio and elsewhere, I suspect these these folks are likely to use their clout and their money to push for reforms regarding other types of cannabis plants.  Similarly, if folks in Ohio and throughout the nation get used to seeing CBD sodas on many store shelves and CBD creams when shopping for soap, it seems ever more likely that they will start to view many forms of cannabis more benignly. 

July 30, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, History of Marijuana Laws in the United States | Permalink | Comments (0)

Monday, July 29, 2019

"Cannabis Has Big Law Seeing Green, but the Am Law 50 Are Skipping the Party"

The title of this post is the title of this notable lengthy American Lawyer article, which has this subheadline: "Law firms are rushing to open cannabis practices as the industry booms, including many among the Am Law 200. Why is the top tier taking a pass?". Because I am a lawyer and law professor who teaching on cannabis law, I am very interested in any and all stories at the intersection of the cannabis industry and the legal industry. Here are excerpts from this one:

Jonathan Robbins starts his day early. By 6 a.m., he’s on his home office computer scanning emails, and then he hits the hot sheets—dozens of newsletters from attorneys, advocacy groups, legislators and associations focused on the cannabis business. And there is a lot to read.

Robbins, who chairs the cannabis practice at Akerman, believes that when he began to collect clients in the industry back in 2013, he was one of the first Big Law attorneys to practice cannabis law in the United States. “Back when I first started practicing, I went to a conference in Vegas called MJBizCon,” he says. “At the time, it was just a bunch of guys selling nice bongs. This year, there were 28,000 people there.”

One thing has remained consistent through that time, however, even as state after state has legalized marijuana in some form, fueling an estimated $10 billion industry: According to the U.S. government, cannabis is a Schedule I narcotic, putting it in the same ­category as heroin, cocaine and methamphetamines. It is a controlled substance and is illegal on a federal level.

That presents a series of problems for law firms seeking to advise and profit from clients that are involved in a criminal enterprise — at least as far as the federal government is concerned. While more than two dozen Am Law 200 firms have launched formal cannabis practices in the last decade, no Am Law 50 firms are among them. Those that publicly embrace the practice tend to have a clientele consisting largely of midmarket companies — and Wall Street law firms are still conspicuously absent.

Cannabis clients have one concern above all others, Robbins says: “banking and merchant services.” The drug’s complex legal status has created a paradox. It is both driving the growth of cannabis practices within law firms and holding them back from reaching their full potential....

Most major U.S. law firms have done some work in the cannabis space at this point, and according to Morgan Fox, media relations director at the National Cannabis Industry Association, the stigma around having a cannabis practice is virtually gone—at least for small to medium firms. But the largest firms still don’t advertise it. Searching their websites reveals snippets of work done but nothing that could be considered a formalized practice.

Robbins believes there is still a more conservative bent to larger firms, which have more to lose if a client skirts legality or something goes sideways as a result of regulatory changes. Akerman did a great deal of due diligence on the potential exposure of dealing with plant-touching clients. The firm concluded it was a risk worth taking, he says....

From Robbins’ perspective, it may be a good thing that larger firms aren’t suddenly pushing ahead. “Bigger firms dipping their toes into it without having the regulatory expertise could cause problems both for the firm and the client,” he says.

There are some firms just outside the Am Law 50, like Sheppard, Mullin, Richter & Hampton, which announced a formalized 70-attorney practice in May, that are actively looking to raise the profile of their cannabis practices. But they are doing it slowly. Sheppard Mullin’s practice head, Whitney Hodges, says that although the firm made the effort to formalize its practice, it isn’t in a position to discuss financial expectations.

Some smaller firms are quite happy with the fees generated by the industry. Joshua Horn, partner and co-chair of the cannabis practice at Fox Rothschild, says that in the three years since his firm formalized its practice after dabbling in the space for years, it has gone from zero cannabis-related revenue to a multimillion-dollar practice that he expects to keep growing.

Seth Goldberg, a partner at Duane Morris and team lead of its cannabis practice, concurs. He expects the practice to expand, bolstered by the constellation of practice areas the industry touches and projections that the market could grow to $50 billion in the next decade. His firm has been pleased with its revenue results since formalizing the practice in January 2017, though he declined to share them.

Zane Gilmer, a partner in the cannabis practice at Stinson, believes the industry will grow, but his firm does not have an accounting system that measures the exact amount of money the practice is bringing in. The firm’s practice, he says, is more about servicing existing clients that have started to do business with entities dealing with cannabis. His own work focuses, in part, on advising financial institutions that are planning on dealing with companies in the cannabis space. It’s a bit of a gray area.

Although Gilmer says he has been doing work that relates to the cannabis industry since his arrival at Stinson in 2014, the firm didn’t formalize its official practice until last year, and he still sees a lot of room for maturity both in the emerging industry and those who service it. But there’s enough business to necessitate its own practice arm.

July 29, 2019 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Tuesday, July 23, 2019

Senate hearing on marijuana industry banking issues reveals continued challenges for federal reforms

Many folks seemed quite excited by the Senate Banking Committee's decision to hold this hearing today, titled “Challenges for Cannabis and Banking: Outside Perspectives,” to discuss the SAFE Banking Act and related issues concerning the banking problems that face the marijuana industry. But just the headlines of two press reports on the hearing suggest my persistent pessimism about the short-term prospects for federal marijuana reforms remains justified:

From The Hill: "Pot banking bill supporters seek path to passage in skeptical Senate"

From CNBC: "Senate cannabis hearing shows challenges to rewriting pot laws despite growing support in Congress"

Both articles provide a helpful review of the hearing, and here is how the CNBC piece gets started:

A much-hyped congressional hearing on easing cannabis banking restrictions served as a reminder Tuesday that reforming pot laws remains an uphill battle in Congress despite growing bipartisan support among lawmakers.

The Senate Committee on Banking, Housing and Urban Affairs hosted a hearing titled “Challenges for Cannabis and Banking: Outside Perspectives.” Lawmakers, industry executives and advocates testified on the challenges cannabis companies face trying to get basic banking services in states where medical or recreational marijuana is legal. They urged lawmakers to change federal laws to give the budding industry access to traditional financial services.

One piece of legislation, the Secure and Fair Enforcement (SAFE) Banking Act, would allow banks, credit unions and other financial institutions to work with the cannabis industry. Some think it could pass because it’s narrowly focused on banking and not other sticky issues like decriminalizing or legalizing pot.

But Tuesday’s hearing showed just how hard getting the bill through the Senate would be. Aside from committee chairman Mike Crapo, R-Idaho, none of the Republican committee members attended the hearing.

July 23, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Who decides | Permalink | Comments (0)

Monday, July 8, 2019

"Cannabis and Insurance"

The title of this post is the title of this new article available via SSRN authored by Francis Joseph Mootz and Jason Horst. Here is its abstract:

Although many states have decriminalized or legalized cannabis, it remains a Schedule 1 drug under the federal Controlled Substances Act.  The conflict between federal and state law presents many complicated issues, including significant problems relating to insurance coverage.  Insurance law seeks to balance competing policy interests.  On one hand, public policy supports reading insurance policies broadly to indemnify policyholders for their losses.  On the other hand, public policy counsels against permitting insurance to indemnify (federally) illegal activity. 

In this Article, we explore some of the pressing problems arising out of the conflict between these policy considerations in the context of liability, property, and employment-related insurance.  We also explore emerging cannabis insurance policy options in states where cannabis is legal and discuss the advantages, but ultimate inadequacy, of those options.  We conclude that policyholders are likely to find that their reasonable expectations of insurance coverage are unmet at this point in the emerging market.

July 8, 2019 in Business laws and regulatory issues | Permalink | Comments (0)

Wednesday, June 26, 2019

"Race Based Statutes at Play with Cannabis: Cultivating a Process for Weeding Out the Competition"

The title of this post is the title of this new paper recently posted to SSRN authored by Tyrus Hudson.  This paper is the seventh in an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The first six  papers in this series are linked below.)  Here is this latest paper's abstract:

The ongoing battle between federal and state cannabis laws have created a perplexing realm of ambiguity for legislatures tasked with establishing drug policy.  In the midst of this intricate conflict lies another issue that is wreaking havoc throughout the legalized cannabis marketplace.  With federal and state governments failing to administer concrete guidance by virtue of lacking to establish policies which govern concurrently and in a harmonious manner, laws have been enforced on both the federal and state levels, that are negatively impacting various minority groups and their potential to capitalize on the multibillion-dollar cannabis industry.

This article will examine the arguments for, and against, current and proposed legislation that impacts licensure for minority groups trying to enter the legalized cannabis marketplace.  Particularly, this article will address the primary obstacles that most negatively affect minorities and the specific role that each barrier has played in preventing minority entrepreneurs from becoming business owners and seizing the opportunity to cash in on this new lucratively flourishing agricultural business that is taking the nation by storm.  While not much research has been conducted on the topic of minority business owners obtaining licenses to operate in the legalized cannabis market, the primary goal of this article is to stimulate dialogue and encourage further research into the impact that legalizing cannabis is having on minority business owners trying to establish themselves as legitimate participants in this up-and-coming industry.

Prior student papers in this series:

June 26, 2019 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Race, Gender and Class Issues, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Wednesday, May 29, 2019

"An Argument Against Regulating Cannabis Like Alcohol"

The title of this post is the title of this paper recently posted to SSRN authored by Jonathan R. Elsner, who just recently graduated from The Ohio State University Moritz College of Law. This paper is now the fifth of an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The first four papers in this series are linked below.)  Here is this latest paper's abstract:

As cannabis prohibition comes to an end in the United States, federal and state governments must decide how to regulate its cultivation, distribution, and sales.  One particular option, supported by some alcohol wholesalers and distributors, is a regulatory system based on that of the alcohol industry, whereby the government mandates a distribution system consisting of three mutually exclusive tiers: manufacturers, distributors, and retailers.  This paper, however, argues against creating a regulatory framework for the nascent adult-use cannabis industry modeled after the government-mandated, three-tier distribution system established for alcohol post-Prohibition as it inherently stifles innovation and quality.

Essentially, the three-tier distribution system creates an unnatural layer of government-mandated middlemen, distributors and wholesalers, who perpetuate market inefficiencies that benefit themselves, along with large corporations, to the detriment of consumers and small-to-medium-sized businesses.  The beer industry, now dominated by two breweries offering largely undifferentiated products, provides a cautionary tale regarding the effects of the three-tier distribution system to those developing the regulatory structure for the adult-use cannabis industry.

Prior student papers in this series:

May 29, 2019 in Business laws and regulatory issues, History of Alcohol Prohibition and Temperance Movements, History of Marijuana Laws in the United States, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Tuesday, May 21, 2019

New issue brief calls for "Using Marijuana Revenue to Create Jobs"

Download (25)As detailed in this press release, yesterday "the Center for American Progress released a new issue brief calling for states and the federal government to use marijuana tax revenue to fund the creation of thousands of public sector jobs in low-income communities of color that have been historically deprived of economic opportunity due to discriminatory drug enforcement."  Here is more from the release:

The issue brief proposes a tangible way to pay for the creation of jobs in communities that have experienced the heaviest consequences of disparate criminal enforcement of marijuana.  The authors calculate that annual tax revenues from the regulated marijuana market in California and Washington state, for example, could create nearly 20,000 jobs.  This number is sure to increase as more and more Americans — 68 percent, according to a 2018 CAP/GBAO Strategies poll — favor marijuana legalization and more states consider legalizing the recreational use of marijuana as well as creating a regulated marijuana market.

The proposal is an outgrowth of CAP’s 2018 report, “Blueprint for the 21st Century: A Plan for Better Jobs and Stronger Communities,” which called for a massive investment in public sector  job creation and a jobs guarantee for highly distressed communities.

The brief further describes the need to ensure that any marijuana legalization effort leads with provisions that ensure racial equity and correct injustices that have resulted from the war on drugs.  Key recommendations include providing automatic and cost-free expungements of marijuana arrest and conviction records; reinvesting in essential services for communities most harmed by the war on drugs; and promoting equitable licensing systems and funding for minority-owned businesses.  These measures would greatly help people who face barriers to economic opportunity, employment, and other basic necessities due to the collateral consequences of a marijuana-related conviction.

The full eight-page issue brief is titled “Using Marijuana Revenue to Create Jobs” and is authored by Maritza Perez, Olugbenga Ajilore, and Ed Chung. Here is its conclusion:

Today, states are raking in billion-dollar profits for activity that sent millions of African American and Latinx individuals into the criminal justice system, trapping their families and communities in poverty for generations.  The movement to legalize marijuana presents an opportunity both to achieve justice for and to build economic opportunity in these communities.  Creating public sector jobs and other policies outlined in this issue brief acknowledge the economic impact that the war on drugs has had on low-income people of color.  With these policies, elected leaders can begin to address the structural barriers that states must rupture so that individuals from some of their most vulnerable communities have equal access to economic opportunity.

May 21, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Taxation information and issues | Permalink | Comments (0)

Monday, May 20, 2019

"Marijuana in the Workplace: Distinguishing Between On-Duty and Off-Duty Consumption"

The  title of this post is the title of this paper recently posted to SSRN authored by Tyler G. Aust, who just recently graduated from The Ohio State University Moritz College of Law.  This  paper is now the four of what will be an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The first three papers in this series are linked below.) Here is this latest paper's abstract:

The proliferation of legal marijuana foretells an uncertain future for businesses that implement zero-tolerance drug policies.  In states where recreational marijuana is legal, businesses still have the power to enforce drug policies through employment contracts.  That changed in Maine, where state law prohibits employers from making adverse employment decisions based solely on an employee’s off-duty use of marijuana.  As legalization efforts sweep across the Midwest, it is unclear whether other states will follow Maine’s model.  Some businesses have already relaxed pre employment marijuana testing amid labor shortages.  To prepare for the future, employers should revise their drug policies to distinguish between on-duty and off-duty marijuana consumption and allow employees to use marijuana outside of the workplace.

Prior student papers in this series:

May 20, 2019 in Business laws and regulatory issues, Employment and labor law issues, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Friday, May 17, 2019

Noting diverse employment law realities for medical marijuana users in diverse states

Governing has this effective new piece on employment law's intersection with marijuana reforms under the headline "Can Medical Marijuana Get You Fired? Depends on the State." The subheadline highlights a theme of the piece: "Less than half of the states where the drug treatment is legal protect patients from employment discrimination. Courts have generally sided with employers -- until recently." Here are excerpts:

In most states, you can use medical marijuana without getting arrested -- but it could still get you fired.  While 33 states have legalized cannabis for medicinal purposes, fewer than half of them protect patients from being fired or rejected for a job because of a positive cannabis test or simply because they're registered on a medical marijuana database.  This legal haziness has sparked lawsuits across the country.

Courts have generally sided with employers, says Peter Meyers, a law professor at George Washington University.  This was the case in 2006 in Oregon and in 2009 in Montana.  More recently, however, judges have shifted their verdicts in favor of employees.  In New Jersey last month, an appeals court ruled that medical marijuana use is covered under the state's ban on disability-based employment discrimination.  This case follows similar rulings in Connecticut, Massachusetts and Rhode Island. As more states legalize the drug treatment, the battle will continue in the workplace.

“The big problem is [marijuana] remains illegal federally except for narrow exceptions,” says Meyers, who has written about the constitutionality of drug testing. “There’s this conflict, and a lot of the court rulings have deferred to federal law. It’s a very confusing situation.”  The legal contradiction has left a lot of employers, and employees, uncertain about what rules to follow.

Bipartisan legislation to protect medical marijuana patients from employment discrimination has been introduced in Congress, but it only applies to federal workers and has yet to gain traction. With the federal government unlikely to change its marijuana policy any time soon, states are left to make their own rules.  In 14 of them, medical marijuana patients have explicit employment protections either through legislation or court rulings, according to the Marijuana Policy Project.

That leaves 19 states where people may have to choose between this treatment option and a job.  One of them is California, which was the first state to legalize medical marijuana, in 1996, but doesn't have explicit workplace protections.  The state Supreme Court ruled in 2008 that an employer could reject a job candidate with a positive cannabis test -- even if they had a prescription.  Bills seeking to override that decision have been tossed around without success.

Even where employment protections exist, they have limitations.  Arkansas law, for example, says an employer can't discriminate based on a person’s past or present status as a marijuana patient.  But companies can still ban employees from taking it at work.  In Oklahoma, employers can't penalize employees or applicants for a positive drug test -- unless failing to penalize someone would cause the employer to “imminently lose a monetary- or licensing-related benefit under federal law or regulation.”...

Despite the widespread legalization of medical cannabis, there are a number of reasons employers pause when it comes to having people who use it on their staff.  Some aren't fully aware of their state's protections, and others might fear losing out on federal funding.  “A lot of people are concerned about whether marijuana users will be less productive [at] work or if there will be more workplace accidents,” says Karen O’Keefe, state policies director for the Marijuana Policy Project.

But unlike many other drugs, THC, the active ingredient in marijuana, can be detected for 30 days or longer after use, so workplace drug tests don't necessarily portray a person’s current level of impairment.  As medical marijuana becomes less taboo, more employers will likely change their drug policies.  Already, fewer employers -- particularly those facing staff shortages -- are requesting preemployment tests for marijuana.

May 17, 2019 in Business laws and regulatory issues, Employment and labor law issues, Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms | Permalink | Comments (0)