Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

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)

Sunday, May 12, 2019

Second installment of Ohio State Cannabiz Roundtable scheduled for May 16

Roundtable-2-1024x492As noted in this post, in January I had the opportunity to participate in an exciting cannabis industry panel discussion, co-sponsored by the Ohio State Drug Enforcement & Policy Center (DEPC), under the heading "Cannabiz Roundtable."   This coming week, on Thursday, May 16 and as detailed here, another set of cannabis industry participants are part of another DEPC discussion this time titled "Cannabiz Roundtable: Industry Diversity & Legislative Updates."

The event is described at this link, where one can find this event description:

About

The legal landscape of the cannabis industry continues to change both at the state and federal level, creating continuous challenges and opportunities for entrepreneurs in Ohio. At the same time, the cannabis industry is facing a challenge of ensuring that it reflects the diversity of our community and that communities that have been disproportionately affected by the War on Drugs benefit from opportunities in the legal industry. Please join us for our second Business of Cannabis Roundtable where we will host two panels discussing both issues.

Building Industry Diversity

As in many other states, the cannabis industry in Ohio is challenged with ensuring that it reflects the diversity of its community. Despite increased attention among the industry professionals and government entities alike, companies continue to struggle with recruiting, training and retaining a diverse workforce. Please join our panel of industry professionals as they discuss their own experience of entering this new industry, resources that are available for training and recruitment and strategies for building a diverse industry.

Legislative Updates

Our second panel will focus on legislative and regulatory updates in respect to Ohio’s medical marijuana program and Ohio’s treatment of hemp and CBD. Given the recent changes in the federal law, our panel of experts will discuss what changes are afoot in Ohio and how will these changes affect the cannabis industry.

Hosts

Center for Innovation Strategies

Drug Enforcement and Policy Center

Ohio Cannabis Chamber of Commerce

May 16th, 2019, starting at 4pm, at the Ohio Union round Meeting Room (3rd Floor)

May 12, 2019 in Business laws and regulatory issues, Medical Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Tuesday, May 7, 2019

"Intellectual Property Survey: Cannabis Plant Types, Methods of Extraction, IP Protection, and One Patent That Could Ruin It All"

The  title of this post is the title of this paper recently posted to SSRN authored by Amanda Maxfield, who is a student at The Ohio State University Moritz College of Law.  This is the third of what will be an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The first paper in the series was authored by Shelby Slaven under the title "The Canna(business) of Higher Education, the second paper in the series was authored by Jordan Hoffman under the title "Marijuana Banking in New York and Around the US: 'Swim at Your Own Risk'.").  Here is this latest paper's abstract:

Intellectual property is one of a company’s most valuable assets, at times deserving rigorous time and effort for proper protection.  Companies rely on patent, trade secret, trademark and copyright laws to protect their intellectual property.  For most businesses, this process is routine and a standard part of their ordinary course of business.  Cannabis companies, unfortunately, have many obstacles to overcome to use some of these same protections, as cannabis is considered federally illegal, yet legalized in many states to varying degrees. 
Cannabis companies must, therefore, be innovative and nuanced in their strategies for protecting their proprietary business information such as patentable subject matter through the use of patents and trade secrets.  The method of intellectual property protection is driven by the subject matter.  Cannabis growers target specific plant types based on cannabidiol (“CBD”) and delta-9-tetrohydrocannabinol (“THC”) ratios and desired characteristics using specific method of extraction, all of which are patentable if legal elements are met.  Unfortunately, while the cannabis industry is an emerging market with plenty of growth ahead of it, an ongoing Colorado court case involving liquids containing cannabinoids that could result in major negative ramifications for all involved in the cannabis industry.

May 7, 2019 in Business laws and regulatory issues | Permalink | Comments (0)

Friday, May 3, 2019

"Clearing the Air About Marijuana in Qualified Opportunity Zones"

The title of this post is the title of this interesting short piece that is available on SSRN and is a reprint from the Tax Management Real Estate Journal.  The piece is authored by Libin Zhang, and here its abstract:

The law formerly known as the Tax Cuts and Jobs Act of 2017 created qualified opportunity zones (QOZs), which are low-income census tracts in which certain investments by qualified opportunity funds (QOFs) are provided tax benefits.  The investments generally cannot include any golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises (some practitioners refer to such businesses as "sin businesses," but this article uses the non-judgmental and less anti-golf term of "excluded business.")

Some commentators have stirred the pot by questioning the extent that QOFs can be involved in marijuana businesses.  While the QOZ rules have their hazy areas, the excluded businesses should not include marijuana activities.

However, section 280E may disallow deductions for taxpayers that buy and sell marijuana. QOFs should ensure that they deal with marijuana in a different capacity, such as in a real estate rental business, in order to ensure that their deductions do not go up in smoke.

May 3, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Taxation information and issues | Permalink | Comments (0)

Wednesday, May 1, 2019

Shouldn't every major marijuana investor make major investments in marijuana research?

Research-data-analysisThe question in the title of this post is prompted by this notable story out of Boston headlined "Harvard, MIT share $9 million gift to study marijuana's health effects." Here are the interesting details:

An investor in the cannabis industry has donated $9 million to Harvard and MIT to study the drug’s health effects, in what the institutions describe as the largest private gift to support marijuana research in the United States.  The Broderick Fund for Phytocannabinoid Research, announced Tuesday morning, will be shared equally by Harvard Medical School and the Massachusetts Institute of Technology, with the goal of filling vast gaps in the understanding of how marijuana affects the brain and behavior.

“The lack of basic science research enables people to make claims in a vacuum that are either anecdotal or based on old science,” said the donor, Charles R. “Bob” Broderick, an alumnus of both universities. “For generations we haven’t been able to study this thing for various sorts of societal reasons. That should end now, as well as the prohibitions that are falling around the world.”

Broderick has invested heavily in the booming marijuana business, starting in Canada in 2015 and more recently the United States, through his family-run Uji Capital. Although Broderick stands to profit if the studies find benefits from marijuana, the universities and the researchers said the donor will have no say in the work process or its results. They also pledged to publish their findings even if they find marijuana doesn’t help or causes harm.

Broderick recalled the first time he raised the idea of funding cannabis research with a Harvard development officer: “There was silence on the other end. Then she said, ‘I don’t think we do it.’ And I said, ‘That’s the problem.’ ” The official soon called back to say that Harvard researchers studying brain chemicals would be interested in examining marijuana’s effects.

Dr. Igor Grant, a longtime California marijuana researcher who is not involved with the Harvard-MIT project, said the grant “will really let them move forward with research that has been difficult to fund.”

“The work in this area has been very, very slow coming,” said Grant, director of the Center for Medicinal Cannabis Research at the University of California San Diego.

“This is exactly the type of research we need,” said Dr. Peter Grinspoon, a Massachusetts primary care doctor and board member of Doctors for Cannabis Regulation, a group promoting legalization and regulation of marijuana. Whether for or against marijuana, Grinspoon said, “Everybody wants more research.” The marijuana studies to date vary in quality, often have conflicting results, and typically involve either purified extracts or smoked marijuana — not the gummies, cookies, vapor, oils, or highly potent buds that people consume today....

Until recently researchers could work only with marijuana grown at a federal farm in Mississippi, whose plants are less potent than those purchased at dispensaries in states where the drug is legal. But John Gabrieli, a professor of brain and cognitive sciences at MIT and one of the grant recipients, said “a fast-changing regulatory environment” is allowing access to better material.

The MIT researchers intend to use extracts from the plants to tease out the effects of marijuana in people with schizophrenia — about half of whom are heavy cannabis users, Gabrieli said. The researchers want to pursue intriguing evidence that a component in marijuana known as tetrahydrocannabinol, or THC, improves cognitive function in people with schizophrenia. They will look at how THC as well as another key component — cannabidiol, or CBD — affect cognition alone and in combination.

Another MIT researcher will study how chronic exposure to THC and CBD may alter the cell types implicated in schizophrenia, potentially shedding light on why teens who use cannabis are at greater risk of developing schizophrenia and why the drug may be more dangerous for teens than adults.

Other studies at MIT will examine whether marijuana ingredients can help people with autism and with Huntington’s disease, and will study the effects of cannabis ingredients on attention and working memory. It’s been “incredibly hard” to get funding for marijuana research, Gabrieli said. “It’s been illegal all over the place until very recently. Without the philanthropic boost, it could take many years to work through all these issues.”

At Harvard, the $4.5 million gift establishes the Charles R. Broderick Phytocannabinoid Research Initiative, involving some 30 basic scientists and clinicians at the medical school and its affiliated hospitals. The Harvard team plans to study the effects of marijuana ingredients on brain cell function and the connections between brain cells, testing purified ingredients on mice and rats.

Researchers at Harvard have been studying natural brain chemicals known as endocannabinoids, which are involved in a variety of functions, including memory, appetite, and stress response. The grant will enable them to expand that research to encompass cannabinoids derived from plants. “Marijuana has about 100 different cannabinoid compounds. We understand very little about the specific effects of each of them on the nervous system,” said Bruce Bean, Harvard neurobiology professor and one of the project’s researchers....

The research, however, is funded by someone who could profit if the findings are favorable or lose money if new dangers are discovered.  Could knowing this somehow, even unconsciously, bias the results?  Josephine Johnston, director of research at the Hastings Center, a think tank concerned with bioethics, said such conflicts of interest are commonplace. “In a pure world, you wouldn’t have a situation like this.  But it’s pretty much a fact of life of biomedical research in the United States that you have interested parties funding research,” said Johnston, co-editor of a book on conflicts of interest in biomedical research. Institutions can enact safeguards to ensure both that the research is unbiased and that it’s perceived as trustworthy.

Both MIT and Harvard said they have such policies in place, requiring that gifts come without strings attached and that researchers have control over their work and its publication.  Grant, the California marijuana researcher, agreed that conflict of interest is an important concern. But, he added, if people profiting from the marijuana boom invest in science, “maybe that’s not a bad thing. They could just as easily buy yachts or do something else.”

Because I am a kind of marijuana researcher (focused on law and social science, rather than medical science), I realize I have a bias when suggesting that everyone involved in the marijuana industry ought to be funding academic marijuana research.  Also, as a director of the Drug Enforcement and Policy Center at The Ohio State University, I am sensitive to the concern that research funded by the marijuana industry or investors carries real conflict risks that can come with any private funding of public research. 

All that said, this article helps highlight just some of the many reasons why a lot more private funding (and a lot more public funding) is needed for all sorts of marijuana research.  There are many times I end up feeling truly overwhelmed by all the important research questions that arise in this space and all the formal and informal barriers to conducting all the needed research.   And especially with so many legal and social changes in this space, this period seems like an "all hands on deck" moment.  And I do not think it is misguided to believe that everyone involved in the marijuana industry and especially its investors ought to be swabbing the deck as best they can.

May 1, 2019 in Business laws and regulatory issues, Medical community perspectives, Medical Marijuana Data and Research, Recreational Marijuana Data and Research, Who decides | Permalink | Comments (0)

Monday, April 29, 2019

"Marijuana Banking in New York and Around the U.S.: 'Swim at Your Own Risk'"

The title of this post is the title of this paper just posted to SSRN authored by Jordan Hoffman, who is a student at The Ohio State University Moritz College of Law.  This is the second of what will be an on-going series of student papers supported by Drug Enforcement and Policy Center.  (The first paper in the series was authored by Shelby Slaven under the title "The Canna(business) of Higher Education.") 

Here is the abstract of this new paper on marijuana banking:

Today, banking in any way relating to marijuana is a violation of federal law.  Conflicting laws and guidance from the federal and state governments threatens the welfare and success of a billion-dollar industry.  Analyzing the current marijuana banking laws, regulations, and practices in New York and around the US provides a glimpse into an industry suffocating from public pressures and overpowering economic tides.  To protect and uphold the integrity of our government and the agencies it deems controlling, the federal government must reform marijuana banking.

April 29, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, History of Marijuana Laws in the United States, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate, Who decides | Permalink | Comments (0)

Thursday, April 25, 2019

"Cannabis, Marijuana, Weed, Pot? Just Call It a Job Machine"

The title of this post is the headline of this notable and lengthy new New York Times article.  Here are excerpts:

Although cannabis remains illegal on the federal level, 33 states now allow its sale at least for medical purposes.  Ten of them, including California, have legalized recreational use.  And as new markets open and capital continues to flood in, the cannabis industry has become, by some measures, one of the country’s fastest-growing job sectors.

The jobs range from hourly work at farms and stores to executive positions.  They also span the country. Columbia Care, a medical cannabis company that is based in New York and has 500 employees, has indoor farms and manufacturing plants in Massachusetts, Delaware, Florida, Illinois, Arizona and the District of Columbia.

It’s hard to know exactly how many jobs there are in the legal cannabis business.  The United States Labor Department collects data from cannabis farms and retailers, but does not provide figures for the industry. Still, listings for cannabis-related positions have rocketed to the top echelon of the fastest-growing-job categories on sites like Indeed and ZipRecruiter.

Julia Pollak, a labor economist at ZipRecruiter, said the company’s data put the number of cannabis jobs nationwide at 200,000 to 300,000.  Most of those jobs are on the lower end of the pay scale, consisting of rote agricultural work like plant trimming ($10 to $15 an hour) and “budtenders” (about $25,000 a year), who help customers decide what kind of cannabis they want and then weigh and bag it.

But as the industry expands, there has also been a strong demand for better-paid positions like chemists, software engineers, and nurses who consult with patients about using cannabis for anxiety and other medical conditions.  “The early signs are that this will grow rapidly,” Ms. Pollak said....

The pioneers who brought the industry out of the shadows are being joined by professional managers and executives — “talent,” in corporate speak — who have had careers in other industries.  For upper-level managers and executives, companies say they prefer candidates with a background in highly regulated industries like alcohol or pharmaceuticals....

After a decade in pharmaceutical marketing at companies including Gilead Sciences, Julie Raque recently became the vice president for marketing at Cannabistry Labs, a cannabis research and testing company in Chicago.  She was intrigued by the industry and eager to join a start-up, but had to take a pay cut in exchange for company stock — and to accept that her decision might be a one-way door.  “I highly doubt companies would want to hire me back,” she said.  “I knew I was about to do something big, and since then I’ve not looked back, because I’m having so much fun.”

A few prior related posts:

April 25, 2019 in Business laws and regulatory issues, Employment and labor law issues, Medical Marijuana Commentary and Debate, Recreational Marijuana Commentary and Debate | Permalink | Comments (1)

Saturday, April 20, 2019

Real research to support the unreal attention the food industry now gives to 4/20

As I mentioned in a prior post,  I am not all that keen on all the marijuana buzz devoted to 4/20.   But I am certainly keen on getting a bargain, and this USA Today article highlights how many food retailers are eager to make much of the holiday.  The article is headlined "4/20 specials: 'High' priority list of munchie deals at Pizza Hut, Carl's Jr., Lyft, more," and here is how it sets up the list of offersns:

Saturday is a high-ranking made-up holiday. It's 4/20, aka Weed Day or Pot Day, and that means specials for cannabis fans across the country, regardless of whether they can legally buy pot in their state or not.

This year, more major restaurant chains are getting in the holiday mood including Pizza Hut, which has a sweet brownie deal, and Boston Market with its buy-one-get-one free Pot Pie deal. Plus, Carl’s Jr. says it is the first chain to test a CBD-burger at one Denver location only on Saturday.....

Unlike marijuana, another cannabis species, hemp has almost none of the psychoactive compounds that cause a user to get high. Now that it's no longer labeled a controlled substance, more businesses have the opportunity to create hemp-based products, from tinctures to lotions.

Here are some of munchie deals, not drug deals, though you might find a discounted buzz Saturday....

Whether you think this is misguided or masterful marketing, there is a bit of science behind these tie-ins. Specifically, consider this recent article on SSRN authored by Michele Baggio and Alberto Chong titled "Recreational Marijuana Laws and Junk Food Consumption: Evidence Using Border Analysis and Retail Sales Data."  Here is its abstract:

We use retail scanner data on purchases of high calorie food to study the link between recreational marijuana laws (RMLs) and consumption of high calorie food.  To do this we exploit differences in the timing of introduction of marijuana laws among states and find that they are complements.  Specifically, in counties located in RML states monthly sales of high calorie food increased by 3.1 percent for ice cream, 4.1 for cookies, and 5.3 percent for chips.

April 20, 2019 in Business laws and regulatory issues, Recreational Marijuana Commentary and Debate | Permalink | Comments (0)

Thursday, April 18, 2019

"Canada Has Made Pot Super Boring"

Download (19)The title of this post is the headline of this interesting New Yorker commentary authored by Stephen Marche. Here are excerpts:

This 4/20 will be different, at least in Canada.  It will be the first celebration of marijuana since the country made pot legal in October, 2018.  The time passed since the end of prohibition hasn’t been long enough to establish any direct consequences from legalization so far, but one thing has already become painfully clear from Canada’s experiment. When you make pot legal, you make it super, super boring....

Other than new signs at the airport warning the more dull-witted Canadian citizens to dispense of their marijuana in the appropriate receptacles before leaving the country, it was hard to notice any real change after the passage of the marijuana laws.  The pot dispensaries, semi-underground before the end of prohibition, were supposed to disappear, but went on just as before.  They’ve just becoming increasingly polished.  The place where I buy my weed looks like a Pottery Barn, and it was so busy the other day that they gave me one of those buzzers they hand out at Shake Shack to tell you when your order is ready.  I had to wait twenty minutes.

It’s also money that’s making pot boring.  Recently, I went to a champagne-and-hot-wings party — a superb concept, by the way — in a wealthy neighborhood in Toronto, and it felt like half the people attending were in the cannabis industry in one way or another; many of them had transitioned from hedge funds.  Marijuana stocks have overtaken real estate as the standard conversational go-to of Toronto dinner parties.  And you have not understood how banal marijuana can be until you overhear two parents watching their kids at a swimming lesson discuss how I.S.O. 9000 certification affects the marketing efforts for stocks of C.B.D.-extract companies....

Even a few months after legalization, I find myself wondering how much of the pleasure of marijuana came from its illicitness.  When you used to pass around a joint, you were sharing a little naughtiness, a tiny collective experience of rebellion.  Now, at a party, when you a pass around a joint, you’re basically saying let’s go stare at things for a while.  When I see cops on the street today, there is nothing I do that might upset them.  We are on the same side, utterly.  It’s pathetic.

There may still be dangers to marijuana, of course.  The public-health effects of legalization are, as yet, unknown.  Nobody knows whether legalization will lead to higher rates of teen-age mental illness, or to traffic accidents.  But, already, it is unimaginable that marijuana would be made illegal again.  Even with the brief distance of a few months since the end of prohibition, the sheer stupidity of the drug war appears absolute. Marijuana isn’t worth the attention of the police.  It’s not even that good a drug. It wouldn’t be in my top five, anyway.

One of the most important consequences of marijuana’s legalization is that the drug can now be studied. We might learn how it works and what it does to people. Clinical trials will replace the loose collection of vague anxieties and promotional pseudoscience that have dominated discussions of marijuana up to this point in history.  It will finally be possible to think sensibly about marijuana. And what could be more boring?....

It has to be said, in boredom’s defense, that it’s the cure for a great number of evils.  The cliché holds that America is losing the war on drugs, but it’s not quite accurate. Cocaine and heroin have never been cheaper.  Overdose deaths recently topped car accidents as a more likely cause of death for adults in the United States.  But America is very much winning the war on drugs that are legal: tobacco use has declined sixty-seven per cent since 1965, and drunk-driving fatalities by forty-eight per cent since 1991.  Of course, the way America reduced the use of these drugs wasn’t by killing bad guys and arresting users en masse, but by treating them like social problems with collective solutions.  Yawn.  No one’s going to make a season of “Narcos” out of that.

Canada is proving, once again, the deep political power of boredom: if you want to suck the power and glamour out of drugs, let the government run them.

April 18, 2019 in Business laws and regulatory issues, History of Marijuana Laws in the United States, International Marijuana Laws and Policies, Recreational Marijuana Commentary and Debate | Permalink | Comments (1)

Friday, April 12, 2019

"The Canna(business) of Higher Education"

The title of this post is the title of this paper just posted to SSRN and authored by Shelby Slaven, who is a student at The Ohio State University Moritz College of Law. Here is the paper's abstract:

While the idea of legalizing cannabis for adult use is gaining on acceptance among the public, the past and current policies on both, the state and federal level, have resulted in dearth of research on the efficacy of cannabis for therapeutic purposes as well as possible societal and health consequences of recreational use.  Institutes of higher education are best positioned not only to reform research on the substance, but to train a generation of cultivators, distributors, and healthcare professionals, and while doing so address some of the historical harms perpetrated by the policies of the War on Drugs.  Students are seeking out ways to capitalize on a growing market and remedying past discrimination should be a top priority.  This paper first provides an overview of cannabis legalization as it stands today, the political efforts that got it here, and those that will move it forward.  It then discusses institutes of higher education and the efforts to bring cannabis into the classroom.  Lastly, this paper argues that Historically Black Colleges and Universities can provide education, training, and a foot in the door for Black individuals who have suffered harsher criminal penalties in the name of the war on crime.

April 12, 2019 in Business laws and regulatory issues, Employment and labor law 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)

Tuesday, April 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 a presentation to be made by one of my students in my Marijuana Law, Policy & Reform seminar this coming week.  Here is part of his explanation of his topic and links to some background reading:

State legalization of marijuana, and the rising prevalence of marijuana businesses, has continually thrust Internal Revenue Code (IRC) § 280E into the spotlight.  Many scholars have argued for the provision’s abolishment, but the IRS’s staunch stance remains unyielding.  The literature seems to suggest a tacit assumption that IRC § 280E will remain a hurdle if/until marijuana is removed from Schedule I.  Although IRC § 280E is a hurdle, other mechanisms are shifting to allow marijuana businesses to be successful despite this tax provision. 

For example, in many cases, the Tax Cuts and Jobs Act of 2017 did more for marijuana businesses than a repeal of IRC § 280E would have.  Yes, marijuana businesses are still worse off than other businesses from a tax perspective, but marijuana’s competition is not necessarily other sectors, it is the black market.  There is something to be said for the fact that the marijuana industry continues to grow, despite claims of IRC § 280E making growth “impossible.”  However, the primary focus of this paper is not to explain why IRC § 280E predictions were incorrect, it is to look forward at why and how the industry can continue to succeed regardless of IRC § 280E.

Background Reading

April 2015 white paper by the National Cannabis Industry Association, "Internal Revenue Code 280E: Creating An Impossible Situation For Legitimate Businesses": Download 2015-280E-White-Paper

Fortune article, "The Marijuana Industry’s Battle Against the IRS"

2015 IRS Memo on IRC § 280E

Cannabis Business Times article, "Tax Court Reinforces IRS Code 280E in Harborside Ruling"

Memo from Rosenberg Martin Greenberg law firm, "Are Owners of Cannabusinesses Eligible for the Qualified Business Income Deduction Under Section 199A?"

April 9, 2019 in Business laws and regulatory issues, Federal Marijuana Laws, Policies and Practices, Taxation information and issues | Permalink | Comments (1)

Monday, April 1, 2019

"Challenges in Securing Intellectual Property (IP) Rights in the Cannabis Industry"

The title of this post is the title of a presentation to be made by one of my students in my Marijuana Law, Policy & Reform seminar this coming week. Here is part of his explanation of his topic and links to some background reading:

The cannabis industry has been growing rapidly and has become more mainstream.  In 2018, New Frontier Data forecasted that the legal U.S. cannabis market ― worth an estimated $8.3 billion in 2017 ― would grow to almost $25 billion by 2025.  While many innovators of the cannabis industry are heavily focused on the business activities to get the company off the ground by dealing with cannabis-specific challenges such as marketing, financing, and differentiations.  However, it is also critical to evaluate the significance of intellectual property (IP) and the benefits it can provide.

As with any other new ventures, enforcing an IP protection strategy early on can maximize the profits of a new invention and minimize the risk of potential infringement.  However, there are some challenges because cannabis (or at least THC) is still illegal under federal law.  My paper will focus on elucidating the IP issues and challenges in a budding cannabis industry.  Further, I will discuss some factors and complexities to secure IP rights on cannabis-related inventions.

Background readings:

* "Cannabis: IP Issues in a Budding U.S. Industry"

* "Building Cannabis IP Includes Both Your Brand and Your Technology"

* "The Complicated Relationship Between IP Law & Cannabis"

* "Protecting Your IP Is (No Surprise) Even Harder in the Cannabis Business"

* "Securing U.S. Patents in the Cannabis Industry"

April 1, 2019 in Assembled readings on specific topics, Business laws and regulatory issues | Permalink | Comments (0)