Canna Law Blog ™

Canna Law Blog

LEGAL SUPPORT FOR THE CANNABIS BUSINESS COMMUNITY SINCE 2010

Florida Cannabis: Amendment 2, The Good, The Bad, and The Indifferent

Posted in Events, Florida, Medical Cannabis

As we Floridians (I grew up in Florida and received both my undergraduate and law degrees there) closer to voting on whether to adopt Amendment 2, both the yes and no camps are interpreting the Amendment in an effort to illuminate for the public what will happen if the Amendment passes. In this post, we try to figure out what this Amendment will likely mean for Florida based on our work in multiple other medical marijuana states measures.  Amendment 2 itself is short, but relatively broad in scope; here are the highlights of which voters should be aware (in our opinion):

1.   “A physician licensed in Florida shall not be subject to criminal or civil liability or sanctions under Florida law for issuing a physician certification to a person diagnosed with a debilitating medical condition in a manner consistent with this section.” Contrary to what some in the “Say No On 2″ campaign believe, this provision does not license doctors to prescribe cannabis. Doctors cannot “prescribe” cannabis because it is still a Schedule I illegal substance under Federal law. Moreover, doctors can lose their medical licenses (which are overseen by the DEA) for even recommending that their patients use cannabis. Most importantly, the Amendment mandates that only licensed physicians can make a cannabis recommendation after fully documenting why their patient needs the marijuana and that marijuana is a good alternative to other drugs. This is different from California or Washington, where a “licensed health care provider” can recommend cannabis. Though Florida once had a “pill mill” epidemic, it is very unlikely that it will experience the same fate with marijuana. Floridians should trust in their own law enforcement to bust unscrupulous physicians.

2. “Debilitating Medical Condition” means cancer, glaucoma, positive status for human immunodeficiency virus (HIV), acquired immune deficiency syndrome (AIDS), hepatitis C, amyotrophic lateral sclerosis (ALS), Crohn’s disease, Parkinson’s disease, multiple sclerosis or other conditions for which a physician believes that the medical use of marijuana would likely outweigh the potential health risks for a patient.” If Floridians care about the recreational use of marijuana and/or its “abuse,” this is probably the most problematic provision in the Amendment. Why? Because it includes “other conditions.” Medical marijuana statutes that allow for using marijuana for chronic or intractable pain do have a tendency to lead to loopholes that allow for recreational use and to gray market tactics like phony recommendations or a medical marijuana card that never expires. Washington, California, and Oregon all allow medical cannabis for chronic pain and we cannot deny that all three states have had issues with well patients getting legal medical cannabis.

3. “Personal caregiver” means a person who is at least twenty-one (21) years old who has agreed to assist with qualifying patient’s medical use of marijuana and has a caregiver identification card issued by the Department. A personal caregiver may assist no more than five (5) qualifying patients at one time.” Designated care providers have been used to circumvent medical marijuana laws in multiple states where that have failed to create a designated care provider registry and where the relevant statutory language allows “caregivers” to serve and infinite number of patients with no regulation or oversight by the state. But Florida is not likely going to be susceptible to that because its Amendment 2 mandates that caregivers register with the state, that the Department of Health oversee caregiver participation, and that caregivers be limited in the number of patients they can serve.

4. “Nothing in this section shall require any accommodation of any on-site medical use of marijuana in any place of education or employment, or of smoking medical marijuana in any public place.” Just like all other states that have legalized cannabis, Florida employers can still maintain zero tolerance drug policies and there smoking marijuana in public places will be forbidden.

5. “Duties of the Department [of Health].” The “No on 2″ campaigners are stirring up hysteria by claiming that Florida will become like California if it implements a full medical marijuana program. California has  become the wild west for marijuana because it continues to have no real state oversight of its marijuana program, but Florida cannabis will be regulated by Florida’s Department of Health. Lest anyone does not believe the Department of Health is up to the task of strictly regulating medical cannabis, please check out the onerous regulations under Florida’s recently passed Charlotte’s Web law.

Though Amendment 2 is not without its flaws it is worth passing and we urge you to vote yes on November 4th. For why we are saying this, please check out Vote Yes On Florida’s Medical Marijuana Amendment 2, No Matter What.

Cannabis Promises to Keep

Posted in Business Basics, Illinois, Legal Issues, Licensing, Nevada, Washington

For most of our clients in Illinois, Nevada, and Washington, the heady days of applying for state marijuana business licenses are behind them. These states have either reviewed or are still reviewing the application submissions, which included operating plans and financials and criminal histories. In those applications, especially in competitive states, the applicants made statements about their businesses intended to make their applications more attractive to state decision makers. Sure, we’ll have a written employee training program and will have a two week regulatory education course for new hires. Of course we’ll perform ongoing financial and security reviews and keep all records on file. Yes, our compliance officer will conduct quarterly compliance audits and will update our compliance manual to prevent future problems. Oh, and we will be donating five percent of our profits to drug education programs in the local schools as well. These statements seemed relatively painless at the time; the applicants just wanted the state to say yes.

Licensees, however, need to realize that these promises are likely as enforceable as any regulation, and if you said you were going to implement something, you actually have to do it.

Most states have inspectors who will be conducting unannounced audits of your new cannabis business. These inspectors will be checking to make sure that you have complied with state rules, but their audits do not have to stop there. They likely will also include a review of whether your business has actually complied with its stated plans. No state wants to approve an applicant to operate a marijuana business based on a plan that the applicant fails to fulfill, and they state that clearly in their regulations. See Washington Administrative Code 314-55-050 (failure to operate in accordance with board approved operating plan subjects license to suspension or cancellation), Nevada Administrative Code 453A Sec. 39(3)(c)(state may suspend or revoke license for failure of medical marijuana establishment to carry out the policies and procedures in the application of the medical marijuana establishment), and Illinois Administrative Code 1290.70(g) and Section 1000.70(f) (Information and plans provided in an application become a condition of the state’s authorization. Dispensaries and cultivators have a duty to disclose any material changes to the application. Failure to comply with the conditions or requirements in the application may subject the dispensing organization or cultivation center to discipline, up to and including suspension or revocation of its authorization by the state).

So, for anyone about to open their cannabis business or who is already open for business, please take a moment to look back at your application submissions. If you promised to distribute employee safety manuals to your employees, you should do it. Now. If you said that you would maintain audited financials, get with your accountant now to plan for it. Getting your license suspended for failing to do what you said you were going to do would be an unfortunate and silly outcome, so stick with your plan. Your state said that you could start running a marijuana business because of your plan, and they will not allow you to do so if you fail to implement it.

Any questions?

Cannabis Law Myths, Part I — Retailers Are Not Liable For Bad Product

Posted in Business Basics, Legal Issues

Many myths surround cannabis laws and this is the first post we will be doing as part of an intermittent series of posts examining some of the more prevalent ones. This post focuses on the myth that cannabis retailers cannot be held liable for the defective cannabis products they sell — only the grower or processor can be.

Not true.   

Though the product liability laws in all states generally favor those not involved in manufacturing a defective product, there are circumstances when retailers can be held liable for having sold a defective product, even if they did not know about any defect. Contrary to popular belief, just because a retailer has no part in making the defective product it sold, the retailer can still be held liable for having sold it.

In about half of all states, a retailer that sells a defective product can be subject to liability for harm caused to a consumer from a defect. What this can mean for cannabis dispensaries is that they can be held liable if someone falls ill from anything sold at retail, including edibles or tinctures or whatever.

Many state laws set forth exceptions for retail sellers of products, but they do not absolve retailers of all liability. These laws typically provide that a product seller can be liable for damages caused to a consumer if the consumer’s harm was caused by the product seller’s own negligence, if the product seller made a warranty about the product and then breached that warranty, or if the product seller intentionally misrepresented the product it was selling

Beyond these affirmative acts that can inflict liability, most states also have laws rendering product sellers liable for defective products if the court deems it unlikely that the injured consumer be able to enforce a judgment against any manufacturer. In real life terms, this means that if someone is injured by a defective medible and the manufacturer of that medible cannot pay damages to the injured consumer, the retailer will be required to pay those damages, even though it did nothing wrong.

In an industry as new as cannabis it is certain that some manufacturers will succumb to insolvency, so the possibility of product liability attaching to retailers is not remote.

Bottom Line: If you are a cannabis retailer, you are wrong to assume that you cannot be held liable for defects in the products that you sell and for the injuries that result from those defects. This means that you need to be careful in vetting the manufacturers from whom you buy and the products you sell. You also should have insurance to cover worst case scenarios.

They Said It On Marijuana, Quotable Saturday, Part XXXIV

Posted in General

Back in 2001, Afroman did a song Because I Got HighThat song started out on the Internet and then went viral. It mostly dealt with the problems of smoking weed.

Last week Afroman came out with a new version of Because I Got High, with very different lyrics, this version calls for legalizing pot and extols its virtues. Though light-hearted, it does speak some interesting truths, and we analyze a bit of the song’s lyrics below.

 

“I used to drink beer and wine, but then I got high.”Cannabis is showing promising results for leading some people away from excessive alcohol consumption.

“Anxiety attacks, but then I got high. I used to take Xanax, but then I got high No more prescription pills and I know why. Because I got high, because I got high, because I got high.” A legitimate study recently found states that have legalized medical marijuana have 25 percent fewer opioid-related deaths.”

“The state made revenue, because I got high. They built a school or two, because I got high.” Both Washington and Colorado are going to bring in hundreds of millions of dollars in tax revenues from cannabis.

“I don’t have to buy from gang bangers shooting craps, if it’s legalized.” Every state that has legalized medical or recreational marijuana has strict standards aimed at preventing criminals from getting involved in a legal marijuana business. The more marijuana sold on the legal market, with the profits going into the pockets of legitimate businesspeople, the less marijuana sold on the illegal market, with the profits going into the pockets of “gang bangers.”

Don’t you agree?

Vote Against Marijuana Taxes in Washington

Posted in Legal Issues, Washington

On Washington State voting ballots this year, there is an advisory vote — Advisory Vote No. 8 to be exact — on whether Washington State cannabis businesses should receive tax breaks to which they are technically required. In other words, should marijuana taxes be different than all other taxes?

Right now, marijuana is heavily taxed in Washington. Really heavily taxed. Our firm is involved in cannabis legal matters in many states (Alaska, California, Florida, Illinois, Nevada, New York, Oregon, to name just those where our attorneys are licensed) and none of those states have or will tax cannabis businesses at a level approaching Washington. You talk about food being from farm to table, well Washington prides itself on taxing (again and again) marijuana from farm to consumer, and every single step in between.

Despite this, the Washington Legislature earlier this year acted to exclude marijuana businesses from eligibility for 36 different tax preferences for business, sales and property taxes, most of them aimed at agriculture. In other words, the legislature voted to treat marijuana differently than other crops. And the Seattle Times, in a very short editorial, thinks that this sort of discrimination is just fine.

We don’t.

The Times calls on Washington State votes to concur with the Legislature and in an upcoming advisory vote, vote to maintain the discrimination. The Seattle Times rationalizes this opinion as follows:

Good move: It makes no sense to impose steep “sin taxes” on marijuana, and then open up tax breaks intended to help farmers. Marijuana is a crop, but the legalization measure approved by voters in 2012, Initiative 502, rightly puts pot alongside alcohol as an adult indulgence that should be taxed to offset its social costs.

In closing the tax preferences for marijuana, the Legislature added $2.8 million a year in revenue, which in turn requires an advisory vote on the November ballot thanks to a 2007 initiative from anti-tax activist Tim Eyman.

The vote is meaningless, but voters should nonetheless back the Legislature’s decision to exclude marijuana tax breaks. When you see Advisory Vote No. 8 on the ballot, vote to “maintain” it.

In other words, we should advise everyone that we are okay with marijuana being excessively taxed and treated differently from other crops. And hey, your vote is meaningless anyway.

Your vote is not meaningless. This ballot measure may be meaningless, but your vote is going to tell politicians how you feel about marijuana. Therefore, we think it important that you vote and that you vote for marijuana businesses getting the same tax benefits as any other business. We think it important that you not let our elected representatives treat marijuana businesses any worse than they treat other businesses.

Vote REPEAL on Advisory Vote No. 8.

Thanks for listening.

Lawsuit To Stop Cities From Banning Marijuana

Posted in Legal Issues, Litigation, Washington

Tomorrow our cannabis lawyers will be in Chelan County Superior Court arguing to stop the City of Wenatchee from banning marijuana dispensaries within its city limits.

To grossly summarize, our position is that because Washington voters chose to legalize marijuana throughout the entire state, no city should be able to override that vote. In other words, all we are asking is that the vote of the people be honored. Far too many cities in Washington and in other states that have legalized recreational or medical cannabis are of the view that they know best and that they are not bound by state law. Our goal is to use this lawsuit to advance the cause of legalization both in Washington and in other states, by shutting down the alleged right of these cities to subvert state-wide legalization votes.

Though the laws of each state vary, we are making a copy of the brief we filed in this case available so as to help lawyers in other states (particularly states other than Washington, Alaska, California, Florida, Illinois, Nevada, New York, Oregon where we have our own licensed lawyers) to pursue similar cases, should such a case make sense.

If you want to learn more about the importance of tomorrow’s hearing, we suggest you read some or all of the articles below:

Oh, and please wish us well in this fight.

US Attorney Fardon Speaks on Marijuana

Posted in Federal law and policy, Illinois, Legal Issues

In Wednesday’s post, Marijuana and the New Attorney General: Why You Should Care I wrote about the important distinction between federal law and policy, and the role of the attorney general in the federal regulatory and enforcement scheme. The U.S. attorney general (until further notice, Eric Holder), oversees 93 United States attorneys (federal prosecutors), each heading up the DOJ in their federal district with responsibility for dozens, or even hundreds of assistant U.S. attorneys.

Wednesday’s piece focused on the amount of leeway Holder enjoys and today we note the degree of latitude the individual U.S. attorneys have within their own districts. We are prompted to do so by recent statements by the U.S. Attorney for the Northern District of Illinois, Zach Fardon.

Fardon took office only a year ago, and, until now, had remained publicly mum on the subject of state-legal marijuana. Speaking at the Union League Club in Chicago this week, Fardon hit the nail on the head, saying that the increasingly complicated web of federal, state, and local law and policy on marijuana presents a “tricky paradigm.” Nervous industry participants in northern Illinois will also be glad to hear that they won’t likely hit Fardon’s radar for prosecution, so long as they are following state law. Fardon even extended this mild reassurance to banks considering offering banking services to the cannabis industry here, stating that, so long as a bank is “careful,” “transparent,” and “follow[s] the laws” it will likely be in the clear. But let’s not get too excited – The Chicago Sun Times reports that Fardon “visibly squirmed” when asked if banks now have the “all clear.”

Some level of squirminess by U.S. attorneys sitting in states with some form of legalized marijuana is probably to be expected. After all, marijuana is still clearly illegal under federal law, and federal prosecutors are charged with upholding and enforcing federal law. But at the same time, federal prosecutors, like many in law enforcement, are firsthand witnesses to the effects the war on drugs has had on defendants, their families and communities, and on the justice system as a whole. Moreover, U.S. attorneys live and work in the states in which they sit, and may be swayed by movements to legalize marijuana on a state level.

So it should come as no surprise that individual U.S. attorneys interpret and apply federal drug law and policy in different ways. With the release of the most recent Cole memo in August 2013, the Huffington Post reported on the varying attitudes of federal prosecutors around the country; we’ve also written here about the public musings of former U.S. Attorney for the Western District of Washington, Jenny Durkan and the discretion federal prosecutors enjoy to investigate and prosecute federal drug crimes.

The other day we explained why you should care about who replaces Eric Holder, but today’s lesson is that you should care (perhaps even more) about who occupies the office of your local U.S. attorney’s office. Here in the Northern District of Illinois, we’re cautiously optimistic about Zach Fardon.

If you want to learn more about cannabis banking, check out the following:

Cannabis Law Events

Posted in Events

Our cannabis business lawyers are often asked to speak on legal issues surrounding recreational and medical cannabis. We generally try to avoid speaking at for-profit business conferences, “expos,” and exhibitions as so many of those are fonts of misinformation and hucksterism. We simply have no desire to share the stage with overzealous newbies (who oftentimes have “paid to play”), pawning themselves off as experts while propagating misinformation. Like this article, we too see these sort of events as at least potentially counterproductive.

On the flip side, we view it as our obligation to speak before legitimate groups (mostly not for profits) that are seeking either to gain or to convey a better understanding of present and future cannabis laws and to engender real discussions, as opposed to “selling opportunities.” Towards that end, we will have at least one lawyer speaking at the following events in October, and we unequivocally urge our readers to attend:

  • October 15.  Emerging Frontier of Marijuana Law, at the University of Washington School of Law in Seattle, William H. Gates Hall, from 12:30 p.m. to 1:30 p.m.
Come if you wish to learn…

Marijuana Bars: Makes Sense to Us

Posted in Colorado, Legal Issues, Recreational Marijuana, Washington

Washington and Colorado both prohibit consuming marijuana in public. In both states, consuming marijuana in most hotels, clubs, and bars is also generally forbidden due to both public consumption and general smoking laws. And don’t even think about using marijuana at the retail storefronts from which you buy it as doing that could jeopardize the dispensary’s license.

With the large number of out-of-staters coming to Washington and Colorado to consume cannabis, there is clearly a need for safe, comfortable, and — dare we say hip — venues for legal cannabis consumption. A large number of locals would no doubt take advantage of such venues as well.

Colorado is allowing establishments like Club Ned, “the club with altitude” in Nederland, Colorado, where you can Bring Your Own Green and recreate accordingly. According to Forbes, Club Ned took advantage of an exception to the Colorado Clean Indoor Air Act for “a place of employment that is not open to the public and that is under the control of an employer that employs three or fewer employees … [Club Ned] will be open only to dues-paying members, who will have to make appointments and bring their own pot. But Club Ned will have tables and sell refreshments, creating something resembling the convivial, tavern-like atmosphere at Dutch ‘coffee shops’ (which are not legal, strictly speaking, but have been tolerated for decades).” Though Club Ned is a small a victory for marijuana tourism in Colorado, it can hold only thirty people at a time and it appears to be the only legally sanctioned club of its kind in the entire state.

Washington has been even tougher than Colorado with recreational cannabis clubs. Almost immediately after the passage of Initiative 502, the Washington State Liquor Control Board disallowed smoking cannabis in liquor-licensed bars. Washington has nothing akin to Club Ned and one bar, Frankie’s, had significant legal problems when it tried to add a “members only” cannabis lounge upstairs from its bar.

For the following reasons, we think places like Club Ned make sense and should be legal:

Cannabis clubs would help to normalize marijuana. Marijuana is now legal and continuing to keep it behind closed doors is hypocritical and only serves to reinforce the idea that it is horrible vice, far worse than alcohol. Cannabis clubs will also encourage the responsible use of marijuana as most people generally behave fairly well in public. Clubs also will likely help control usage because most clubs will want to stop its patrons from driving when too high to do so, just like bars have the same incentive for their customers. These clubs will also boost tourism.

Oregon and Alaska are promoting their legalization votes with campaigns calling for cannabis to be treated like alcohol and the trending view nationwide is for roughly equivalent treatment. Allowing cannabis bars only makes sense.

On The Separation of Church and Pot

Posted in California, Colorado, Federal law and policy, Florida, Illinois, Legal Issues, Minnesota, Nevada, Oregon, Recreational Marijuana, Washington

A Seattle church located in uber-hip Capitol Hill (Mt. Calvary Christian Center) is protesting against Uncle Ike’s, a state licensed cannabis retailer that has opened up shop next door. The church’s lead pastor claims that a cannabis retailer located within 1,000 feet of his church is “an indictment of where our society has come.” This pastor also believes that Uncle Ike’s very existence will inevitably put cannabis into the hands of his congregation’s youth.

Legally, the church has neither standing nor any legal basis to challenge Uncle Ike’s. Just as the church would have no basis for challenging the existence or the location of the liquor store that’s right across the street from and well within 1,000 feet of the church; this liquor store has been there for years — without any protest — despite alcohol’s obvious harms.

Washington State law prohibits cannabis businesses form locating within 1,000 feet of the various types of places listed in WAC 314-55-050(10). That list does not include religious institutions. Mt Calvary’s lead pastor is calling for the Washington State legislature to add churches to its 1,000 foot list or for the City of Seattle to implement its own similar prohibition.

That would be a mistake. And it could set a dangerous precedent in other states as those states undertake marijuana legalization. Why?

As a result of extensive footage and setback requirements in both state and local legislation, the number of eligible locations for a cannabis business in any city anywhere is already severely limited. It is not at all unusual for our cannabis lawyers to spend weeks working with our clients vetting locations to determine whether or not they’ll work. We have confronted this problem in California, Colorado, Florida, Illinois, Minnesota, Nevada, and Oregon, in addition to Washington. If churches are added to Washington’s “1,000-foot-list,” cannabis businesses would almost never be permitted to open based on available space. If legalized cannabis is to have any chance of defeating black and gray market cannabis, we need more cannabis businesses, not less.

Of even greater importance is the need to maintain separation of church and state. Why should a religious institution be treated differently from a political or social institution or a private residence? Why would favoring a religious institution not constitute a violation of our Constitution’s First Amendment requirement to separate church and state?

In addition, the voters of Washington chose not to require cannabis businesses to keep their distance from churches and the NIMBY dissatisfaction of one church is no reason to contradict the will of the people.

Marijuana is being legalized and regulated and one of the reasons for doing that is to reduce its usage by children, and so far that appears to be working. If we start distrusting the efficacy of regulation and initiate rules that will essentially shut down legal marijuana, we likely will be increasing youth access to marijuana where its prohibition actually makes it easier to obtain.

Though we respect the right to protest, we believe that the best hope for a responsible cannabis program in Washington (and elsewhere) lies with the desires of dispensaries like Uncle Ike’s to operate a law-abiding, community conscious business for adults and with state regulations that make that both possible and necessary.