Canna Law Blog ™

Canna Law Blog


BREAKING NEWS: Washington State Issues Emergency Medical Marijuana Rules

Posted in Business Basics, Medical Cannabis, Washington

Washington State’s medical marijuana rules continue to rapidly change. The Washington Department of Health (DOH) just this week issued emergency medical marijuana rules. These rules were promulgated as part of the Medical Cannabis Patient Protection Act, which brings medical marijuana under the authority of the Washington State Liquor and Cannabis Board (LCB) and DOH beginning on July 1, 2016. The DOH appears to have adopted a broad interpretation of what the term “medical marijuana” means. Essentially, it’s going to be patient’s choice when it comes to what “medical grade” marijuana is:

At this time, the decision of what marijuana products may be beneficial is best made by patients in consultation with their health care practitioners. For this reason, the department will not limit the types of products available to qualifying patients. Instead, the department intends to create standards for products that any consumer can rely upon to be reasonably safe and meet quality assurance measures.

With a few distinct new additions to our state’s marijuana regulatory system, the emergency ultimately build upon existing LCB regulations for marijuana producers, processors, retailers, and third-party labs.

Washington State issues emergency medical marijuana rules

Washington State issues emergency medical marijuana rules

Most importantly, these emergency rules are effective immediately. Under Washington law, when an agency files emergency rules, those rules go live when filed if they are necessary for the “preservation of the public health, safety, or general welfare.” In filing these rules, the DOH’S reasoning for their emergency status is due to the fact that the LCB will start accepting applications from potential medical marijuana retail distributors on October 12th, and those applicants cannot sell medical marijuana without DOH guidance. The DOH is currently seeking public comment on these emergency rules and they are, as always, subject to change.

The emergency rules create a new category of “compliant marijuana products,” which, in turn, have three subcategories: General Use, High THC, and High CBD. General Use compliant products contain less than 10 milligrams of THC per serving, with no more than ten servings per unit. High THC compliant products contain between 10 and 50 milligrams of THC per serving. Each unit may not contain more than ten servings. High THC compliant products may be sold only to qualified patients or designated providers. High CBD compliant products must meet one of the following ratios: (1) Marijuana concentrates with less than 2% THC and 25 times more CBD concentration by weight; (2) Edible products with less than two milligrams of THC and at least five times as much CBD per serving by weight for solids or volume for liquids; or (3) Topicals containing five times more CBD than THC concentration.

The rules also establish a process for testing marijuana for pesticides and heavy metals. Testing will be required for all parts of the marijuana plant. The minimum sample size for testing is three grams per three pounds. The DOH, in conjunction with the LCB and the Department of Agriculture, will create and maintain a list of prohibited pesticides. The rules do not require terpene analysis, but they do prohibit adding synthetic or artificial terpenes to a product and they also require that companies making claims about the amount of terpenes in a product provide a third-party lab analysis to support those claims.

With respect to labeling, the emergency rules prohibit products from using words, symbols, or images commonly used in the medical or pharmaceutical industry. For example, labels cannot include the words “prescription” or “RX.” The labels must also prominently display the following statement: “This product is not approved by the FDA to treat, cure, or prevent any disease.”

The emergency rules also require standards for safe product handling. All processing facilities must maintain clean and sanitary conditions through each stage of marijuana handling. This includes promoting personal cleanliness, regular and thorough hand washing, and prohibiting employees or volunteers from handling marijuana when they are ill.

Finally, the emergency rules require specific training for employees. Employees must be trained to identify valid medical marijuana authorizations and state IDs and must learn to enter information into the state’s voluntary medical marijuana database. Employees are also required to learn to adhere to confidentiality requirements regarding medical marijuana patients. Additionally, employees are to be trained about the science behind cannabinoids, including concentrations of CBD and THC, in order to assist patients and designated providers at retail stores.

These rules will require careful compliance from marijuana businesses and all interested stakeholders should keep a close eye on how these rules develop and change, as they are sure to change again as the new medical-recreational hybrid marketplace rolls out.

BREAKING NEWS: Oregon Recreational Marijuana Draft Rules Arrive

Posted in Legal Issues, Licensing, Oregon

The Oregon Liquor Control Commission (OLCC) finally issued its draft rules yesterday for Oregon’s recreational marijuana program. The rules weigh in at a hefty 70 pages and you can find them here. In an accompanying release, the OLCC cautioned that “draft rule language is subject to change and should NOT be used as basis for making business decisions.” So there is that. And here is the bottom line: if you review these rules and you have watched this process closely, you will be treated to no big surprises, although some large gaps remain.

Oregon has just released its draft recreational marijuana laws

Oregon just released its draft recreational marijuana rules

Starting with the basics, the OLCC will be licensing four types of primary licensees as part of Oregon’s recreational marijuana program: producers (growers), processors, wholesalers and retailers. A single applicant can apply for and receive all of these licenses and be vertically integrated. As rumored, the OLCC will also be licensing laboratories, marijuana handlers (they get a “permit”) and requiring a fee for “packaging and labeling preapproval.” The application fee for each of these licenses is currently listed as “[blank].” Yes, it is blank!

Applications can only be submitted online and interestingly, there is no language to the effect that “applications will be reviewed in the order received,” as the Oregon Health Authority famously provided in its initial review of dispensary applications a few years back. As a part of the OLCC application process, most individuals will have to supply information or fingerprints for a criminal background check and complete an Individual History Form. This is also no surprise.

Every application made by an entity is required to have at least one “legitimate owner.” This is the individual applicant or legal entity which owns at least 51% of the business to be licensed; or, it is one or more individual applicants (or applicant legal entities) that collectively own at least 51% of the business to be licensed. “Ownership” includes having a direct or indirect ownership of the shares, membership interests, or other ownership interests of the business to be licensed. Ownership does not necessarily include: (1) preferential rights to distributions based on return of capital contribution; (2) options to purchase an ownership interest that may be exercised in the future; (3) convertible promissory notes; or (4) security interests in an ownership interest. If these rules hold, we will likely be seeing a ton of (1), (3) and (4) for non-Oregon residents who want a piece of the action. If these rules hold, Oregon will remain a very good place for out-of-staters looking to get involved in the cannabis industry.

In addition to listing at least one “legitimate owner,” the OLCC also will require that an application “include the names and other required information for all individuals who are applicants …. and [also] who are not applicants but who have a ‘financial interest’ in the business…”. An applicant, in turn, is described as “any individual or legal entity that has a financial interest in the business for which licensure is sought and who is directly involved in controlling the ordinary course of business ….”. This includes most everyone but employees, independent contractors, as well as some shareholders, directors, LLC members and limited partners and passive investors. If the applicant is an individual (and not an entity), the applicant must be 21 years of age with two years of Oregon residency (this latter requirement sunsets in 2020).

All applications, whatever the license type, will have to provide a map or sketch of the premises proposed for licensure, a floor or plot plan, proof of lawful possession of the subject premises (meaning a deed or lease), and a business operating plan that covers several things, including security, employee qualifications and training, transportation of product, and dealing with minors. The OLCC will inspect each premises before issuing a license and must receive a favorable land use compatibility statement from the city or county for the proposed premises, as well.

If you wish to be a processor or producer, still more requirements remain. Processors will have to provide (1) one of several endorsements related to the proposed processing activity; (2) a description of the type of products to be processed; and (3) a description of equipment to be used, including any solvents, gases, chemicals or other compounds used to create extracts or concentrates.

Producers will have to provide (1) a report describing the applicant’s estimated electrical and water usage; (2) a description of the growing operation, a description of equipment to be used in the production, and whether production will be indoor, outdoor or both; (3) proof of a water right or a statement that water is supplied from a public water system or from an irrigation district; and (4) the proposed canopy size and tier of their crop with a designation of the canopy area within the licensed premises.

What is the allowed canopy size? The answer is “__[blank]__” (!). This means that although we are less than three months away from licensing, and although people are making very difficult choices on buying and leasing property, we still have no real indication as to how big an area can be used for your cannabis crops. All we know is that these draft rules divide production into two main categories: indoor production and outdoor production. Each of these categories, in turn, is divided into two tiers: Tier I (smaller) and Tier II (larger). Indoor and outdoor production will be allowed at the same licensed premises (“mixed cultivation”) and there is a ratio for calculating canopy size where that occurs. Current OMMP growers may apply for a producer license at the same location as a grow site; however, all growers producing marijuana at that address must be listed on the application.

Finally, all licensees must comply with general requirements as to signage, financial and business record keeping and other matters. And then there are myriad specific requirements for each license type (except wholesaler, for which there is no draft language, still). Those specific areas include, but are not limited to, security, health and safety (testing), packaging and labeling, seed-to-sale tracking, transportation and delivery, waste management, advertising, and rules for OLCC investigation and enforcement.

In sum, these are only draft rules and they are incomplete, but these rules constitute the best glimpse yet as to what the Oregon recreational marijuana program will look like. Final temporary rules are probably still a month or so away. One of my firm’s cannabis attorneys is on the state committee for wholesalers and he says that we should anticipate wholesaler requirements being made public “very soon.”

The next and perhaps only opportunity for citizen input in the form of oral testimony on these draft rules is this Friday, October 9 at 1pm at the OLCC headquarters. We of course plan to be there in full force.

Oregon Marijuana And The Local Rules: NOW Is The Time To Get It Right

Posted in Advocacy, Business Basics, Oregon
Oregon sure does have a lot of cannabis rules (photo from

Oregon sure does have a lot of cannabis rules (photo from

Cannabis rule-making in Oregon is all local right now as the state’s cities and counties consider the relationship they wish to have with Oregon’s newest crop. We have written about some of these local developments here, here, here, here and here. At times it seems like everything is happening everywhere all at once and none of it quite the same (except in eastern Oregon, where everyone’s opting out). The pace of local activity does not seem affected in the least by the wait for state issued administrative rules, those from the Oregon Health Authority (medical) and Oregon Liquor Control Commission (recreational).

As we have written in the past, despite the passage of HB 3400 and related new laws, part of running a pot business in Oregon remains advocating for your right to do so. This is true even in counties like Deschutes, with its 2,313 medical marijuana growers; Clackamas, home to 3,396; and Lane, with a robust 5,054. Over the course of the past month, these three jurisdictions and a myriad of others have put everything on the table, from opting out of marijuana almost entirely, to developing local rules (and taxes), to simply doing nothing.

We regularly advocate for clients in cities and counties around the state, in a variety of ways. Most recently, I attended the Board of Commissioners’ meeting for Clackamas County on September 24, where its proposed land use regulations were discussed. (You can find those here.) Our local grower and processor clients were disappointed in several aspects of these proposed rules, including: no cultivation on land zoned industrial, no grow sites over 5,000 square feet, no processing sites over 3,000 square feet, and 100 foot setback requirements from any property line for many industry participants. There were others of course as well, but those are some highlights.

Some of our clients are good at advocating for themselves and their interests, while others would rather trust a professional to do this. As with many local hearings, the hearing I attended last week allowed for public testimony, and many people testified in favor of the industry, with many others against. In addition to the industry participants and opposers, several attorneys testified, some of them alongside their clients.

Attorneys are accustomed to reading rules. We understand the rule-making process and we can generally tell when a proposed rule is solid and when it should be probed. In the context of recreational marijuana, local legislatures are allowed to make “reasonable” regulations to implement HB 3400. Not only must these regulations be reasonable within the scope of that statute, but they must accord with other, existing laws as well.

The proposed Clackamas County setback requirement of 100 feet from a property line is a good example of a proposed ordinance that may not be reasonable, and also may not accord with existing law. It may not be reasonable to require a marijuana crop to be 100 feet from a property line in Clackamas County, when this same requirement does not apply to other, more noxious uses, like hog farms. The setback requirement may also conflict with state statutes. We have written that marijuana is a “crop” under HB 3400 and is therefore protected by the state’s “right-to-farm” law (ORS 30.930). That law prohibits local ordinances and lawsuits that target common farming practices, now including marijuana practices, as incidents of nuisance (sound or smell) or trespass. A required 100 foot setback based on potentially bad smell appears to do that. One might also argue that a 100 foot setback requirement constitutes an actionable taking of private property.

Having an attorney advocate on your behalf before the rules are in place may help ensure that a local government does not enact rules that prejudice your interests. A good attorney will advise local government where its proposals court conflict and litigation, and a good local government will want to hear this perspective. With rules being drafted on marijuana every day around the state, opportunities for influence will likely never be as good. Pay close attention: working to get good rules on the front end could make all the difference.

Marijuana And The Presidential Election: Where Do They Stand? Part 4

Posted in Events, Federal law and policy

The Bottom of the Barrel (Plus Biden)

This will likely be our last introductory post in the “Where do they Stand” series for this election cycle. Don’t worry though, we’ll continue to update this series if we see any flip-flopping or if anyone who once seemed irrelevant somehow changes course. So far we’ve profiled each of the candidates with a reasonable chance of winning the presidency, with the exception of Joe Biden if he decides to throw his hat into the ring. Other than him, all that’s left are the candidates polling at less than 1%. These are folks who, on the GOP side, don’t even reach a level of concern high enough to justify Trump taking jabs at their looks. So we’ll dive in with Biden first because the others, frankly, hardly matter.

Presidential Front Runners and MarijuanaJoe Biden
Biden is quite a wild card for the next election cycle. Biden has understandably said that he just isn’t 100% there yet after the loss of his son. This is an admirable statement given that he would be the presumptive nominee for the democratic party, having waited his turn for the past eight years. And really, how fun would it be to see Joe up there? Who wouldn’t want this guy as our president

But in all seriousness, Biden is not the best candidate if you care about the legality of marijuana in any form. Biden has been known for his support of the war on drugs, and he has unequivocally stated that he is against legalization, saying “I think legalization is a mistake. I still believe it’s a gateway drug. I’ve spent a lot of my life as chairman of the Judiciary Committee dealing with this. I think it would be a mistake to legalize”

Biden does believe that penalties should be reduced for drug crimes though, and he also believes it’s a waste of time and resources to lock people up for marijuana. He also supports President Obama’s policies that have allowed legalization at the state level, so it’s a bit of a start.

Medical – doesn’t support legalization at all.

Recreational – No way.

The Rest of ‘Em

The rest of these candidates are polling at a collective 1.3% for Dems and 1.5% for the GOP. These bids seem pretty similar to me trying to race Usain Bolt in the 100 meters. It would be fun to say I did it, but unless Bolt were to break a leg and simultaneously got attacked by a pack of hungry wolves during the race, I wouldn’t stand a chance. So here’s (briefly) the bottom of the barrel in order of their current relevance.

Jim Webb – D – 0.6%.  I put Webb on here as a Dem because that’s who he’s lumped in with on the polls, but truthfully he’s gone back and forth between Dem and GOP over the years, so who knows what he really is other than a true centrist. With regard to marijuana, Webb appears to favor a states-rights approach, stating that “we’ll see how it plays out.” He also doesn’t support jail time for possession or consumption. Other than that, his views aren’t clear.

Medical & Recreational – States should choose

Martin O’Malley – D – 0.6%. Doesn’t support legalization in Maryland (his home state), but said Colorado is a good experiment as a “laboratory of democracy.” The good news is that he signed a bill decriminalizing possession, and also another bill that allowed for medical use (after opposing a broader bill). Since he didn’t veto these measures, it appears that his approach is likely to listen to his electorate.

Medical – Depends on the bill.

Recreational – Nope.

Bobby Jindal – R – 0.5%. Jindal is one of the only candidates who has come out and clearly stated his positions on most issues, including marijuana, and he is “not for legalization of marijuana. [He} think[s] that would be a mistake.” He also thinks that federal law should be enforced. “

Jindal does, however, support a restrictive medical law “as long as it’s tightly controlled and for truly genuine medical purposes, not just simply an excuse for legalizing marijuana….If it truly is tightly controlled, supervised by physicians, I’m OK with that.”

Medical – Supports very restrictive legislation.

Recreational – Strongly opposes.

Rick Santorum – R – 0.4%. Yes, he is still in the race, at least as of today. Santorum is opposed to medical and recreational use. He also does not believe that states have rights to enact laws that contradict federal laws. He “think[s] Colorado is violating federal law.”

Recreational & Medical – No way.

Lindsey Graham – R – 0.3%. Graham has been pretty clear on his positions, including on cannabis. It can all be summed up in one quote: “I’m against legalizing marijuana for recreational purposes. But when it comes to medical marijuana and this [CBD] oil, I think politicians should embrace what makes sense. When it comes to issues like this, I don’t want to be academic in thought. This is about people. This is about families with sick children. Why should someone in my position get in the way of helping a child, if you can reasonably and logically do it?”

Recreational – No.

Medical – If it helps patients (he doesn’t seem to yet know if it does though).

George Patakai – R – 0.3%. Pataki isn’t in favor of legalization in any form, and ohe pposed efforts to legalize medical use in New York based on advice from his medical advisers. He also does not support New York’s current medical regime saying that he “[doesn’t] think it’s a step in the right direction.”

On a good note, he is a strong advocate for states’ rights.  As such, he said he would “be very strongly inclined to change the federal law to give states, when they’ve had a referendum, the opportunity with respect to marijuana to decriminalize it.”

Medical and Recreational – Whatever the states choose, but he doesn’t like either.

Lincoln Chafee – D – 0.1%. Chafee is open to listening to what people have to say, and he has said that his position on marijuana “will evolve during the campaign.” He has also said that the tax revenue is tempting for governors ,joking that it’s “pot for potholes.” Given his statements, it appears he will swing whichever way the public wants him to!

Medical and Recreational – Whatever gets him a bigger piece of the pie.

For more on the upcoming election, check out our previous posts on the other candidates (and former candidate):

Got Hemp? It’s Probably Imported.

Posted in Federal law and policy, Hemp
Hemp Street ≠ Easy Street

Hemp Street ≠ Easy Street

Our cannabis business lawyers are seeing a big uptick in both new clients interested in hemp and existing cannabis clients interested in hemp. This growing interest stems at least in part from hemp having so many uses, including for food, beauty products, textiles, and even construction (hempcrete).

Both hemp and marijuana are derived from the cannabis sativa plant, but they have very different characteristics. For years, marijuana has been bred for its mind-altering effects, which come from the Tetrahydrocannabinol (THC) in the plant. Marijuana is usually cultivated to produce the maximum amount of female flowering plants, which contain the highest concentration of THC. Hemp is usually not bred for THC and it typically contains only trace amounts of that cannabinoid. Hemp plants are primarily male and a do not produce flowers. Because hemp doesn’t produce flowers, hemp cultivators are unconcerned with factors that impact flower growth and, therefore, hemp is more commonly grown outdoors.

Despite the substantial differences between hemp and marijuana, the legal status of the two are intertwined. Under the federal Controlled Substances Act, marijuana does not include hemp or seeds “incapable of germination.” In Hemp Indus. Ass’n v. DEA, the Ninth Circuit held that the DEA cannot regulate all hemp products that also contain trace amounts of THC because Congress did not regulate non-psychoactive hemp when drafting the Controlled Substances Act. As a result of this ruling, manufacturing, distributing, and possessing hemp is not federally illegal, unlike with cannabis. However, growing hemp is prohibited without a permit from the DEA because at some point in the life cycle of the cannabis sativa plant the plant will inevitably produce marijuana, in addition to hemp. And no big surprise here, but the DEA rarely issues hemp cultivation permits and that has severely stunted hemp cultivation in the U.S.

The 2014 federal Farm Bill created more opportunities for hemp cultivation by allowing for industrial hemp cultivation without a permit from the DEA if done by a state Department of Agriculture, or by a college or a university for academic or agricultural research purposes in a state that maintains its own hemp regulation. Some states have taken advantage of the federal legislation and for more information on that, check out the following:

So, how can a U.S. company create hemp products without growing hemp itself or having any domestic hemp resources? It can import hemp under the importation laws and rules promulgated by the United States Department of Agriculture and by United States Customs and Border Protection. According to a recent Congressional Report on hemp, China supplies the most raw and processed hemp to the United States, followed by Romania, Hungary, and India. Canada is the single largest source of hemp seed and oilcake imports.

Though importing hemp is legal, it still presents significant risks because U.S. Customs and Border Protection is always looking out for anything containing THC, even trace amounts, and for anything with any type of cannabis logo or packaging. In fact, in response to the question, “[c]an I import hemp products into the United States?,” U.S. Customs responded as follows:

Hemp products such as cosmetics, clothing, food, etc. may be imported into the United States if they do not contain tetrahydrocannabinols (THC). Hemp Seeds: Imports of hemp seeds must be sterilized. Non-sterilized hemp seeds remain a schedule one controlled substance and therefore may only be imported into the U.S. with a Drug Enforcement Agency (DEA) Permit Form 35. All Other Hemp Products: If the product contains tetrahydrocannabinols (THC) and causes THC to enter the human body, it is an illegal substance and may not be imported into the U.S

U.S. Importers have to heavily rely on their exporters to ensure the hemp materials or seeds being imported to the U.S. contain no THC at all and that any seeds are not capable of germination. Ultimately, if the exporter makes a mistake with its hemp imports, the U.S. importer pays the price, both civilly and criminally.

In my next hemp post, I’ll talk about how businesses legally process hemp across the country.

Early Marijuana Sales In Oregon – It’s On!

Posted in Oregon

Early Recreational Marijuana Sales in OregonYesterday was another landmark day in Oregon cannabis. Early sales of recreational marijuana commenced (at 12:01 a.m., in many places) and reports from around the state were positive. In most places, recreational pot was selling for between $10 to $20 per gram, depending on strain and quantity sold.

Much of the news in the weeks leading up to early sales centered on how cities and counties would manage the roll out, whether by adopting new zoning rules, adopting time, place and manner restrictions, or by opting out of early sales all together. We saw a little of everything.

Portland, the city with 148 licensed medical marijuana dispensaries, made a mess of it. Portland set forth draft rules requiring city licensure for all local dispensaries, which is well and good, except that the rules were badly written on a couple of key issues and re-drafted and then re-drafted again at the 11th hour, again badly. It was gruesome and hard to look away.

At one point, the city threatened to fine dispensaries for participating in early sales before 7 a.m., or after 9 p.m., yet the City had not yet even drafted applications for these dispensaries to sell any marijuana, at all. Then, the city backtracked on its threats, focusing on the fact that its rules imperiled the eventual viability of existing dispensaries. The City ultimately decided to hold its nose and pass the bad rules, take applications in December, and probably change the rules again in 2015. It was a bad hour for a jurisdiction that had shown leadership on marijuana over the past few years, and the City should be seriously questioning whether the Office of Neighborhood Involvement is competent to work in this space.

Elsewhere, things were better. Some cities, which had enacted restrictive marijuana zoning laws in the past, elected to do nothing and simply watch early sales play out. The City of Hillsboro was one such locale. The fact that Hillsboro’s restrictive zoning has resulted in only three licensed dispensaries to date in a well populated jurisdiction was likely a boon for each of those dispensaries today, which were able to sell recreationally with little competition.

Downstate, at least 28 Lane County dispensaries began selling recreational marijuana today, including 15 in Eugene, six in Springfield, four in Cottage Grove and one each in Florence, Oakridge and Veneta. Reports of sales were brisk. East of the Cascades, things were slow as usual. Of the 286 licensed medical marijuana dispensaries in the state, only 30 are east of the Cascades, and 16 of those are in Bend. The City of Bend did not ban early sales, but almost all of eastern Oregon has opted out of recreational marijuana sales entirely.

As we have written, early sales are especially great for Oregon dispensaries and residents alike, as all transactions are tax free until January 4, 2016. At that point, a 25% sales tax will ensue and run through the end of the temporary sales program, which is December 31, 2016. By then, the Oregon Liquor Control Commission (OLCC) will have issued licenses for recreational dispensaries, and those sales will also be underway (taxed between 17% and 20% under House Bill 2041).

Tribal Marijuana in California Conference: October 5 in Sacramento, CA

Posted in California, Events, Federal law and policy, Native American Tribes

Tribal Marijuana in CaliforniaOdawi Law PLLC and Canna Law Group are teaming up to discuss the future of marijuana on tribal lands in California in wake of the raids on the Alturas Indian Rancheria and the Pit River Tribe in July and on the Pinoleville Pomo Nation Rancheria in September.

The July 7, 2015 raid in Modoc County, conducted by state and federal law enforcement, resulted in the seizure of 12,000 marijuana plants that had allegedly been cultivated by the tribes in partnership with a Canadian developer previously convicted of marijuana-related crimes.

“Large-scale commercial marijuana grows on tribal lands have the potential to introduce quantities of marijuana in a manner that violates federal law, is not consistent with California’s Compassionate Use Act, and undermines locally enacted marijuana regulations,” said the U.S. Attorney’s office of the raid.

These raids have understandably made California tribes increasingly reluctant to enter an already challenging marijuana business landscape. Marijuana remains federally illegal to manufacture, deliver, or possess. California’s Compassionate Use Act is a masterwork in legislative vagueness. And California is a Public Law 280 state, meaning that  the federal government has authorized state law enforcement to enforce state criminal law on tribal lands.

The Tribal Marijuana in California Conference will provide guidance through California’s soon to be promising yet presently rocky marijuana landscape, and will address hard-pressing issues: How can tribal leaders best self-govern on marijuana issues, especially following the Alturas and Pit River raids? What can tribes do to ensure consistency with rapidly evolving federal, state, and local laws regulating marijuana? Should tribal governments become more involved in the political process to protect tribal sovereignty to regulate marijuana? Should California tribes organize to protect tribal sovereignty to regulate marijuana?

Speakers include Robert Odawi Porter, a former president of the Seneca Nation and leading attorney on protecting American Indian tribal government sovereignty and treaty rights; Robert McVay, business attorney of the Canna Law Group, and Marc Burgat, a senior advisor with Dentons with extensive experience in public policy, government, politics, and business advocacy.

For a full overview of The Tribal Marijuana in California conference material, and to purchase tickets, please visit this Eventbrite page. General Admission is $200, with special discounts for tribal citizens and members, as well as tribal government officials. For more information on special tribal offers, please contact Madeline Williams at 206.224.5657 or

The conference is set for Monday, October 5, 2015 from 12:30pm to 5pm at the Embassy Suites Sacramento-Riverfront Promenade. Tickets are also available for purchase at the door.

Crafting a Marijuana Business Contract That Will Stand Up in Court

Posted in Business Basics, General
Make your contracts work, as best as possible. (photo by indielime

Make your contracts work, as best as possible. (photo by indielime

A few weeks ago we ran a post examining the “illegal” nature of marijuana contracts and the challenge of enforcing such agreements, entitled, “Your Cannabis Contract: Is it Worth the Paper its Written On?” Today we follow up on that post and discuss how to draft your contracts so they have the best chance at enforceability. Although states are increasingly moving towards partial or full legalization, as long as federal prohibition remains the law of the land, your adversary in a contract dispute has a colorable illegality argument that you need to be ready for.

So, how best to combat an illegality argument? Craft your contract in anticipation of that claim. Consider including each of the following terms in your agreements:

  • Acknowledgement of IllegalityYes, we realize this sounds weird that lawyers would recommend you acknowledge the illegal nature of your business, but let’s face it – everyone knows that marijuana is still illegal under federal law and pretending otherwise, or even staying mum on the issue may hurt you more than help you. No court will ever buy it when one or both parties in a marijuana contract dispute try to claim ignorance or make a convoluted argument that he or she is not violating federal law. Including an express acknowledgment that your business includes the growing/processing/testing/selling of cannabis contrary to the federal Controlled Substances Act might score you a couple honesty points and convince the court to proceed with applying ordinary (state) contract law. More importantly, it gives you (and the court) something to point to when the other side is trying to assert its illegality defense.
  • Waiver: You can further strengthen the acknowledgment provision by agreeing to waive an illegality defense, making it absolutely clear that no one expects to be able to make such an argument later down the road.
  • Forum Selection: By necessity, the cannabis industry is very closed-borders; to avoid federal scrutiny, cannabis must remain strictly intrastate. Therefore the people and businesses who are hands-on with marijuana are likely to be found within your own state. This is less true of companies that are only ancillary to the cannabis industry, such as producers of childproof packaging or the online printer that makes up your business cards. Those companies may be based elsewhere, including even in states without any legal cannabis. I mention this because the location of the parties can dictate where a dispute is ultimately decided, unless the parties decide for themselves in advance. You will be better off in a court in a state with some form of legal cannabis, so decide in advance whether that’s in your home state or maybe your contracting partner’s home state. A word of caution, however: don’t put in a forum selection clause agreeing to litigate in Colorado just because you think it is the most marijuana-friendly place in the U.S. Your choice of forum must have some reasonable relationship to the parties to or subject matter of the contract or you might get tossed out of court. In addition, you might consider even narrowing the field of possible fora by selecting the exact court (or arbitral body) for your dispute, particularly if you live in a state with widely varying views on marijuana in specific locales (e.g., eastern versus western Washington).
  • Choice of Law: Closely related to forum selection is choice of law – an agreement to use a particular jurisdiction’s law. Again, you are going to want the law of your home state or some other marijuana-friendly state applied to your dispute. As with the forum selection clause, though, make sure the applicable law has some relationship to you or your contract. For obvious reasons we would recommend choosing a state court over a federal court. State courts are also more likely to be in tune with the locally prevailing attitudes about marijuana as well.
  • Subject Matter Description: Our previous post on this topic discussed how the closeness of the subject matter of the contract to illegal activity determines whether a court will invalidate the contract on illegality grounds. This means that how you describe the subject matter of your agreement can really influence whether a court will deem it “illegal.” In some cases then, it may make sense to be intentionally vague or broad when describing the object of the contract.
  • Severability: You’ve probably seen such clauses in many contracts – it’s the few sentences that say that if one part of the contract is void, the rest remains in force. This may mean that only part of your agreement holds up on court, but a partly enforced contract is usually better than one that is completely invalidated.
  • Independent Consideration: In line with the notion of severability, you should consider whether your contract can be divvied up into parts, with separate consideration tied to distinct products or services. This further ensures that if a part of your agreement is invalidated, you will at least get the benefit of what remains.

Marijuana contracts will continue to have an air of “illegality” about them until federal prohibition is done away with. But if you draft your business agreements carefully, you stand a decent chance that they will be given legal effect in court.

Marijuana versus Alcohol: “This Bud’s (Not) For You!”

Posted in Legal Issues, Recreational Marijuana

Marijuana and AlcoholIt’s long been the commonly held view that “Big Alcohol” doesn’t get along with the burgeoning marijuana industry in the U.S. The logic is that because marijuana is a substitute for alcohol its legalization will mean that it will eventually seize a good piece of the “happy hour marketshare” from the beer, wine, and spirits industry. It’s ironic because alcohol and marijuana share a similar social and historical path with each other. Like cannabis, alcohol was once criminalized and politically demonized before it found societal and legal acceptance via states’ rights and a tax and regulate model.

But all of this logic is starting to look a bit flawed based on a National Bureau of Economic Research study which showed that alcohol consumption actually has increased in those states where cannabis has been made legal. According to Fortune,

Emory University-based researchers used data from the National Survey on Drug Use and Health from 2004 to 2011, looking at states that implemented some form of medical marijuana legalization over those years . . . The more surprising finding was that the availability of medical marijuana increased the number of days in which adults over 21 binge drank (defined as having more than four drinks per day) by 6-9%. It did not, however, have any effect on underage drinking.

Might these two industries find a common ground with marijuana-infused spirits? Not likely at this point.

First, with marijuana being a federally illegal controlled substance, no alcohol maker, supplier, or brewery regulated by the federal Alcohol and Tobacco Tax and Trade Bureau is going to risk making a marijuana-infused alcohol because doing so would likely cause them to lose their federal licensing. It also might put their shareholders at risk for accessary liability under the federal Controlled Substances Act.

Second, even if we’re just talking about small-time, risk-loving home brewers that meet all applicable state cannabis regulations, states will want to rigorously control such marijuana-infused concoctions. Would such activity fall under a state’s liquor, beer, and wine laws? Or would the product come under the control of an agency equipped to regulate marijuana and marijuana products? Or would it come under some hybrid regulations we have yet to see? There still is considerable fear and loathing of marijuana edibles and infused products and so throwing alcohol into the mix would likely cause a state-regulatory fire storm. I am not aware of a single state with rules that would allow for licensing and distributing a THC-infused spirit, wine, or beer.

Third, public opinion is likely going to be against the mixing of drink and smoke. The question will always come up in policy debates as to whether America now wants stoned and drunk drivers on its streets. Though I’m confident that the reasonable person can handle such a concoction,there will certainly be at least one poster child who will ruin it for everyone else. We all know from years of statistics and personal anecdotes just how dangerous alcohol can be when not “handled responsibly,” so I doubt the majority of Americans will want to see a THC-infused martini mix on the shelves just yet.

So, when it comes to the “King of Bud,” we should expect alcohol and marijuana to stay in their respective industry corners for now.