Canna Law Blog ™

Canna Law Blog

LEGAL SUPPORT FOR THE CANNABIS BUSINESS COMMUNITY SINCE 2010

Marijuana Tourism in Washington: Over Before it Even Begins?

Posted in Advocacy, Legal Issues, Recreational Marijuana, Washington
Washington State's cannabis tourism is at risk.

What you see in this picture would almost certainly be illegal in Washington State, which means Washington’s cannabis tourism industry is in jeopardy.

In Marijuana Lounges: All Dressed Up With Nowhere to Go, I wrote about the problems in opening marijuana lounges in states with legal marijuana. In Washington, marijuana lounges House Bill 2136 has made such lounges illegal. The main goals of HB 2136 are technical fixes to I-502, namely to provide cannabis businesses with some much needed tax relief. But HB 2136 also makes it a Class C felony to operate “a club, association, or other business, for profit or otherwise, that conducts or maintains a premises for the primary or incidental purpose of providing a location where members or other persons make keep or consume marijuana on the premise.”

In other words, marijuana and marijuana vapor lounges are banned in Washington State. The question remains though as to how broadly this law will impact Washington’s overall marijuana tourism industry.

Every year people flock to Las Vegas (and to a lesser extent Atlantic City) because it offers something few other places can: legal gambling and lots of “sin.” States with fully legalized recreational cannabis can offer a similar draw so long as they remain a small minority.

Though it’s clear that HB 2136 guts the prospect of cannabis clubs and vapor lounges, its broad language might also serve to prohibit bud and breakfast type tourist lodgings. The problem for marijuana-friendly tourist lodges is that HB 2136 applies to any entity that allows cannabis consumption its the premise, even if the cannabis consumption is “incidental” to the business.

Cannabis crawls and marijuana tour buses have also been thrown under the bus (pun intended). If HB 2136 does not kill them, House Bill 1276, which goes into effect this September almost certainly will. HB 1276 creates an open container law for cannabis by requiring that cannabis products must be stored in a trunk or similar container where passengers do not have access. It would appear that crawls and tours that involve actual consumption will soon be out.

On the flip side, Denver is actively pursuing a city initiative to allow consumption of cannabis in bars and clubs. If that initiative passes and if Washington’s legislators remain so opposed to consumption anywhere beyond the privacy of one’s own home, Colorado will gain an edge over Washington in pursuing cannabis tourists.

 

What’s the Right Price for “Safe Marijuana”? Let’s Roll The Nevada Cam…

Posted in Business Basics, Medical Cannabis, Nevada, Recreational Marijuana
For Nevada's cannabis program to really take off, more testing labs will be needed.

What are you willing to pay for “safe marijuana”?

Without a doubt, Nevada’s revised medical marijuana program has been slow to start. And after a gruelingly competitive application process and significant administrative delay, only one Nevada dispensary is set to open for business going into August, and that’s Silver State Relief out of Sparks. What will also likely further slow down Nevada’s already slow pace is its overall lack of quality assurance testing labs. Though Nevada was not short on applications for Medical Marijuana Establishments for cultivation, production, and dispensing facilities, the state significantly lacks in testing laboratories. According to the Las Vegas Sun, the state approved 55 dispensaries; 182 cultivation facilities; 117 production facilities; and only 17 licenses for independent laboratories. Thus far, it appears that only one testing lab, DigiPath Labs, is ready to operate.

It has been predicted that 540,000 pounds of marijuana will need to be grown to meet qualifying patient demand in the State of Nevada. So, what’s going on with the other labs in Nevada? And why aren’t there more of them?

To secure licensure from the state (and even from certain municipalities and counties), testing labs had to meet almost the same standards as MMEs in certain respects. In addition, Nevada cannabis testing facilities are subject to strict operational guidelines, maybe more than in any state in which our law firm operates. And labs will have to do a lot of the legwork when it comes to the logistics of even securing a sample for testing. Essentially in Nevada, a production facility will contact a testing lab when it has cannabis for testing and a testing facility tech will then visit the production facility, scrutinize a five-pound sample of the cannabis ready for testing, and will randomly select a 12-gram sample to transport back to the lab. The lab will then test the cannabis for several things as required under state regulations: moisture content, potency analysis, microbial screening, and pesticides among others.

Given recent scrutiny of the marijuana industry as a whole, quality assurance testing geared towards consumer safety is more important than ever. But that testing is becoming increasingly more sophisticated and the fields of testing are broadening all the time. This means that testing is starting to become expensive and that labs likely need as much (or more) capital and manpower to operate as any highly-regulated marijuana business. In addition to the state and local licensing fees and operational costs, its no wonder that Nevada doesn’t have more testing facilities — as opposed to Washington, Oregon, and Colorado, where at least licensing fees are not as robust for labs.

Certainly, accurate and reliable testing is going to be cost-intensive, and the cost of that testing will ultimately be passed off to marijuana businesses and to consumers. Indeed, DigiPath Labs, which is promising a 48-hour turn around on its tests, will be charging anywhere from $100 to $250 per test, with a batch costing $500 to $1,000. Consequently, the question becomes, is it better for a state to try to license a good number of qualified labs to ensure competitively-priced testing in the marketplace? Or is it wiser to, say, go the path of Minnesota which designated only two mega-labs to test its cannabis products, making lab expenses just a fixed, higher-end cost of doing business? Only time and the market will tell what businesses and consumers are willing to pay for “safe” marijuana products.

At this point, we here in Nevada are mostly just happy that things on the cannabis front are finally starting to roll…

They Said It On Marijuana, Quotable Saturday, Part LXX

Posted in General
President Nixon, with a bit of an assist from Elvis, started the war on drugs for prenicious reasons.

President Nixon, with a bit of an assist from Elvis, started the war on drugs for pernicious reasons.

History matters. And why Nixon initiated the war on drugs matters. It matters because all history matters and it matters because many who oppose cannabis legalization today do so for strictly political reasons that hardly differ from Nixon’s day.

This week’s quote is much longer than usual, so please bear with us here.

Back when President Nixon knew he would be having a tough re-election fight, he and his henchmen concocted a brilliant (but evil) scheme to divide and scare our nation. The plan would be to generate fear among possible (but not definite) Nixon voters and then ride in on a white horse (the color matters here, as you will see below) and let everyone know that a Nixon reelection would snuff out all that of which the fear has been created. If you voted for Nixon, you would be voting to hold off the young, the poor, the black, and the hippies. In other words, everyone who Nixon was painting as not worthy of us and of wanting to destroy our country.

In the book, Smoke and Mirrors: The War on Drugs and the Politics of Failure (we urge you to read it if you have not already done so), author Dan Baum explains:

The [Nixon] White House lived by the principles of the southern strategy, and Dent’s office had its own lingo. There were issues that mattered to “our” people, and those that mattered to “their” people. “Their” people were what the White House called “the young, the poor, and the black.” The phrase rolled off the tongue like one word: theyoungthepoorandtheblack. The young were the longhaired student antiwar types for whom the president had open and legendary contempt; the poor and the black were leftover concerns from the Great Society.

Brownell daily read a dozen newspapers from around the country and clipped stories that played on those themes. He looked for stories about badly managed social programs, watched for currents of localized resentment, combed the columns for colorful quotes and juicy anecdotes the presidential speechwriters might use. He particularly kept an eye out for drug stories. Drugs were one thing the young, the poor, and the black all seemed to have in common.

Despite Nixon’s assertion to the Disneyland crowd that drugs were “decimating a generation of Americans,” drugs were so tiny a public health problem that they were statistically insignificant: far more Americans choked to death on food or died falling down stairs as died from illegal drugs.

So Brownell was delighted that the media were inflating the story by melding the tiny “hard drug” heroin threat with the widespread “soft drug” marijuana craze. Marijuana, Brownell knew, was a perfect focus for the anger against the antiwar counterculture that Nixon shared with “his people.” Brownell dug out a-recent clip from Newsweek: “Whether picketing on campus or parading barefoot in hippie regalia, the younger generation seems to be telling [the middle-class American] that his way of life is corrupt, his goals worthless and his treasured institutions doomed. Logically enough, a good many middle-class-citizens tend to-resent the message.” In an article Brownell might have penned himself, Newsweek identified the targets of that middle-class resentment this way: “The incendiary black militant and the welfare mother, the hedonistic hippie and the campus revolutionary.” The young, the poor, and the black. Nixon couldn’t make it illegal to be young, poor, or black, but he could crack down hard on the illegal drug identified with the counterculture.

John Erlichman (of Watergate fame) eventually admitted that the drug war had been dreamed up by Nixon and his team because it was too good not to do so:

Anybody who thinks this is the wrong fight for the NAACP should take a peek at this note from the diary of H.R. Haldeman, President Nixon’s chief of staff, referring to the launch of the war on drugs 40 years ago.

“[President Nixon] emphasized that you have to face the fact that the whole problem is really the blacks,” Haldeman wrote. “The key is to devise a system that recognizes this while not appearing to.”

That system turned out to be the War on Drugs, with marijuana being put in the same category as such drugs as heroin and morphine. Nixon’s White House counsel, John Ehrlichman, verified the intention of the War on Drugs in a 1995 interview with author Dan Baum, author of Smoke and Mirrors: The war on drugs and the politics of failure.

“Look, we understood we couldn’t make it illegal to be young or poor or black in the United States, but we could criminalize their common pleasure,” Ehrlichman confessed. “We understood that drugs were not the health problem we were making them out to be, but it was such a perfect issue for the Nixon White House that we couldn’t resist it.”

From, Joining the fight: Not your grandfather’s NAACP, by Larry Gabriel.

The war on drugs has been a sham since day one. That alone is reason to end it.

CDC Marijuana Danger Warning: Reefer Madness or A Call to Arms

Posted in Business Basics, Legal Issues, Medical Cannabis, Recreational Marijuana

In the wake of recent scrutiny concerning the safety and quality assurance of marijuana products, the U.S. Center for Disease Control and Prevention (CDC) issued a report regarding marijuana “safety,” which mostly focuses on the “dangers” of “overconsumption.”

Last week, the CDC issued its Morbidity and Mortality Weekly Report in which it claims there is a “potential danger associated with recreational edible marijuana use.” As the basis for its report, the CDC points to one case of a marijuana-related death. We can debate all day long whether the CDC’s report is a serious warning or whether it’s just more reefer madness, what really matters is that tragic incidents like this require that our industry both formulate a mature response and do what it can to help mitigate against future problems.

Cannabis consumer education is important. Done right.

Cannabis consumer education is important. Done right.

The CDC report zeroes in on a single Colorado death in 2014 in which marijuana was considered a “chief contributing factor.” That single case involved nineteen-year-old Levy Thamba, who jumped to his death from a balcony after consuming “an edible marijuana product.” Allegedly, Thamba’s friend purchased marijuana cookies from a state-licensed marijuana retailer and gave one of those cookies to Thamba. At the point of sale, the sales clerk reportedly made clear to Thamba’s friend that the entire cookie should not be consumed all at once, but should instead be eaten in small pieces. The sales clerk specifically instructed Thamba and his friend to “divide each cookie into sixths, each piece containing approximately 10 mg of THC, the serving size, and to ingest one serving at a time.” It’s unknown whether the sales clerk also provided specific instructions for how long to wait between servings.

The police report maintains that Thamba “ate only a single piece of his cookie, as directed by the sales clerk.” But not feeling any effects 30-60 minutes later, Thamba ate the remainder of the cookie:

[d]uring the next 2 hours, [Thamba] reportedly exhibited erratic speech and hostile behaviors. Approximately 3.5 hours after initial ingestion, and 2.5 hours after consuming the remainder of the cookie, he jumped off a fourth floor balcony and died from trauma. The autopsy, performed 29 hours after time of death, found marijuana intoxication as a chief contributing factor. Quantitative toxicologic analyses for drugs of abuse, synthetic cannabinoid, and cathinones (“bath salts”) were performed on chest cavity blood by gas chromatography and mass spectrometry. The only confirmed findings were cannabinoids (7.2 ng/mL delta-9 tetrahydrocannabinol [THC] and 49 ng/mL delta-9 carboxy-THC, an inactive marijuana metabolite). The legal whole blood limit of delta-9 THC for driving a vehicle in Colorado is 5.0 ng/mL. This was the first reported death in Colorado linked to marijuana consumption without evidence of polysubstance use since the state approved recreational use of marijuana in 2012.

The CDC pointedly notes in its report that, “[a]lthough [Thamba] was advised against eating multiple servings at one time, he reportedly consumed all five of the remaining servings of the THC-infused cookie within 30–60 minutes after the first serving, suggesting a need for improved public health messaging to reduce the risk for overconsumption of THC.”

In this case, it appears that the marijuana cookies had labels setting forth their THC content and the consumers were explicitly warned not to eat the cookies either whole or all at once. Upon reading the CDC’s report, many have been asking how fair it is to blame cannabis for Thamba’s unfortunate death, especially when there is no meaningful evidence indicating cannabis can lead to psychotic behavior. Nonetheless, the message to the cannabis industry should be clear. Though state regulations may set the floor for the minimum required by way of consumer protection, cannabis entrepreneurs need to go above and beyond that floor to ensure that their own consumers are educated about cannabis and its effects. In reality, this likely means, for example, giving to consumers written materials, including brochures, and ensuring clear and comprehensive packaging and labeling, setting out what consumers should and should  not do with what they purchase. With “multi-dose products” like edibles, consumer education and protection is paramount if our industry is going to reduce the heat and liability caused by “overconsumption.”

For more on the need for cannabis businesses to be mindful of the role they can and should play in consumer education, check out the following:

Oregon Recreational Marijuana Sales Begin October 1

Posted in Oregon, Recreational Marijuana

Oregon Recreational MarijuanaAt first, it seemed like a foregone conclusion. When the Oregon legislative session closed on July 6, an incredible amount had happened in the state’s cannabis space, including the passage of a bill allowing early marijuana sales. But then over three weeks passed and Governor Brown still had not signed the very skinny SB 460. She finally did on Tuesday.

On October 1, Oregon medical marijuana dispensaries can begin limited pot sales to adults over 21. These adults can purchase seeds, non-flowering plants and up to a quarter ounce of dried leaves and flowers, per day. Though more restrictive than allowed sales under next year’s full recreational program (for example, this temporary program does not allow for edibles) these offerings are a critical start.

It’s no secret that stiff competition from both regulated and black market competitors has made life tough for medical dispensary operators of late. Though some of our firm’s Oregon cannabis clients have fared well, others have been just hanging on in the hopes of a bump from the early sales program. Because the early sales program does not tax products until January 4, that bump could be substantial.

After January 4, the tax holiday ends. 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).

So what’s next? SB 460 allows local cities and counties to prohibit the temporary sales, and surely a few of them will. Also, the Oregon Health Authority (OHA), which runs Oregon’s existing Medical Marijuana Dispensary Program, is tasked with adopting rules to implement the temporary sales program. The new law doesn’t give much guidance on those, only providing that the rules must “ensure public health and safety” and “comply with [SB 460].” No word yet from OHA on when the rulemaking process will begin, although it will be soon and dispensaries should stay apprised to give input during that brief process.

In addition to gearing up for temporary sales, medical dispensaries and other recreational program hopefuls should be taking key steps to prepare for Oregon’s new recreational program. Draft rules for that program should surface in under two months.

 

Earth to California: There is no “Perfect” Marijuana Initiative

Posted in California, Legal Issues, Recreational Marijuana
What will happen with California cannabis?

What will happen with California cannabis?

California’s Blue Ribbon Commission on Marijuana Policy recently released a 93-page report covering the broad goals for legalization in the Golden State, including over “50 recommendations” for regulating and taxing. According to the report, the Blue Ribbon Commission has spent the last two years working to “provide expert research and analysis to help the public and policymakers understand the range of policy issues and options to consider when drafting proposals to legalize, tax, and regulate marijuana.” The report also highlights that the Commission “. . . is not a policy-setting or advocacy body,” but that it “. . . serves as a resource to interested parties seeking thoughtful analysis about a complicated set of public health, safety, environmental and economic issues. This sort of expert report is are invaluable for making smart, long-term choices about legalization and here are some of its highlights:

  • It starts by focusing on what have become the basic goals of most state legalization regimes: follow federal law priorities, keep kids away from cannabis, promote public health and consumer protection, and preserve public safety.
  • It addresses California’s “unique characteristics” posed by its northern versus southern regions, its local governments, its diverse population and simply that California is a huge state, home to over 38 million people, all of which work to make legalization more challenging.
  • It recommends that the state of California should engage in dialogue with the federal government on implementing its new “robust” marijuana laws and how those laws interact with federal prohibition. It specifically emphasizes the need for state-federal cooperation regarding access to banking and federal taxation of marijuana businesses.
  • The Commission didn’t make any recommendation as to which state agency or agencies should oversee marijuana regulation, but it did recommend that whatever state agency gets the job, that agency (or agencies) should immediately engage stakeholders of all kinds when it comes to formulating future regulation.
  • It recommends the state regulate the following:
    • licensing and training
    • licensing fees
    • home growing
    • types of products sold
    • packaging and labeling
    • diversion controls
    • seed-to-sale tracking
    • consideration for licensing existing good actors in the medical marijuana industry — if you are already in the industry, now is the time to make sure that you take action to be so viewed
    • environmental laws
    • quality assurance testing
    • supply chain transparency
    • where cannabis may be consumed
    • employment and labor law
    • local government control and preemption
    • taxation
    • advertising and marketing
    • highway safety and DUIDs
    • data collection and monitoring
    • use of cannabis revenues
    • whether to have vertical integration amongst licensees.

The report exhaustingly shows how difficult it will be to achieve sufficient unity in California to pass and implement marijuana legalization. Indeed, one of the main themes of the Commission’s report is that legalization is going to take time to get right and “[a]ny ballot measure should allow enough flexibility over time for the creation of effective regulation that is clear, reasonable and responsive, achieves stated goals and is not unduly burdensome.” Pointedly, the report emphasizes that legalization “should not be California’s next Gold Rush.”

There is no perfect marijuana initiative and it is important that Californians keep this in mind when developing their legalization initiative(s), likely for 2016. We (especially our California lawyers) are concerned about California’s legalization becoming so over-thought and over-processed that no initiative will be “good enough” to pass anytime soon. California is a (the?) key state for nationwide legalization and we hope that this report is another step towards California’s legalization in 2016.

How to Avoid Cannabis Litigation: Five Tips

Posted in Business Basics, Legal Issues, Litigation

Here at Canna Law Group, we are never not litigating. The advent of new and untested laws in an industry culture that trends toward risk-tolerant business practices, makes litigation common. Because litigation is unpredictable, time-consuming, distracting, tough, unglamorous and expensive, it is best to avoid when possible. Here are some ways to avoid litigation.

1.  Write it down. Seriously, have a professional write it down. It is very easy (and likely) that expectations will diverge and disputes will occur if your agreement is not memorialized in writing and also signed. Whether it’s an arrangement with a partner, employee, supplier, landlord or other entity, and even if the counter-party is a friend or family member, contracts should always be in writing.

Marijuana LitigationHistorically, the cannabis industry has existed underground and business relationships—even for very large transactions—have been un- or under-documented. That is changing fast and entrepreneurs should be wary of doing business with anyone who resists written contracts. Gross informality in business shows a lack of acumen and may also indicate poor motives.

Having an agreement that clearly sets parameters for when a business relationship fizzles, for example, can minimize the cost of dispute resolution. It can also actually prevent a relationship from breaking down in many ways, as a written contract allows all parties to know with certainty in advance the consequences of various actions or events. Good contracts make business flow and if you cannot agree to written terms with the other side, you should not be doing business together. (For more on intra-company cannabis business disputes, check out yesterday’s post, and How To Avoid Costly Marijuana Business Disputes.)

2.  Do Your Research. Carefully research potential partners, investors, employees, suppliers and even professionals like CPAs, realtors and attorneys. The need to research business partners is pronounced in states like Oregon, Washington, Colorado and Alaska, where markets contain comparatively low barriers to entry yet funding remains competitive. If a potential business partner has a history of failed enterprises or business disputes, or if an investor is unwilling to disclose basic financial information, it’s probably best to steer clear.

3.  Read the Agreement. In the words of the eminent legal scholar Bret Michaels, “Thoroughly read all your contracts. I really mean thoroughly.” The internet is an ocean of documents. You can find any species of agreement easily, in the many hundreds, but an untailored agreement will almost never adequately reflect the expectations of particular parties. For these reasons, it is important that a party read carefully anything they will be signing, even if the document was first prepared by the party’s own attorney. This is because you yourself will have more knowledge of the relevant facts than anyone else and it is crucial to get things right before signing.

4.  Communicate and Stay Flexible. Businesses evolve and outgrow contracts, which may need to be revised or replaced from time to time. This is especially true in the ever-changing marijuana regulatory space. If Party A is unhappy or suffering under a contract term that has become oppressive, Party B will not always achieve the best result by shutting down lines of communication or continuing to enforce the oppressive terms. Sometimes (not always), it is better to accommodate than to try to win at any cost. To that end, professionals may have insights that are not apparent from the inside—especially in the marijuana industry where things are always in flux—and all options should be explored before throwing in the towel.

5.  Think objectively. Like a lot of advice, this is easy to give but often hard to do. If you can put yourself in the other party’s position, and the other party isn’t crazy, you may be able to understand what motivates their decision to press or to obstinately dig in. Bad business judgment can come across as personal animosity, but if you can understand where Party B is coming from, you may be able to resolve a conflict in short order.

Sometimes, even if all of these steps are observed, unforeseeable events make litigation unavoidable. But the chances of becoming embroiled in a costly dispute that draws time and resources away from your cannabis business can be greatly diminished by observing basic formalities. In the cannabis industry, entrepreneurs who insist on good contracts and closely watch the regulatory landscape will help insulate themselves from risk.

Marijuana Attorneys And Partnership Disputes

Posted in Business Basics, Legal Issues, Litigation
Do what you can to avoid a knock-down drag out fight with your cannabis business partner.

Do what you can to avoid a knock-down drag out fight with your cannabis business partner.

As I wrote several weeks ago, we are in the midst of representing a number of clients right now that are having serious disagreements with their business partners. These sorts of situations sometimes arise because the parties did not negotiate a strong operating agreement and don’t have a clear picture of their rights and obligations. Other times it is because one of the partners believes he or she got a raw deal and is looking to change it. Regardless of their genesis, these disputes are hard on everyone. Anger, bitterness, and betrayal can cloud judgment and lead to rash decisions. Resentment brews, and businesses crumble. As cannabis attorneys, we are approached at many different phases of these disputes, but it is important to know the best way to use your attorneys as partnership (“partnership” here is broadly defined) struggles unfold. Today, I’ll write about some of the dynamics, both good and bad, that attorneys bring to the table in partnership disputes.

To start, everything is more difficult and more sensitive for marijuana businesses. States tend to have tight regulations that involve approving of and keeping record of business owners and their percentage of ownership for state-licensed marijuana cultivators, retailers, etc. Partnership disputes can throw those numbers into flux, and it can bring regulators sniffing. When regulators discover that a cannabis business wasn’t honest about its ownership roster on its licensing application, the license itself can be in jeopardy. For more on why it is so important to tell the truth to your state cannabis regulators, check out How To Deal With Your State Marijuana Regulators: Fess Up

Though sensitive the early stages of these disputes are usually the best time to head off larger battles. One way to do that is to keep your lawyer on the sideline to start. Of course it is good to meet with your lawyer to understand your duties and rights, but it’s probably not a good idea to start issuing demand letters from counsel as soon as you feel you have been wronged. The longer negotiations stay confined to the parties, the more likely you are to reach a conclusion that keeps the business alive and averts total breakup.

Assuming that doesn’t work, that’s when it’s time to explicitly bring in counsel. Psychologically, introducing attorneys to the mix changes the dynamic — the fight becomes more real, and the partners can become more solidified in their positions. Negotiating through counsel is tedious, but effective. The bad news is that it can take a long time and it costs both sides money in attorneys fees. Party A and attorney agree on a settlement proposal and send it to Party B’s attorney. Party B and attorney spend a couple of days on it and come back with a counter-offer. And on and on and on. When the parties are far apart and don’t move on their proposals, as has been our experience with a number of these matters, this can drag on for months.

The good news, though, is that using legal counsel does tend to make it easier to reach a deal. This is true not only because we lawyers understand how to negotiate and can remain calm and objective, but also because we play a role in helping our clients understand the benefits of striking a deal. A good attorney with a stubborn client knows that part of his or her job is to push back on the client so that a good deal gets reached. It is not uncommon for clients to reluctantly accept a deal, only to realize a few months later how much it benefited them to get their dispute behind them.

And a good deal has to be the goal. The goal is not to punish the other side for being wrong or for taking advantage of you. The urge to punish and take the other side down is what leads to thoughtless actions and bad results. Very few partnership disputes should go to the time and expense and publicity of a trial. Unfortunately, partnership disputes have a lot in common with divorces. The parties’ assets and liabilities are often intertwined and difficult to understand. The fight is personal and the facts are messy and judges/arbitrators/mediators may or may not come to the right conclusions in such he-said/she-said disputes. Plus, the fight is expensive. The legal expenses for going to trial can be ten or more times the costs of negotiating out on a deal. At minimum, litigation usually involves filing a complaint, answering the complaint, going through months and months of written and deposition discovery and motions practice, and then a trial. At the end of that, if the other side does just enough to confuse things for the judge, you may end up with nothing at all. One of the biggest problems with litigation is that it can spin out of control through no fault of yours or your lawyer. If the other side wants to turn it into WWIII, there is little that you can do to stop that.

So, when it seems like things are starting to fall apart with your partner, keep in mind that your goal is to reach the best resolution possible as quickly as possible. If you are at the point where you are engaging attorneys to negotiate or even to sue the other side, at least make sure that there is a plan in place for how the business is going to operate during the fight. You don’t want to destroy the pie while figuring out how to split it up.

Marijuana Advertising: You Can’t Do That On TV

Posted in Colorado, Federal law and policy, Recreational Marijuana
Don't hold your breath waiting for cannabis ads to show up on your TV.

Don’t hold your breath waiting for cannabis ads to show up on your TV.

The first television commercial for a cannabis product was scheduled to air on Denver-based ABC affiliate KMGH this month but the network’s owner, E.W. Scripps Company, pulled it at the last-minute, citing “concerns about the lack of clarity around federal regulations that govern broadcast involving such ads.” If marijuana is legal in Colorado, why can’t its television stations broadcast advertisements of legal products?

Like most legal issues in the cannabis industry, much of the problem stems from marijuana still being illegal under federal law. Section 843 of the Controlled Substances Act specifically prohibits using “communications facilities” to transmit advertisements for the sale of Schedule I drugs. Violating this provision is a felony.

The Federal Communications Commission regulates and licenses television broadcasters, issuing licenses on an annual basis. There is no FCC regulation expressly prohibiting a televised advertisement of cannabis products in states with legalized cannabis. The FCC, however, renews broadcasters’ licenses each year based, in part, on whether they served the “public interest” during the preceding year. It could be more difficult to satisfy this criterion if broadcasters (arguably) committed a felony by violating Section 843 of the Controlled Substances Act.

At best, airing pot ads could mean that the licensing renewal process could become much more onerous. However, unlike other federal agencies, such as the DOJ, FDA, Treasury, SEC, and the IRS, the FCC hasn’t yet weighed in on cannabis. Without any guidance broadcasters are left guessing how much fuss federal regulators will put up, even if states like Colorado and (probably) Oregon do not prohibit the ads.

Given the lack of regulatory clarity, the potential marijuana ad spends do yet not justify the potential expense, time, and risk to broadcasters. In other words, for virtually all television stations the potential transaction costs are likely just too high to make running marijuana ads a sound business judgment. The alcohol industry spends roughly $2 billion on advertising per year, $500 million on television alone. The cannabis industry can’t hold a candle to that, at least not yet. Banks currently face similar issues with providing accounts to cannabis businesses, though to a somewhat lesser extent.

It’s ultimately a matter of when, not if we’ll start seeing cannabis products advertised on television, but until federal laws soften and until the industry reaches a critical mass, you should not start holding your breath for this. In the meantime, you can watch the banned Colorado ad here.

They Said It On Marijuana, Quotable Saturday, Part LXIX

Posted in Advocacy

Today’s quote is actually a collection of four quotes that prove a point. The quotes are from four veterinarians (from this Newsmax article) on the efficacy of using medical cannabis for pets.  

1.  “The veterinary community needs to address the issue, but we don’t want to talk about it, even though it’s clear our clients are giving marijuana to their pets, with good and bad effects,” said Dr. Doug Kramer, a Los Angeles veterinarian who fed small amounts of medical marijuana successfully to his aging dog, Nikita, in an interview with the Journal of the American Veterinary Medical Association. “I don’t want to come across as being overly in favor of giving marijuana to pets. My position is the same as the (American Medical Association’s). We need to investigate marijuana further to determine whether the case reports I’m hearing are true or whether there’s a placebo effect at work.”

Marijuana Research and Animals2. “My gut reaction is they do probably provide some therapeutic effect benefit… I’m never going to say there’s enough benefit that marijuana should be given to pets. I’m saying there’s enough justification that we need to study it.” – Dr. Dawn Boothe, director of the Clinical Pharmacology Laboratory at Auburn University’s College of Veterinary Medicine, told the AVMA journal she thinks vets will one day use cannabinoid derivatives that have received FDA approval.

3. “These products show potential, but there’s not a lot of research at this point. No one is even sure what the correct therapeutic dosage is. –Tina Wismer, medical director of the ASPCA Animal Poison Control Center, in an interview with Health magazine.

4. “If you get it right, it works, but the flip side is you can overdose them on it,” says Seattle veterinarian Sarah Brandon. “It’s not lethal, but most animals don’t like to feel the high of the THC. They get paranoia, they have respiratory discomfort, just all of the things that would go along with, if you will, a human having a freak out.” – Seattle vet Sarah Brandon in an interview with MyNorthwest.com.

To a large extent, these four veterinarians are all saying the same thing: we think cannabis can work, but we need more testing on what it works for and the best doses. More research.

What these vets say about cannabis for pets holds true for cannabis for humans as well. Now before anyone leaves a comment saying that “man has been using cannabis for thousands of years and we know it helps and we know it’s harmless,” please hear us out here. We know cannabis helps certain conditions and yet we are all the time learning of other conditions for which it has proven helpful. Just last week, for instance, a report came out indicating that it can help speed up the healing of broken bones. There may be hundreds of conditions for which cannabis could help, but for which most are just not yet aware. And even for those conditions for which it helps, do we know the best dosages? Do we know the best strains? Clearly research on these things would be helpful for both humans and for pets.

More to the point, scientific analysis of the medical benefits of cannabis is necessary and it would surprise us if most physicians and veterinarians did not agree with us on this point. The big problem is that our federal government makes cannabis research difficult, bordering on the impossible. This has to change, for the good of the people and our pets.

What are your thoughts?