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With a foundation in advocacy for cannabis legalization built through involvement on University of Washington's campus and with the Washington State Liquor and Cannabis Board, Daniel has positioned himself as a fearless advocate for the cannabis industry.

Cannabis attorneysIn Joe Hemp’s First Hemp Bank and Distribution Network v. City of Oaklanda federal judge ruled against a cannabis business that had sued the city of Oakland for putting it out of business for having failed to obtain proper permits.

The plaintiffs in this lawsuit were Joe’s Hemp and its founder David Clancy. The plaintiffs claimed they operated a “warehouse” to store medical marijuana for members using a “closed distribution network.” According to plaintiffs, members could pay a fee to store marijuana in the warehouse and then remove it from the warehouse when necessary.

Oakland requires any dispensary operating within the city have a cannabis dispensary permit and pay necessary fees and it deemed Joe’s Hemp to be a dispensary.  When Joe’s Hemp refused to apply for the required Oakland city dispensary permit, Oakland imposed fines against Joe’s Hemp and mandated Joe’s Hemp vacate the premises. Joe’s Hemp then sued the City of Oakland in federal court claiming it was not operating a dispensary, but rather a warehouse.

Joe’s Hemp contended that it was operating legally under federal law under the “warehousemen exemption” to the Federal Controlled Substances Act (CSA) which exempts common carriers and warehousemen from criminal liability for possessing Schedule I substances. Joe’s Hemp also claimed this exemption removed it from Oakland’s cannabis dispensary permit scheme. The court was not impressed, calling the alleged warehouse arrangement “a sham” that involved nothing more than its purported members paying fee to get marijuana. The court found this transaction to be a sale of cannabis and held that Joe’s Hemp sat squarely outside any purported warehouseman exemption.

Joe’s Hemp argued the CSA preempted Oakland’s cannabis permitting scheme. The court held the CSA did not preempt Oakland’s ability to permit marijuana business because there was no “positive conflict” between the City of Oakland’s cannabis permit scheme and federal law. The CSA did not preempt Oakland’s permitting scheme “because the permit scheme itself does not violate the Controlled Substances Act, but rather regulates certain entities that do.” The court also ruled that Oakland’s cannabis permitting scheme did not create obstacles to CSA execution because the federal government was free to enforce federal law and the permitting scheme did nothing to prevent that.

Plaintiffs also claimed Oakland’s permitting scheme required they forfeit their Fifth Amendment rights against self incrimination by requiring those running Joe’s Hemp to admit they operate a cannabis dispensary, pushing them outside the warehouseman exemption. The court ruled that even if Joe’s Hemp was only storing cannabis, it would fit Oakland’s definition of a dispensary because the city defines an entity that “stores” or “makes available” marijuana as a dispensary. In other words, an Oakland “dispensary” could — in theory — be a warehouse. The court also found that the permit itself did not require that the business actually admit to cultivating or selling marijuana.

In considering the self incrimination issues the court concluded as follows:

In any case, plaintiffs can simply stop their activity and avoid having to admit anything, i.e., get out of the [cannabis] business and avoid any penalties and admissions. If they choose to continue in an activity that is on the borderline of illegal under federal law, then they cannot escape compliance with local police regulation by saying compliance would constitute an admission under the Fifth Amendment.

The court granted the City of Oakland a motion to dismiss and terminated the case. However, Clancy and Joe’s Hemp have appealed the decision to the Ninth Circuit Court of Appeals and we will provide an update if and when the Ninth Circuit issues an opinion on appeal.

 

NOTE: The above is part of our plan to summarize all cannabis civil cases with a published court decision. By civil case, we mean any case that involves cannabis or the cannabis industry that is not a strictly criminal law matter. These cannabis case summaries are intended both to keep you up to date on cannabis laws as interpreted by the courts and also to serve as a resource for anyone conducting cannabis law research. We also will seek to provide key unpublished cannabis law decisions as well, when available.

Cannabis legalization Washington Oregon California

Today is America’s 241st Birthday where we celebrate the signing of the Declaration of Independence and our country’s creation. In honor of Independence Day, we’d like to take a moment to celebrate American federalism, which has permitted states to legalize marijuana in light of the federal government’s prohibition.

For the first 161 years after our Founding Fathers signed the Declaration of Independence, cannabis was legal. That changed in 1937 when the Marihuana Tax Act was signed into law. This Act served as the precursor for including cannabis in the Controlled Substance Act which makes cannabis illegal on the federal level to this day.

In the last twenty years, states have started to push back on the federal government’s prohibition on cannabis. It started when California became the first state to permit the medical use of cannabis in 1996. Now, 29 states and Washington DC permit medical marijuana. In 2012, Colorado and Washington became the first states to legalize recreational cannabis. Alaska, California, Oregon, Maine, Massachusetts, Nevada, and Washington DC have all since followed suit, to one degree or another

Federalism allows these states to pass laws that conflict with the federal government’s prohibition. In America, both the federal government and state governments have powers to create laws. This system is fundamental to American government and is rooted in our Constitution. Federalism allows states to experiment with laws without making the entire country subject to the effects of those laws. Supreme Court Justice Louis Brandeis famously referred to states as “laboratories of democracy” in his dissenting opinion in New State Ice Co. v. Liebmann (1932):

To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the nation. It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.

This Fourth of July Americans should celebrate that states are free to enact laws they deem fit, even when those laws are at odds with federal law. We should also celebrate those states like California, Washington, Colorado, Alaska and Oregon that have truly been in the forefront on cannabis legalization.

Our federal system has allowed states to chip away at federal cannabis prohibition and our “courageous States” that have legalized cannabis are laying the groundwork to end federal cannabis prohibition by proving legalization can and does work. States with legal cannabis are models for how the Federal Government can and should legalize and regulate cannabis. For now, we can take a moment on our Independence Day to celebrate cannabis’s progress and to look forward to ending cannabis prohibition at the federal level soon.

 

Cannabis prohibition and stigmaOn July 6, 2016, Officer Jeronimo Yanez shot and killed Philando Castile during a traffic stop in Minnesota. On June 16, 2017, Officer Yanez was acquitted of all charges in the killing of Castile. In the days after the acquittal, authorities released investigative reports, including Officer Yanez’s interview with the Minnesota Bureau of Criminal Apprehension (BSA) where he stated the following:

 I thought, I was gonna die. And I thought if he’s, if he has the, the guts and the audacity to smoke marijuana in front of the five year old girl and risk her lungs and risk her life by giving her secondhand smoke and the front seat passenger doing the same thing then what, what care does he give about me. And, I let off the rounds and then after the rounds were off, the little girl was screaming.

Before I deal with the cannabis policy issues related to Castile’s death, I have to parse through what Officer Yanez says below as I am truly dumbfounded by it. Officer Yanez essentially says that anyone who smokes cannabis in front of their kid does not care about the life of their kid or about anyone else’s life either. Ponder that for a moment and then realize that if Yanez was telling the truth here (rather than simply mouthing an excuse he concocted after the fact) how ingrained in our society the idea is that people who smoke cannabis are flat out bad people.

Officer Yanez’s interview was released to the public within days of a Stanford Open Policing Project study showing that in Colorado and Washington State, highway patrol searches plummeted significantly after these two states legalized recreational cannabis in 2012. The type of traffic stop that resulted in Castile’s death occurs less frequently in states with legal cannabis.

In both Colorado and Washington, it is still illegal to drive under the influence of cannabis. However, in both states, individuals over the age of twenty-one are permitted to drive with cannabis stored in their cars. In states where cannabis is not legal recreationally, officers performing routine traffic stops may search a car if they suspect it contains cannabis. The decline in traffic stops in Colorado and Washington since 2012 is due in part to the fact that officers can no longer use possession of cannabis as a pretext to stop and search drivers.

The Stanford findings show that police are much more likely to stop African American and Hispanic drivers while driving. This is true in Washington and Colorado as well, though the overall number of stops have decreased substantially. Marijuana use has long been used as a pretext for targeting minority communities. Marijuana was first made illegal at the urging of Harry J. Anslinger, the nation’s first Drug Czar. Anslinger successfully lobbied Congress to pass the Marijuana Tax Act of 1937, which outlawed possessing or selling cannabis. Anslinger used all sorts of racially charged (and wildly inaccurate) testimony as scare tactics to ram through his harshly anti-cannabis agenda. In the years since, minority communities have been targeted by law enforcement for cannabis crimes. A major study by the ACLU in 2010 found African Americans were 3.7 times more likely to be arrested for cannabis than white people, though data shows that both groups use cannabis at the same rate.

Castile’s death shows how the danger of cannabis can stem from its legal status. Cannabis consumers face no risk of overdose and repeated use does not lead to physical addiction. Compared to other drugs like alcohol and opioids, cannabis is relatively safe. But Castile’s death shows how cannabis use can be deadly so long as it remains illegal.

What happened to Philando Castile was a tragedy and legalizing cannabis will not solve the complicated problems with policing in America. However, at a time when Attorney General Jeff Sessions wants to renew the war on drugs, Castile’s killing is a chilling reminder of the human cost of cannabis prohibition and stigma.

Washington State cannabis lawsAs Washington’s cannabis industry continues to develop, marijuana businesses continue to face new challenges. And with an ever growing number of consumers buying and using marijuana the risk of lawsuits against those who produce or sell cannabis keeps growing as well. Under what is called product liability law, manufacturers, distributors, suppliers, retailers, and others who make products available to the public can relatively easily be held liable for any injuries those products cause. Cannabis business owners must be mindful of product liability lawsuits arising from the cannabis products they make or sell.

In Washington State, product liability law is codified in the Washington Product Liability Act (WPLA), which broadly applies to virtually any injury claim resulting from a product covered under this act. The WPLA distinguishes between product manufacturers and non-manufacturer sellers. Washington’s marijuana market is divided between businesses who grow and process cannabis and businesses that sell the product to consumers. Manufacturers, for WPLA purposes, are the licensed producers that grow cannabis and turn that cannabis into edibles, extracts, concentrates, and other marijuana products. Non-manufacturer sellers are retailers that sell marijuana to consumers. A business can hold a license to produce and process marijuana but it cannot also have any ownership interest in a retail business. In turn, a retailer may have not an ownership interest in a cannabis producer or processor.

A product manufacturer is subject to liability under the WPLA if it was negligent or failed to provide proper warnings or instructions or if the product was not designed as reasonably safe. A plaintiff can show negligence by proving the manufacturer owed a duty to the plaintiff, the defendant breached that duty, and the breach caused the plaintiff damages. A plaintiff can prove a manufacturer failed to provide an adequate warning by showing that a product’s warning or instructions were not likely to notify the consumer of the potential harm and the manufacturer could have provided instructions or warnings that would have been adequate. A plaintiff can show that a product was defectively constructed by establishing that “when the product left the control of the manufacturer, the product deviated in some material way from the design specifications or performance standards of the manufacturer, or deviated in some material way from otherwise identical units of the same product line.” Finally, a plaintiff can prove that a product lacked adequate warning and was designed defectively if the product “was unsafe to an extent beyond that which would be contemplated by the ordinary consumer.”

Washington’s robust marijuana regulations may provide producers and processors with some safeguards against claims brought under the WPLA.  Producers and processors may present evidence of compliance with Washington’s extensive cannabis laws and regulations as a defense to a product liability lawsuit. However, compliance with these state law cannabis standards does not automatically bar products liability claims as it is still possible the state required warnings or acceptable standards for growing and processing are inadequate.

Under the WPLA, non-manufacturer sellers can be liable in some scenarios, but simply selling a product that eventually leads to injury does not by itself establish liability. This means that retailers have a lower risk of being subject to product liability than a manufacturer because they do not manufacture the products they sell. However, a retailer may be liable to an injured consumer if the consumer’s harm was caused by the seller’s own negligence by the breach of a warranty made by the seller, or by a seller’s intentional misrepresentation of facts about the product it is selling. A seller may also be liable if there is no financially solvent manufacturer. Because many producers and processors do not have the funds or the insurance to pay off on large (or even not so large) product liability lawsuits, even cannabis retailers in Washington State need to be wary of product liability lawsuits.

Marijuana businesses operators can reduce their product liability risks by doing the following:

  1. Set up your cannabis business so as to protect yourself from personal liability. See Cannabis Businesses And Corporate Separateness and Cannabis Business and Corporate Separateness, Part II
  2. Vet the businesses with which you conduct business and, in particular, seek to ensure they are complying with applicable regulations and industry standards. See Buying a Cannabis Business: The Top Five Due Diligence Items or Buyer Beware.
  3. Draft your contracts so that vendors must indemnify you for any damages arising from their defective product.
  4. Use appropriate packaging and warning labels on the products you sell. See Cannabis Products and Dosing: Educate, Educate, Educate and Label, Label, Label and Pot Puppies? Let’s Talk Labeling and Packaging. NOW.
  5. Get good insurance for your business. The LCB requires cannabis licensees carry and maintain commercial general liability insurance, but you should also consider adding additional insurance to cover potential product liability lawsuits.

1600px-Flag_of_Washington.svgI previously wrote how “change would be coming” to Washington State’s cannabis law were Governor Inslee to sign SB 5131 into law. Governor Inslee has signed SB 5131 and is now set to go into effect on July 23, 2017.

If you hold a license to produce, process, or sell marijuana in Washington, you need to prepare for the legal changes stemming from SB 5131. This post summarizes some key of the key changes you should expect from SB 5131.

Requires disclosure of IP licensing deals. We previously wrote how the passage of SB 5131 would impact cannabis branding and intellectual property transactions and rights because it requires licensed cannabis businesses to disclose their IP licensing deals to the Washington State Liquor and Cannabis Board (the LCB).

Restricts advertising by licensees. SB 5131 focuses heavily on advertising. Since passage of Initiative 502, cannabis licensees have been banned from advertising marijuana or marijuana products within 1,000 feet of a school or other sensitive area where children regularly populate. This largely prevented advertising cannabis products by radio, TV, or in publications likely to be heard or distributed in or near schools. This is why you mostly see marijuana advertisements only in publications geared towards adults. SB 5131 extends this cannabis advertising prohibition to include not only cannabis products but cannabis businesses. In other words, cannabis licensees now need to be cautious about advertising their cannabis business in any medium where their ad could end up within 1,000 feet of a sensitive area.

SB 5131 also makes the following changes to advertising:

  • No advertising on cars.  The use of “transit advertisements,” which includes any cannabis advertisement on public or private vehicles, is prohibited.
  • No targeting tourists. Advertisements and marketing practices may not target “persons residing outside of the state of Washington.”
  • 21 plus. All advertising must contain text stating that marijuana products can only be purchased by persons 21 and older.
  • No marketing to kids. Cannabis licensees cannot market to kids and cannot “use objects such as toys or inflatables, movie or cartoon characters, or any other depiction or image likely to be appealing to youth.”
  • No mascots. Cannabis licensees cannot use commercial mascots outside of or near a licensed marijuana business. “Commercial mascots” include humans, animals, or mechanical devices used to draw attention to a business, and specifically includes inflatable tube displays, persons in costumes, and sign spinners.
  • Limited outdoor advertisements. Outdoor advertisements are limited to only text that identifies the “retail outlet by the licensee’s business or trade name, states the location of the business, and identifies the type or nature of the business.”
  • Limited indoor advertisements. Indoor advertisements are only permitted in facilities where minors are not permitted, such as bars. Under SB 5131, cannabis advertising is explicitly prohibited in arenas, stadiums, shopping malls, state fairs, farmers markets, and arcades.
  • No billboard advertising, except by retailers. Retailers will be the only cannabis licensees permitted to use billboards, but like all outdoor advertising, they too may only include text identifying the name, location, and the nature of their business on these billboards.

Allows ownership of five retail stores.  SB 5131 will allow individuals to possess an ownership interest in five retail stores. up from three under current law. Existing retailers may (and no doubt will) be able to purchase other licensed retailers and rebrand them with their own name and open new storefronts under their already established name.

Changes for producers & processors. Though medical marijuana patients in Washington are already permitted to grow cannabis in their homes for personal use and may form a collective to grow medical cannabis together there has been no legal means for medical patients to buy cannabis plants because cannabis producers were prohibited from selling cannabis to individuals who did not hold a license to produce, process, or sell marijuana. SB 5131 changes this by allowing “qualified medical marijuana patients and designated providers to purchase immature plants, clones, or seeds from a licensed producer.” This means cannabis producers can now legally sell immature plants, clones, and seeds to medical marijuana patients. However, “to purchase plants or clones, the patients and providers must hold a recognition card and be entered in the medical marijuana authorization database.” Patients that choose not to enter Washington State’s medical marijuana database cannot obtain a recognition card and may only purchase seeds. Though SB 5131 goes into place July 23, the LCB will likely need time to create rules and implement this program.

SB 5131 requires the LCB to adopt regulations for designating cannabis as organic similar to the federal the “organic” classification granted pursuant to federal regulations. Since cannabis is illegal under federal law, it cannot qualify under federal standards for organic certification. Cannabis producers and processors who choose to comply with Washington State organic standards can market their cannabis products as compliant with the LCB’s organic-style regulations.

SB 5131 also tasks the LCB with studying the viability of allowing processors to process industrial hemp. Under current Washington State law, processors may only process cannabis material grown by a producer. SB 5131 will not change this. However, depending on the results of the LCB’s study, processors could eventually be allowed to process hemp products grown by Washington farmers with permits to grow industrial hemp.

Washington marijuana businesses for years have faced a very robust set of rules and laws. SB 5131 only adds to the Evergreen State’s complex regulatory framework. Though businesses may view these regulations as overly burdensome, compliance is not optional and come July 23, SB 5131 will be the law of the land. Washington marijuana businesses should do all they can now to avoid pitfalls after July 23.

Cannabis attorneysMarijuana is a valuable asset and insurance can be a necessary tool in protecting that investment. We have written about how marijuana inventory can be covered under a general liability insurance policy. However, not all courts are willing to hold that an insurance policy covers cannabis.

In USAA v. Tracy (D. Haw. Mar. 16, 2012), a US District court in Hawaii ruled that a homeowner’s insurance policy does not cover medical marijuana. On May 18, 2010, USAA Casualty Insurance Company issued Barbara Tracy a homeowners’ insurance policy. Tracy was a medical marijuana patient who was permitted under Hawaiian state law to possess and grow marijuana. A thief stole 12 of Ms. Tracy’s marijuana plants, valued at $45,600, from Tracy’s property and she submitted a claim to USAA. USAA made an initial payment on the claim but Tracy argued that the amount was insufficient. USAA informed Tracy it would not make any further payment on the policy. Tracy sued USAA for breach of contract, seeking additional funds for the stolen cannabis plants. USAA moved for summary judgment to have Tracy’s claim dismissed, arguing that her marijuana was not covered under her policy.

USAA’s policy covered theft of “trees, shrubs, and other plants” and Tracy argued that this should include her marijuana plants. USAA first contended that Tracy did not have an insurable interest in medical marijuana. Hawaiian Law defines an insurable interest to be any “lawful and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage.” USAA argued that an interest in medical marijuana is not “lawful” because Hawaii’s medical marijuana law “does not legalize the medical use of marijuana, but provides an affirmative defense to marijuana-related state law crimes for the medical use of marijuana.” USAA also pointed to the fact that Hawaii’s medical marijuana law states that “this part shall not be construed to require insurance coverage for the medical use of marijuana.” The court rejected both arguments by determining that Hawaii does permit the use of medical marijuana, making it lawful, and that although Hawaii’s medical marijuana law did not require insurance coverage, it does not prohibit insurance coverage. The court determined that Tracy did have an insurable interest in marijuana as legally compliant medical marijuana user.

However, the court was persuaded by USAA’s second argument that it could not purchase medical marijuana using insurance proceeds as that would violate federal law. The court cited to cases that established that Hawaiian courts can refuse to enforce contracts that violate federal law. The court ruled Tracy’s possession and use of marijuana violated federal law because it directly conflicted with the federal Controlled Substances Act, even though she was compliant with state law.  The court concluded that the insurance policy purportedly covering her marijuana plants was an illegal contract that could not be enforced and that USAA had no obligation to provide her insurance proceeds for the plants. As a result, it granted USAA summary judgment, holding that it did not owe Ms. Tracy anything more.

For more on insurance and marijuana, please see the following:

NOTE: The above is part of our plan to summarize all cannabis civil cases with a published court decision. By civil case, we mean any case that involves cannabis or the cannabis industry that is not a strictly criminal law matter. These cannabis case summaries are intended both to keep you up to date on cannabis laws as interpreted by the courts and also to serve as a resource for anyone conducting cannabis law research. We also will seek to provide key unpublished cannabis law decisions as well, when available.

Cannabis attorneysCommercial leases for cannabis businesses are a major concern for many of our clients largely because cannabis businesses operate in an industry prohibited under federal law. Generally, contracts that are illegal are unenforceable and there is an argument to be made that any and all cannabis contracts are illegal, at least at the federal level. But a recent Arizona state court shows that state courts are not always receptive to that argument and that a contract that violates federal law is not necessarily unenforceable.

Green Cross Medical, Inc. v. Gally (April 18, 2017) addressed whether a commercial lease with a medical marijuana grow operation in Arizona was enforceable. John Gally owned commercial property in Winslow, Arizona that he leased to Green Cross Medical to operate a medical marijuana dispensary. Two weeks later, Gally sent a letter to Green Cross revoking the lease. At the time Gally terminated the lease, Green Cross had not received the necessary license to operate a dispensary. However, the lease permitted Green Cross to sublease the property and nothing in the lease stated the lease would be terminated if Green Cross did not receive a license to run a dispensary.

Green Cross sued Gally for breach of contract and attempted to obtain a temporary restraining order to prevent Gally from revoking the lease. Gally argued that the lease was illegal and therefore unenforceable because it involved cannabis distribution. The trial court was persuaded by Gally’s argument and ruled that the lease agreement was indeed unenforceable because violated both federal and state law. Based on this, the trial court did not grant Green Cross the restraining order and it denied Green Cross damages for Gally’s having revoked the lease.

Green Cross appealed the trial court’s decision.  First, the appeals court determined that Green Cross could seek damages against Gally even though Green Cross did not receive a license to operate a dispensary on the leased property because the right to sublease was a valuable property right. As a result, Green Cross was permitted to seek damages for the loss of the lease.

The appeals court also held that the lease was not illegal on under Arizona law. The court stated that the Arizona Medical Marijuana Act (AMMA) protects rights of dispensaries to enter into commercial leases and that dispensaries have a contractual right to enter into lease agreements with landlords. The appeals court concluded that “[g]iven the language of the AMMA, a court may not void or refuse to enforce a dispensary’s lease with a landlord simply because the dispensary would be supplying marijuana in compliance with the AMMA.”

The appeals court also rejected Gally’s arguments that he as the landlord could face criminal liability under state law because he was facilitating marijuana distribution by leasing property to a cannabis dispensary. The appeals court pointed to the fact that Gally agreed to execute the lease understanding that Green Cross intended to operate in Arizona’s medical market:

We emphasize that nothing in the AMMA requires a landlord to rent a property to a proposed dispensary. Gally was free not to enter into the lease if he was uncomfortable with the proposed use of the Property. But once he chose to do so, he was not free to rescind his contractual commitments without facing potential monetary liability. Accordingly, leasing property to a medical marijuana dispensary that is in compliance with the AMMA is not illegal under Arizona law. Thus, the superior court erred when it found the lease was void and dismissed the complaint seeking damages for the breach.

The appeals court then acknowledged that federal law prohibits distribution of marijuana under the Controlled Substances Act (CSA) and that it is, therefore, illegal under federal law for an Arizona landlord to lease property to a marijuana business. However, the appeals court went on to state this federal illegality “does not render the contract in this case unenforceable under all circumstances.” The court cited to several cases where contracts involving medical marijuana businesses were upheld by courts despite being prohibited under federal law, showing that courts balance the federal government’s interest in enforcing the CSA with states’ interest in permitting the medical use of marijuana.

The appeals court weighed the interests of the federal government and the state of Arizona and held that the lease was not unenforceable simply because it violated the federal CSA. The appeals court explained that federal government enforcement of the CSA against state-compliant marijuana operators had been in flux for years and that the Department of Justice (DOJ) had instructed US Attorneys not to prosecute individuals acting in compliance with the Cole Memo. The court also noted that Congress has prohibited the DOJ from using funds to prosecute people distributing marijuana in compliance with state law. As a side note, that spending provision was recently extended.

The Arizona Appeals Court sent the case back to the trial court to reconsider the facts of the case in light of the appeals court having held that the lease was not unenforceable and that Green Cross may recover damages for Gally’s terminating the lease.

You can find more on cannabis leases here:

 

 

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Several states have legalized recreational use of cannabis but no state has yet created a state-sanctioned place for adults to legally consume cannabis. This leaves many consumers with no place to enjoy legal cannabis as no state permits public consumption. A bill in Nevada could make it the first state to allow for cannabis clubs.

Senate Bill 236 would grant cities and counties authority to issue licenses to businesses wishing to allow cannabis use at their premises or to hold special events where cannabis use is permitted. Cities and counties would have the ability to establish an application process and create rules for these businesses. These businesses could not be located within 1,000 feet of a school or community facility, defined as a daycare, playground, public swimming pool, recreation center, place of worship, or drug or alcohol rehabilitation facility. Businesses could not allow consumption of marijuana in public view and could not allow individuals under 21 to enter the business or special event where marijuana is consumed. These licensed businesses could be the cannabis clubs that recreational states have been missing.

SB 236 passed the Nevada Senate by a 12-9 vote and now heads to the Assembly where it must pass in the same form it passed the Senate. If it does, it will then go to the Governor’s desk for signature and it would become law with his signature.

Legalization initiatives in California and Maine may allow for cannabis clubs, but those states have not drafted regulations addressing cannabis clubs. Alaska experimented with the idea of cannabis clubs but ultimately has not permitted such clubs.  Oregon and Washington explicitly prohibit consumption of marijuana at a place of business. Some towns and counties in Colorado allow private clubs where individuals can consume cannabis but they are subject to local rules and regulations. For example, the City of Denver passed Initiative 300 last November to allow businesses to permit cannabis consumption, but the program has yet to be fully implemented.

Colorado considered legislation that would have allowed for social consumption clubs state-wide but the bill ultimately failed to make it through the legislature. According to the Cannabist, Colorado Governor John Hickenlooper would have vetoed the bill had it made it to his desk:

Given the uncertainty in Washington [DC], this is not the time to be … trying to carve off new turf and expand markets and make dramatic statements about marijuana. The federal government can yield a pretty heavy hand on this and I think we should be doing everything we can to demonstrate … we are being responsible in how we implement the will of our voters.

The fear of federal crackdown was too much for lawmakers in Colorado and it remains to be seen whether Nevada will ultimately go forward with licensing businesses to permit cannabis consumption. Nevada is a logical choice for these clubs given that it is a hub for tourism and it already permits legal gambling and prostitution which are outlawed in most other states. One can imagine a few social use clubs fitting in on the Las Vegas strip. Las Vegas could become the US-version of Amsterdam or Barcelona, where cannabis consumers can enjoy their product at a cafe or bar.

 

Washington State cannabis lawyers

The Washington State Legislature recently passed SB 5131, which contains many tweaks to Washington’s cannabis laws. The measure now awaits signature by Washington Governor Jay Inslee. Here are ten ways SB 5131 could change Washington’s marijuana market if Governor Inslee signs it into law:

  1. Homegrown Marijuana. SB 5131 would allow licensed marijuana producers to sell immature cannabis plants, clones, and seeds to qualifying patients who enter the state’s medical marijuana database. Patients who choose not to enter the database may grow up to four plants in their homes under current Washington law and it’s not clear how those patients would legally acquire immature plants, clones, or seeds in light of SB 5131. Additionally, the Washington State Liquor and Cannabis Board (“LCB”) must examine the viability of allowing recreational users to grow their own marijuana in a way that complies with the enforcement priorities outlined in the Cole Memo.
  2. Retail License Ownership. Under this bill, a retailer or individual “with a financial or other ownership interest in” a retail license can own up to five retail licenses. Current Washington State law limits an individual from having an ownership interest in more than three licensed retailers.
  3. Forfeiting applications. The bill would require the LCB forfeit retail licenses that have been issued but are not operational and open to the public after two years unless the delay in opening and getting operational is due to circumstances beyond the licensee’s control. However, the LCB may not require forfeiture if the licensee has been unable to open because of a town or county’s moratorium prohibiting a retail cannabis store or because zoning, licensing or other regulatory measures prevent the retail store from opening.
  4. Processing Hemp. The LCB must study the viability of allowing licensed processors to process industrial hemp grown in Washington. This could eventually lead to legislation that would allow processors to purchase cannabis plant material from farmers licensed to grow industrial hemp. Currently, processors may only purchase products from licensed cannabis producers or other processors.
  5. Advertising. SB 5131 would make the following substantial changes to cannabis advertising laws in Washington.
    1. Advertising to Kids. The bill would prohibit marijuana licensees from taking “any action directly or indirectly to target youth in the advertising, promotion, or marketing of marijuana and marijuana products, or take any action the primary purpose of which is to initiate, maintain, or increase the incidence of youth use of marijuana or marijuana products.” This includes prohibiting using toys, movie or cartoon characters, or other images that would cause youth to be interested in marijuana. It also prohibits using a “commercial mascot” which is defined as “a live human being, animal, or mechanical device used for attracting the attention of motorists and passersby so as to make them aware of marijuana products or the presence of a marijuana business.” This includes inflatable tube displays, persons in costumes, and sign spinners. Cities and counties would be free to further restrict marijuana advertising.
    2. Outdoor Advertising. Billboards visible from any street, road, highway, right-of-way, or public parking area cannot be used to advertise cannabis, except that a marijuana retailer may use a billboard solely to identify the name or nature of  its business and directions to its retail store. Outdoor signs could not contain depictions of marijuana plants, products, or images that appeal to children. Outdoor advertising would be prohibited in “arenas, stadiums, shopping malls, fairs that receive state allocations, farmers markets, and video game arcades.” A limited exception would allow outdoor advertising at events where only adults are permitted.
  6. Gifting Marijuana. Adults twenty-one and over would be allowed to deliver marijuana to other adults so long as the marijuana is offered as a gift without financial remuneration and so long as the amount of marijuana gifted is no more than the amount an adult can legally possess in Washington — one ounce of useable marijuana flower.
  7. Licensing. This bill would allow a licensed marijuana business to enter into licensing agreements or consulting contracts “with any individual, partnership, employee cooperative, association, nonprofit corporation, or corporation” for goods or services, trademarks, and trade secrets or proprietary information. Licensees would be required to disclose these agreements to the LCB.
  8. Public Disclosure. SB 5131 would exempt trade secrets and other proprietary information of a licensed marijuana business from disclosure under Washington’s Public Disclosure Act.
  9. “Organic” Weed. The bill instructs the LCB to adopt regulations for marijuana similar to products certified as organic under federal regulations. The organic standard is granted pursuant to federal regulations and because marijuana is illegal under federal law, it cannot qualify under those federal standards. The LCB would adopt regulations so that marijuana could be grown in a way that mimics organic products. The products then could be labeled as compliant with the state’s standards.
  10. Tribal Oversight. SB 5131 would require the LCB receive approval from a federally recognized Indian Tribe before granting a license on tribal land.

Governor Inslee is likely to sign SB 5131 into law, though he may veto certain parts of the bill. Stakeholders in Washington’s cannabis market should keep an eye on this legislation and prepare to make changes necessary to comply with SB 5131 if and when it gets signed.

UPDATE: On May 16, 2017, Governor Inslee signed SB 5131 without vetoing any sections of the bill.

Donald Trump is expected to announce Representative Tom Marino (R-Pa.) as our country’s next director of the Office of National Drug Control Policy, colloquially known as the US drug czar. As drug czar, Marino would evaluate and coordinate domestic and international our country’s anti-drug efforts and advise the President on U.S. anti-drug efforts. The whole drug czar “thing” is bad news and Marino himself is even worse. He is “just another anti-marijuana, pro-pharma” extremist.

Tom_Marino_Official_Portrait,_112th_Congress

Marino began his professional career as a prosecutor who sought to do his part on in the “war on drugs” by prosecuting drug offenders. Since 2010, Marino has served in the U.S. House of Representatives and consistently opposed measures to reform federal cannabis law.

Marino voted against the Rohrabacher-Farr amendment which prohibits the Department of Justice from using federal funds to prevent states from implementing medical marijuana laws. He also voted against a measure allowing Veterans Affairs doctors to recommend medical cannabis to their patients and he opposed measures to ease federal restrictions on hemp and CBD. When asked about marijuana legalization, Marino stated he would consider legalizing cannabis only “if we had a really in depth-medical scientific study,” and if medical cannabis were available only in “pill form.” In other words, if it has anything to do with liberalizing our cannabis laws, Marino is against it.

 

According to the “Office of National Drug Control Policy Reauthorization Act of 1998” the drug czar “shall ensure that no Federal funds … shall be expended for any study or contract relating to the legalization (for a medical use or any other use) of a substance listed in schedule I” of the Controlled Substances Act and “take such actions as necessary to oppose any attempt to legalize the use of a substance” listed in Schedule I. Cannabis is still a Schedule I substance and therefore subject to this blanket prohibition on legalization and research.

Marino is no friend of cannabis legalization and Trump’s having has tapped someone with such outdated views is concerning. But even more concerning is the mandate that any drug czar must oppose all marijuana legalization efforts. More than half the states  have legalized medical marijuana and eight states have legalized recreational cannabis, with more to come. With legalization, the evidence that it works better than prohibition is piling up. This country’s director of drug policy should have the discretion to consider this evidence and draw his her own conclusions on cannabis prohibition. As things now stand, the role of our drug czar is not so much to craft policies based on changing realities, but to ensure that our drug policies remain stuck in another era. This is bad policy and it makes no sense and it needs to change.

Earlier this year, the Trump administration considered cutting the Office of National Drug Control Policy entirely. Unfortunately, the President’s tapping Marino as the next drug czar indicates he is now heading in a very different direction. Who needs a drug czar anyway? Trump had it right initially. This office should be eliminated and fast.