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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.

Marijuana Cannabis and the DEA

The Drug Enforcement Administration (DEA) has made many a dubious claim about cannabis over the years. For this reason and countless others, our cannabis lawyers have consistently called to disband the DEA, believing it past the point where it can be redeemed. The good news it that the DEA took a hit last week for having posted false claims about cannabis.

In December 2016, the nonprofit medical marijuana advocacy group, Americans for Safe Access (ASA) formally requested the DEA either remove or correct misinformation regarding cannabis on the DEA’s website. ASA made its claims under the federal Information Quality Act, which ensures “the quality, objectivity, utility, and integrity of information (including statistical information) disseminated by Federal agencies.” ASA contends that the DEA failed to meet the Information Act’s and the ASA’s executive director explained why it was challenging the DEA on its inaccurate marijuana claims:

For years, the DEA has published scientifically inaccurate information about the health effects of medical cannabis, directly influencing the action —and inaction— of Congress. We are simply taking the DEA’s own statements, which confirm scientific facts about medical cannabis, and analysis that has long been accepted by a majority of the scientific community. Our request is simple: the DEA must change its public information to better comport with its own expressed views, so that Congress has access to the appropriate tools to make informed decisions about public health. Alternatively, ASA requests that the DEA simply remove the inaccurate statements or the documents in their entirety.

ASA’s take-down request focused on “The Dangers and Consequences of Marijuana Abuse,” an article available on the DEA’s website that contained 25 allegedly inaccurate statements, including the following:

  • “Marijuana use can worsen depression and lead to more serious mental illness such as schizophrenia, anxiety, and even suicide.”
  •  “Marijuana takes the risks of tobacco and raises them. Marijuana smoke contains more than 400 chemicals and increases the risk of serious health consequences, including lung damage.”
  • “Teens who experiment with marijuana may be making themselves more vulnerable to heroin addiction later in life, if the findings from experiments with rats are any indication.”

The ASA pointed out that the DEA itself had contradicted many of these 25 claims in a DEA report from August 2016 on its decision not to initiate proceedings to reschedule marijuana, including the following:

  • “At present, the available data do not suggest a causative link between marijuana use and the development of psychosis.”
  • “The HHS concluded that new evidence suggests that the effects of smoking marijuana on respiratory function and cancer are different from the effects of smoking tobacco.”
  • “The HHS cited several studies where marijuana use did not lead to other illicit drug use. Two separate longitudinal studies with adolescents using marijuana did not demonstrate an association with use of other illicit drugs.”

By using the DEA’s own research against it, ASA forced the DEA into a corner where it had to either disavow its August 2016 report or admit that its website was incorrect. By removing the offending page, the DEA chose the latter.

Count one for the good guys.

 

Cannabis real estate lawyersSince licenses to grow, process, or sell cannabis are usually tied to a specific real property location, it is not surprising that cannabis businesses often need real estate help. The following are some basic points we try to convey to our cannabis clients about real estate in a cannabis context.

1. Location. Location. Location. Choosing the right location is important for any business, but this is especially true for a cannabis business. Finding a suitable and state-and-local-law-compliant location for a marijuana business can be difficult. Most states, cities, and counties limit where marijuana businesses can physically operate. States and cities often require cannabis businesses be at least 1,000 feet away from schools and parks because federal criminal law sentencing guidelines tack on extra sentencing time for cultivating, processing, or distributing cannabis within 1,000 feet of a school or park. Local zoning laws can also significantly restrict location options and these can vary greatly from local government to local government. Regulations that limit the number of cannabis stores or grow sites allowed in a given county are also common, as are moratoriums and outright bans.

2. Find a Landlord With Whom You Can Work. Most commercial landlords will not rent out their space to a cannabis business. Because cannabis remains illegal under federal law, landlords can face arrest for violating the federal Controlled Substances Act or, more realistically, losing their property via a civil asset forfeiture. Look what happened to the landlord in the Harborside case. The landlord-tenant relationship can be strained if the landlord is not informed of the nature of the tenant’s business and the risk associated.

3. Make Sure Your Lease Works for the Cannabis Industry. “Boilerplate” lease agreements do not work for cannabis businesses. For example, the typical Commercial Broker’s Association lease states that any illegal activity on the property will constitute a lease default. We usually write our commercial marijuana leases to forbid only those actions that violate state law and federal law with the exception of the federal Controlled Substances Act. Commercial leases also typically contain a provision governing the activities permitted on the leased property. If the tenant is a marijuana retailer, the permitted use provision should explicitly permit the “retail sale of marijuana.” Leaving the permitted use provision vague only increases the chances of the cannabis business tenant being found in breach of the lease for having conducted an activity not permitted on the property.

4. Know Your Property. Our cannabis real estate lawyers are far too frequently brought in on long simmering real estate deals only to have to tell both sides that there will need to be major changes in the deal points for the deal to work at all. Before getting too far down the negotiating path, it is wise to at least secure a real property report. These reports will show ownership history, encumbrances (such as mortgages) on the land, and any easements or other restrictions on property use. For example, if there is an unpaid mortgage on the land, the holder of that mortgage can foreclose on the property, even though the current owner was not the one who entered into the transaction. Even a tenant who is not purchasing the property should be informed of the property’s history and the risks associated with that property.

For more on cannabis and real estate, check out the following:

The future of the cannabis industry under President Trump remains hazy and Judge Neil Gorsuch’s Supreme Court nomination does little to clear the fog. Judge Gorsuch currently serves on the 10th US Circuit Court of Appeals. Though he is a native of cannabis-friendly and uber-liberal Boulder, Colorado, he is himself a conservative judge. As far as we can tell, he has never publicly opined on cannabis legalization, but he has authored a few opinions relating to cannabis that give at least a hint at his stance on cannabis.Neil_Gorsuch_10th_Circuit

In US v. Daniel and Mary Quaintance, defendants were indicted on federal charges of conspiracy and possession with intent to distribute cannabis. The Quaintances claimed protection under the Religious Freedom Restoration Act which prohibits the federal government from “substantially burdening” sincere religious exercise. The Quaintances argued that marijuana was a sacrament at their church and therefore their use cannabis use was legally protected.

The District Court denied the defendants’ motion to dismiss. Judge Gorsuch upheld the lower court’s ruling because “extensive evidence” showed that “the Quaintances’ professed beliefs are not religious but secular” and that the facts indicated “that the Quaintances don’t sincerely hold religious beliefs they claim to hold, but instead seek to use the cover of religion to pursue secular drug trafficking activities.” My reading of this case says that most judges would have ruled the same way, based on the facts.

In Family of Ryan Wilson v. City of Lafayette and Taser International, Judge Gorsuch held lawful a Colorado police officer’s fatal use of a Taser on a man fleeing a cannabis arrest. Judge Gorsuch acknowledged that the manufacturing and processing of marijuana may not be “inherently violent crimes” but that the officer was justified in assuming that a person illegally growing marijuana may be armed and so the officer was also justified in using a Taser. Yes, a person illegally growing marijuana may be armed, but so may anyone else. Judge Gorsuch’s ruling in this case seems to indicate he does not have a particularly good view of those who grow cannabis, at least illegally.

Feinberg et al. v. IRS provides the most insight into Judge Gorsuch’s thoughts on legal cannabis. In this case, a Colorado dispensary argued that Fifth Amendment protections allowed them not to report data to the Internal Revenue Service. The Fifth Amendment shields individuals from testifying to criminal activity likely to lead to prosecution. The petitioners argued that marijuana production and distribution is a crime under federal law and by reporting their marijuana business activities to the IRS they would be inviting federal prosecution. Though Judge Gorsuch ruled against the petitioners, his written analysis did not embrace the federal government’s often perplexing stance on marijuana.

Judge Gorsuch acknowledged that the federal government sends a “mixed message” on legal cannabis, with the Department of Justice instructing prosecutors not to enforce federal law in states like Colorado but with the IRS refusing to recognize business expense deductions for marijuana businesses because their conduct violates federal law:“[s]o it is that today prosecutors will almost always overlook federal marijuana distribution crimes in Colorado but the tax man never will.”

Judge Gorsuch also noted the government’s inconsistent argument as to why marijuana businesses are both illegally and yet cannot claim Fifth Amendment protection for tax purposes:

Yes, the Fifth Amendment normally shields individuals from having to admit to criminal activity. But, the IRS argued, because DOJ’s memoranda generally instruct federal prosecutors not to prosecute cases like this one the petitioners should be forced to divulge the requested information anyway. So it is the government simultaneously urged the court to take seriously its claim that the petitioners are violating federal criminal law and to discount the possibility that it would enforce federal criminal law.

Finally, and now that Trump has selected Jeff Sessions as his AG, prophetically, Judge Gorsuch noted the shaky legal footing under which the cannabis industry has flourished:

It’s not clear whether informal agency memoranda guiding the exercise of prosecutorial discretion by field prosecutors may lawfully go quite so far in displacing Congress’s policy directives as these memoranda seek to do. There’s always the possibility, too, that the next…Deputy Attorney General could displace these memoranda at anytime.”

Judge Gorsuch is only 49 years old, meaning his lifelong tenure on the highest court could span decades and will almost certainly involve a cannabis case or two. Though the above cases reveal very little about Judge Gorsuch’s position on cannabis, his overall judicial philosophy may bode well. He is a strict constructionist when it comes to interpreting our Constitution and strict constructionists tend to favor states’ rights. If Judge Gorsuch does indeed favor states’ rights, as we suspect, this should mean that he will have no problem with individual states (as opposed to the Federal Government) deciding on their own cannabis laws.

Let’s hope so.

Cannabis regulatory lawyersIn December 2016, the DEA issued a rule defining “Marihuana Extracts” to include extracts “containing one or more cannabinoids from any plant of the genus Cannabis.” This rule went into effect on January 13, 2017. That same day, The Hemp Industry Association, Centuria Natural Foods Inc., and RMH Holdings LLC filed a petition with the US Court of Appeals for the Ninth Circuit challenging that DEA rule.

The Controlled Substances Act is a federal law that determines what substances are illegal drugs. Congress authorized the Department of Justice to add and remove substances to the Controlled Substances Act (CSA), and the DOJ has delegated that authority to the DEA. The DEA promulgated the “Marihuana Extract” rule pursuant to that grant of authority, meaning that products the DEA defines as fitting the “Marihuana Extract” definition are illegal substances.

Rules can have a similar effect as laws but if a rule conflicts with a law, the law will prevail. In other words, Congressional laws that conflict with a DEA rule should outweigh the DEA rules. The Petitioners who are appealing the DEA rule are arguing that the “Marihuana Extract” rule outlaws parts of the cannabis plant that Congress specifically made legal in the CSA and in the 2014 Farm Bill.

Congress placed marijuana on Schedule I of the CSA and defined it to include all parts of the plant Cannabis sativa L., except the mature stalks of the plant and seeds incapable of germination. Stalks and products derived from those stalks are not illegal because they are not marijuana. This distinction allowed for legal production of hemp products even though marijuana remains federally illegal. The 2014 Farm Bill also allows states to implement programs to legally grow industrial hemp. “Industrial hemp” is defined to mean “the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

Prior to the “Marihuana Extract” rule, only one cannabinoid was explicitly named in Schedule I of the CSA: THC which is known for causing marijuana’s euphoric “high.” Other cannabinoids, like CBD, were not specifically prohibited. This meant products derived from mature stalks of cannabis that did not contain THC were arguably legal as no part of that product was prohibited by the CSA. Now those same products are illegal because they contain other cannabinoids that are now defined as controlled substances according to the “Marihuana Extract” definition. The definition also applies to industrial hemp grown pursuant to the Farm Bill. The Petitioners who are appealing to the Ninth Circuit argue that the DEA’s rule is inconsistent with the CSA and the Farm Bill and that the court should therefore find the rule invalid.

Petitioners also argue that the DEA failed to comply with the Administrative Procedure Act in creating this rule. In addition to complying with the CSA, the DEA must also follow the Administrative Procedure Act, which essentially sets forth the procedures governmental bodies must follow in enacting new rules. The Petitioners argue that under the APA the “Marihuana Extract” rule invalid as it:

  • Is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with other law (such as the Farm Bill and the CSA);
  • Is unconstitutional;
  • Exceeds the DEA’s statutory authority; and
  • Was created without following necessary procedures.

This is not the first time the DEA has faced legal challenges for interfering with legal hemp. In 2001-2003 the DEA attempted to treat hemp food products as Schedule I substances because they contained trace amounts of THC. The Ninth Circuit Court of Appeals ruled that the presence of THC does not alone make a product a controlled substance. Petitioners plan to use this ruling to assert that cannabinoids that occur in legal portions of the cannabis plant are not controlled by the CSA and may not be regulated as marijuana by the DEA.

Since the DEA issued this rule my firm’s cannabis regulatory lawyers have received a daily stream of calls from businesses wanting to know whether the CBD products they are producing, selling or buying are now illegal. Specifically, most of these callers want to know whether products containing CBD that are derived from hemp and do not contain THC are still legal. At this point, the jury (or really the judge) is still out and we — like everyone else — will be waiting to see how the courts rule.

Cannabis lawsMore than a year ago we started our series rating all fifty states on cannabis and last week we named Oregon as the top state. During that year, much has happened in the cannabis world, including some changes in various states that would have changed their rankings had they occurred previously. For example, we ranked Arkansas at number 40, which is now way too low for considering it has legalized medical cannabis. The same could be said of North Dakota, which we ranked at 33, but then turned around and surprised many by also voting to legalize medical marijuana.

Needless to say, many of our rankings engendered considerable controversy, particularly with respect to those states that substantially changed course after we had ranked them. So to salve at least some of you who were unhappy with our rankings, I very briefly will analyze the sort of changes we would make were we to start all over today, which we are not going to do, at least for the foreseeable future.

The Worst

41. Montana; 42. Iowa; 43. Virginia; 44. Wyoming; 45. Texas;  46. Kansas;  47. Alabama;  48. Idaho; 49. Oklahoma;  50. South Dakota.

We ranked South Dakota as the worst state for cannabis. Oklahoma and Idaho were also extremely close for this not-so-honorable distinction. These states generally have extremely harsh cannabis laws and no working form of medical marijuana, with many only allowing for High-CBD oil, if anything. Montana voted to reform its medical marijuana laws and that alone means that in any re-do Montana would rank higher for cannabis than the number 41 ranking we gave it.

The Bad

31. South Carolina; 32. Tennessee; 33. North Dakota; 34. Georgia; 35. Louisiana; 36. Mississippi; 37. Nebraska; 38. Missouri; 39. Florida; 40. Arkansas.

Like the bottom-ten, these states generally have harsh criminal penalties for cannabis and poor medical cannabis laws. This group though would look very different if we were to conduct a re-ranking since North Dakota, Florida, and Arkansas all legalized medical marijuana in November and those changes would catapult these states much higher in the rankings.

The Mediocre 

21. New Jersey; 22. Illinois; 23. Minnesota; 24. New York; 25. Wisconsin; 26. Arizona; 27. West Virginia; 28. Indiana; 29. North Carolina; 30. Utah.

These states generally have some good laws, be those fairly tolerant criminal laws or workable medical cannabis programs. Overall, these states did not change much since we ranked them. Interestingly, we probably received more criticism for our Arizona ranking than for any other state, with countless people e-mailing to insist that Arizona would be legalizing soon. Instead, Arizona was the only state that failed to approve a marijuana initiative on its ballot in 2016 and so its ranking would — if anything probably decline a few slots if we were to re-rank.

The Good

11. Maryland; 12. Connecticut; 13. Vermont; 14. Rhode Island; 15. Kentucky; 16.Pennsylvania; 17.Delaware; 18. Michigan; 19. New Hampshire;  20. Ohio.

These states are ahead of the curve with medical marijuana and had reasonable criminal penalties. However, in one of our more controversial rankings, we put Kentucky relatively high in our rankings not so much because of its mediocre medical marijuana program, but because it is a leader in reforming hemp laws.

The Best

1. Oregon; 2. Colorado; 3. Washington; 4. California;  5. Alaska; 6. Massachusetts;  7. Maine; 8. New Mexico; 9. Nevada; 10. Hawaii;

Our top ten featured the eight states that legalized recreational marijuana along with several states that have truly impressive medical marijuana programs. If we had it to do over again, we would rank Nevada right above New Mexico, but when we slotted Nevada in the 9 spot, it had yet to legalize recreational marijuana.

What do you think of our rankings now?

Barcelona lawyersOur Barcelona lawyers have lately been receiving a steady stream of calls about producing and distributing cannabidiol-based products around the world, from Spain. Cannabidiol  (CBD) is a compound found in cannabis but unlike tetrahydrocannabinol (THC), the compound in cannabis that gives users a high, CBD is non-psychoactive. Studies suggest CBD can be effective in treating epilepsy and other neuropsychiatric disorders including anxiety and schizophrenia. CBD may also be effective in treating post-traumatic stress disorder and may have anxiolytic, antipsychotic, antiemetic and anti-inflammatory properties. With so many potential benefits, it should come as no surprise that our Barcelona attorneys are so often asked about the legality of CBD oil in the European Union?” In short, it depends on what part of the cannabis plant from which the CBD oil was derived.

CBD can be extracted from marijuana plants (cannabis sativa) or from industrial hemp plants. Both are cannabis varieties but grown for a different purpose and with a different “legal personality” reflecting the legal status of extracted CBD oil in the EU. Hemp has been cultivated throughout the world for industrial and medical purposes, and for the production of useful objects such as clothing, candles, paper, and thousands of other products. Hemp oil and hemp seeds also contain many essential nutrients. In Europe and in Spain, hemp must be grown under EU regulations. Industrial hemp must contain no more than 0.2% THC on a dry weight basis. If the EU criteria are met, then a hemp producer may obtain EU certification for the product. Failure to follow protocol can lead to trouble. Local Spanish farmers producing hemp are right now facing criminal charges for crimes against public health for having not fulfilled current regulations in production. This adds uncertainty for foreign investors in finding the right provider of raw material. Medical marijuana contains high levels of THC, concentrated mainly in flowers and trichromes of the plant.

Those wishing to import CBD based products into Spain face labeling requirements. The number of CBD products available on the Spanish market has increased but most consumers are unaware of the exact amount of CBD they should take, or do not know the exact composition of the CBD oil or tincture they are buying. Clear labeling is essential when distributing CBD in Spain. A product’s label should describe the exact concentration of CBD as an active ingredient, the content of the solution, the specified amounts of each ingredient, the manufacturing method used, and the instructions for use and dosage. The label should also refer to a website with more detailed information.

Uncertainty also comes from a recent change in US law. Previously, the legal status of CBD products in the US also turned on the part of the cannabis plant from which the product was extracted. However, the Drug Enforcement Administration recently promulgated a rule creating a new “Controlled Substances Code Number” for “Marihuana Extracts” and extends that classification to extracts “containing one or more cannabinoids from any plant of the genus Cannabis.” CBD is a cannabinoid and hemp is a plant of the genus Cannabis so the rule explicitly applies to CBD products sold in the US. Though we vehemently dislike this new rule, it does mean that companies should not distribute CBD products in the US unless they are doing so pursuant to state law in a state where marijuana is legal in some form.

The Spanish market has an appetite for CBD dietary supplements that is not being met by the many other plant-based dietary products being launched and accepted by the Spanish public. The opportunities for CBD products are clearly there in both the EU and in Spain, but this is a complicated legal arena that calls for caution.

oregon

2016 was a huge year for cannabis. So we decided we would rank the fifty states from worst to best on how they treat cannabis and those who consume it. Each of our State of Cannabis posts analyzed one state. We started this series on January 10, 2016, and now, over a year later, we are ready to crown the top state for cannabis law: Oregon.

Our previous rankings are as follows: 2. Colorado; 3. Washington; 4. California;  5. Alaska; 6. Massachusetts;  7. Maine; 8. New Mexico; 9. Nevada; 10. Hawaii; 11. Maryland; 12. Connecticut; 13. Vermont; 14. Rhode Island; 15. Kentucky; 16.Pennsylvania; 17.Delaware; 18. Michigan; 19. New Hampshire; 20. Ohio; 21. New Jersey; 22. Illinois; 23. Minnesota; 24. New York; 25. Wisconsin; 26. Arizona; 27. West Virginia; 28. Indiana; 29. North Carolina; 30. Utah;  31. South Carolina; 32. Tennessee; 33. North Dakota; 34.Georgia; 35. Louisiana; 36. Mississippi; 37. Nebraska; 38. Missouri; 39. Florida; 40. Arkansas; 41. Montana; 42. Iowa; 43. Virginia; 44. Wyoming; 45. Texas;  46. Kansas;  47. Alabama;  48. Idaho; 49. Oklahoma;  50. South Dakota.

Oregon

Recreational Marijuana. Oregon voters approved Measure 91 to legalize recreational cannabis in 2014. This was two years after the failure of the Oregon Cannabis Tax Act, which appeared on the 2012 ballot and would have legalized recreational marijuana.  Measure 91 allows adults, 21 and over, to grow up to 4 plants on their property, possess up to 8 ounces of usable marijuana (dried marijuana flowers or leaves that are ready to smoke) in their home, and carry up to 1 ounce in public. Like other legal states,  marijuana cannot be consumed in public.

The Oregon Liquor Control Commission has the authority to tax, license and regulate recreational marijuana grown, sold, or processed for commercial purposes but does not regulate the home grow/personal possession provisions of Oregon law. The OLCC oversees multiple license types including producer, processor, wholesale, retail, and researcher licenses. Oregon has not limited the number of licenses it will grant, meaning that OLCC is continuously accepting applications. It also allows a single licensee to own multiple licenses (e.g., an entity can hold a producer, processor, and retail license). This differs from the approach taken by Washington, which limits the number of licenses granted and is currently not accepting new marijuana applications. Oregon’s marijuana market is open to out of state actors as the state does not impose a residency requirement. This also differs from Washington and from Colorado which require licensees to be state residents. Oregon imposes a relatively low 17% tax on recreational marijuana sales. Finally, Oregon is one of the few states to allow for cannabis delivery, although Portland, the state’s largest city, does not (yet) allow for marijuana delivery.

Medical marijuana. Oregon first legalized medical marijuana in 1998 by passing Ballot Measure 67. Oregon’s medical market is distinct from the recreational market although there is some regulatory overlap between the two. For example, Oregon medical dispensaries were authorized to sell recreational marijuana from October 1, 2016-January 1, 2017 while the recreational market took shape.

Oregon medical marijuana is regulated by the Oregon Health Authority. Individuals with a qualifying medical condition and a recommendation for medical marijuana from an attending physician can apply for a medical marijuana card. Qualifying conditions include the following:

  • Cancer
  • Glaucoma
  • Alzheimer’s
  • HIV/AIDS
  • Cachexia (wasting syndrome)
  • Severe pain
  • Severe nausea
  • Seizures, including but not limited to seizures caused by epilepsy
  • Persistent muscle spasms
  • Multiple sclerosis

Medical patients may possess up to 6 plants, which may only be grown at a registered grow site address, and up to 24 ounces of marijuana. This means patients are legally allowed to possess more cannabis than recreational users. Medical users may purchase from licensed medical marijuana dispensaries, but are limited to purchasing the following amounts in a single day

  • 24 ounces of usable marijuana;
  • 16 ounces of a medical cannabinoid product in solid form;
  • 72 ounces of a medical cannabinoid product in liquid form;
  • 16 ounces of a cannabinoid concentrate whether sold alone or contained in an inhalant delivery system;
  • Five grams of a cannabinoid extract whether sold alone or contained in an inhalant delivery system;
  • Four immature marijuana plants; and
  • 50 seeds.

Many expect Oregon’s medical and recreational cannabis regimes will eventually merge, and proposed legislation could accomplish just that.

Bottomline. Determining the top state in this series was not easy. There was significant debate among our cannabis lawyers as to whether California, Colorado, Oregon, or Washington should take top honors. Seeing as how we have offices and lawyers in California, Washington and Oregon, we must concede just a bit of bias here. Ultimately, we determined that Oregon has the best marijuana program.

One of the prime determinants for us was Oregon not having a residency requirement, as we see this as very business friendly and making it much easier for cannabis businesses to secure funding. Oregon also has shockingly low licensing fees and it does not cap the number of licenses it will grant. This means one need not be a millionaire to get into the industry and this also means there will be (and there is) substantial competition to keep cannabis prices down. Oregon also allows its cannabis licensees to vertically integrate by owning multiple license types. The state is also consumer friendly, with relatively low taxes and with laws that allow for home growing your own cannabis. Oregon has had legal medical marijuana for nearly twenty years and it used this medical market to permit early sales of recreational marijuana, evidencing the state’s willingness to take a pragmatic approach to marijuana legalization.

Oregon’s cannabis laws are not perfect, but they are the best in the nation.

Do you agree?

colorado2016 was a huge year for cannabis. As a result, we are ranking the fifty states from worst to best on how they treat cannabis and those who consume it. Each of our State of Cannabis posts analyzes one state and our final post will crown the best state for cannabis. As is always the case, but particularly so with this series, we welcome your comments.

We have reviewed all 50 states and are now almost ready to reveal our top pick when it comes to cannabis. This post focuses on the runner-up, Colorado, which along with Washington, was the first state to vote to legalize recreational marijuana.

Our previous rankings are as follows: 3. Washington; 4. California;  5. Alaska; 6. Massachusetts;  7. Maine; 8. New Mexico; 9. Nevada; 10. Hawaii; 11. Maryland; 12. Connecticut; 13. Vermont; 14. Rhode Island; 15. Kentucky; 16.Pennsylvania; 17.Delaware; 18. Michigan; 19. New Hampshire; 20. Ohio; 21. New Jersey; 22. Illinois; 23. Minnesota; 24. New York; 25. Wisconsin; 26. Arizona; 27. West Virginia; 28. Indiana; 29. North Carolina; 30. Utah;  31. South Carolina; 32. Tennessee; 33. North Dakota; 34.Georgia; 35. Louisiana; 36. Mississippi; 37. Nebraska; 38. Missouri; 39. Florida; 40. Arkansas; 41. Montana; 42. Iowa; 43. Virginia; 44. Wyoming; 45. Texas;  46. Kansas;  47. Alabama;  48. Idaho; 49. Oklahoma;  50. South Dakota.

Colorado

Recreational Marijuana. Colorado voters approved Amendment 64 in November 2012, legalizing recreational marijuana. In Colorado, adults 21 and over can possess up to one ounce of marijuana of useable marijuana. Colorado allows for home grows, meaning adults are allowed to grow cannabis plants in their homes. The state allows up to six marijuana plants in a private and locked space in a residence and a person may possess all marijuana grown from those plants, so long as that marijuana stays on the premises.

Colorado’s recreational marijuana market is the nation’s oldest. Though Washington and Colorado both voted to legalize marijuana on the same date, Colorado was the first to implement its recreational market. That market is made up of licensed cultivation facilities, product manufacturing facilities, testing facilities, and retail stores. The Colorado Department of Revenue oversees Colorado’s licensed cannabis entities. According to the Department’s website, Colorado’s market is currently made up of 441 retail stores, 623 cultivation facilities, 241 product manufacturers, and 13 testing facilities. Colorado cannabis eclipsed $1 billion in sales in only the first ten months of 2016 according to Fortune.

Colorado (Denver, actually) is in the forefront (sort of) on public consumption of cannabis. Denver voters approved Initiative 300 to allow private businesses to offer space for their patrons to consume cannabis. However, the Liquor Enforcement Division of the Colorado Department of Revenue recently approved a rule prohibiting businesses with a liquor license from applying for cannabis consumption permits under Initiative 300. This new rule will mean that Denver bars and restaurants that serve alcohol cannot also allow their patrons to use cannabis on-site.

Medical Marijuana. Colorado first approved the medical use of marijuana in 2000 when Colorado voters approved Amendment 20. Patients may possess up to 2 ounces of marijuana and may cultivate no more than six marijuana plants. Doctors may recommend more to treat a patient’s specific medical needs. The following are qualifying conditions for which a patient may use medical cannabis:

  • Cancer
  • Glaucoma
  • HIV/AIDS
  • Cachexia (wasting syndrome)
  • Persistent muscle spasms
  • Seizures
  • Severe nausea
  • Severe pain

Colorado patients may purchase cannabis at licensed medical dispensaries at a lower tax rate than recreational users. Colorado’s medical cannabis industry continues to operate alongside its recreational cannabis market.

Bottomline. Colorado ranks so high on our list largely because it has a proven history of being on the cutting edge of cannabis reform. It was the first to implement recreational marijuana and it has had an operational medical market for nearly twenty years. Colorado is now moving forward with allowing public consumption of cannabis as well. The cannabis industry is booming in Colorado, with profits from cannabis exceeding initial projections. One could argue that Colorado’s successful legalization has done more for legalization nationwide than that of any other state. One could also make a good argument for Colorado having done more to end the stigma surrounding cannabis than another state.

Next week we will conclude this series by revealing our number one cannabis state and. Our number one state owes a lot to Colorado and to Washington (our number three state) for its number one ranking. That state achieved its lead ranking by having been able to learn from the two great states (Colorado and Washington) that preceded it on legalizing cannabis.

Stay tuned.

Washington State cannabis lawyers
Washington State cannabis laws. Very very good.

This is proving to be a big year for cannabis. As a result, we are ranking the fifty states from worst to best on how they treat cannabis and those who consume it. Each of our State of Cannabis posts will analyze one state and our final post will crown the best state for cannabis. As is always the case, but particularly so with this series, we welcome your comments. As a result of the overwhelming success of many cannabis initiatives this November, all the remaining states in this series have legalized the adult use of recreational marijuana. This week we cover Washington, who along with Colorado, was the first to legalize recreational marijuana.

Our previous rankings are as follows: 4. California;  5. Alaska; 6. Massachusetts;  7. Maine; 8. New Mexico; 9. Nevada; 10. Hawaii; 11. Maryland; 12. Connecticut; 13. Vermont; 14. Rhode Island; 15. Kentucky; 16.Pennsylvania; 17.Delaware; 18. Michigan; 19. New Hampshire; 20. Ohio; 21. New Jersey; 22. Illinois; 23. Minnesota; 24. New York; 25. Wisconsin; 26. Arizona; 27. West Virginia; 28. Indiana; 29. North Carolina; 30. Utah;  31. South Carolina; 32. Tennessee; 33. North Dakota; 34.Georgia; 35. Louisiana; 36. Mississippi; 37. Nebraska; 38. Missouri; 39. Florida; 40. Arkansas; 41. Montana; 42. Iowa; 43. Virginia; 44. Wyoming; 45. Texas;  46. Kansas;  47. Alabama;  48. Idaho; 49. Oklahoma;  50. South Dakota.

Washington

Recreational marijuana. Washington State legalized the recreational use of marijuana in 2012 when its citizens voted to pass of Initiative 502. Under Washington State law, adults over the age of 21 can legally possess up to one ounce of marijuana flower, sixteen ounces of marijuana-infused product in solid form, seventy-two ounces of marijuana-infused product in liquid form, or seven grams of marijuana concentrate. The Washington State Liquor and Cannabis Board regulates Washington’s cannabis market, creating and enforcing rules regarding marijuana.

Washington’s marijuana market mainly consists of three different license types: producer, processor, and retail licenses. To a certain extent, cannabis licensees cannot vertically integrate because an individual cannot have an interest in all cannabis licensing types. A retail license holder may have no interest in a producer or processor license. However, a licensee may possess both a producer and processor license. To qualify for any Washington State cannabis license, one must have at least six months of residency in Washington State.

Washington State requires residency compliance from anyone who qualifies as a “True Party of Interest,” which means anyone who either exercises “control” of the cannabis company (control is not defined) or who receives or is entitled to receive either net or gross profits from a licensee. By way of a couple examples, True Parties of Interest include anyone who holds stock in a corporation and it includes the spouses of any stockholders. Every True Party of Interest in a Washington State cannabis business must be vetted by the Liquor and Cannabis Board and must have resided in Washington for at least six months, same as a cannabis licensee.  Failure to disclose a True Party of Interest leads to instant cancellation of a license.

The Washington State Liquor and Cannabis and Cannabis Board  is not currently accepting applications for cannabis producer, processor, or retail licenses. This means Washington’s cannabis market is currently closed to newcomers seeking a new license, but it it not closed to those seeking to get into the Washington State cannabis industry by buying outright or by buying into an existing licensed Washington State cannabis business.

Medical Marijuana. In November of 1998, Washington voters approved Initiative 692, providing legal immunity to patients using medical marijuana. In 2011, the Washington State Legislature passed SB 5073, allowing patients to possess up to 15 cannabis plants and 24 ounces of usable cannabis. The bill required the Washington State Departments of Health and Agriculture to register and license cannabis dispensaries. However, those provisions and various other provisions relating to dispensaries were vetoed by then-Governor Christine Gregoire. What was left was a semi-legal gray medical marijuana market.

I-502 created a legal recreational cannabis market independent of the existing medical market. This dual channel cannabis system radically changed in 2015 when the Washington State Legislature merged Washington State’s medical and recreational cannabis markets by passing SB 5052 and HB 2136. Among other things, these two new laws required both recreational and medical marijuana in Washington State be produced, processed, and sold by licensed cannabis entities.

Today, Washington State retail cannabis stores must obtain a medical marijuana endorsement to sell medical cannabis, though there is no legal distinction between recreational and medical cannabis itself. Instead, the distinction between recreational and medical cannabis is “in the eye of the beholder,” meaning that if a medical patient who obtains authorization from a health care professional uses cannabis to treat his or her ailment, it is medical.

The amount of medical marijuana a patient can possess depends on whether the patient decides to register with the state’s medical marijuana database. Medical cannabis patients who register in the medical marijuana database may purchase the following amounts of cannabis, free of sales tax, from a medically endorsed retail store:

  • Three ounces of usable marijuana
  • Forty-eight ounces of marijuana-infused product in solid form
  • Two hundred sixteen ounces of marijuana-infused product in liquid form or
  • Twenty-one grams of marijuana concentrate

Patients in the Washington State medical marijuana database are also allowed to grow from six to fifteen plants, as recommended by their doctor, and possess up to eight to sixteen ounces of marijuana produced from those plants. Patients who elect not to enter the Washington State medical marijuana database may purchase only the amounts allowed for recreational users and grow four to six plants for medical use and possess up to six ounces of usable marijuana from those plants. These patients also do not get to purchase their cannabis (even if for medical use) free of sales tax.

Bottomline. Washington is a pioneer in the movement to reform marijuana laws. Though it has a one of the most sophisticated marijuana markets in the country and really good cannabis laws overall, Washington does not quite rise to the very top of our state cannabis ranking. This is because the two remaining states, Colorado and Oregon, have implemented legal marijuana in a way that is more patient-friendly and that allows for greater competition among licensed marijuana entities and generally lower prices to the consumer. But the difference between Washington and the remaining two states is minuscule, as all three of these states (Washington, Colorado and Oregon) have extremely favorable cannabis laws, that truly are considerably better and more established than any of the other states. Washington State’s excellent marijuana laws and its overall tenor of enforcement make Washington number three in our State of Cannabis series.

 

californiaThis is proving to be a big year for cannabis. As a result, we are ranking the fifty states from worst to best on how they treat cannabis and those who consume it. Each of our State of Cannabis posts will analyze one state and our final post will crown the best state for cannabis. As is always the case, but particularly so with this series, we welcome your comments. As a result of the overwhelming success of many cannabis initiatives this November, all the remaining states in this series have legalized the adult use of recreational marijuana. This week we cover the Golden State: California.

Our previous rankings are as follows: 5. Alaska; 6. Massachusetts;  7. Maine; 8. New Mexico; 9. Nevada; 10. Hawaii; 11. Maryland; 12. Connecticut; 13. Vermont; 14. Rhode Island; 15. Kentucky; 16. Pennsylvania; 17. Delaware; 18. Michigan; 19. New Hampshire; 20. Ohio; 21. New Jersey; 22. Illinois; 23. Minnesota; 24. New York; 25. Wisconsin; 26. Arizona; 27. West Virginia; 28. Indiana; 29. North Carolina; 30. Utah;  31. South Carolina; 32. Tennessee; 33. North Dakota; 34.Georgia; 35. Louisiana; 36. Mississippi; 37. Nebraska; 38. Missouri; 39. Florida; 40. Arkansas; 41. Montana; 42. Iowa; 43. Virginia; 44. Wyoming; 45. Texas;  46. Kansas;  47. Alabama;  48. Idaho; 49. Oklahoma;  50. South Dakota.

California

Recreational marijuana. On November 8, 2016 California voters approved the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). California is the largest state in the nation and after the AUMA is fully implemented, the 38 million people (children excluded) who reside in California will have access to legal marijuana. Needless to say, this is huge.

The AUMA is a complicated, 62-page measure. At its most basic, the AUMA allows adults (21 and over) to possess roughly an ounce of cannabis flower, eight grams of concentrate, or up to six plants. It also creates a regulated market for the production, manufacture, and sale of marijuana.

The AUMA creates 19 distinct cannabis licenses:

  1. Type 1 = Cultivation; Specialty outdoor; Small.
  2. Type 1A = Cultivation; Specialty indoor; Small.
  3. Type 1B = Cultivation; Specialty mixed-light; Small.
  4. Type 2 = Cultivation; Outdoor; Small.
  5. Type 2A = Cultivation; Indoor; Small.
  6. Type 2B = Cultivation; Mixed-light; Small.
  7. Type 3 = Cultivation; Outdoor; Medium.
  8. Type 3A = Cultivation; Indoor; Medium.
  9. Type 3B = Cultivation; Mixed-light; Medium.
  10. Type 4 = Cultivation; Nursery.
  11. Type 5 = Cultivation; Outdoor; Large.
  12. Type 5A = Cultivation; Indoor; Large.
  13. Type 5B = Cultivation; Mixed-light; Large.
  14. Type 6 = Manufacturer 1.
  15. Type 7 = Manufacturer 2.
  16. Type 8 = Testing.
  17. Type 10 = Retailer.
  18. Type 11 = Distributer.
  19. Type 12 = Microbusiness.

The AUMA allows for vertical integration of these licenses, with the exception of testing licensees; if you have a testing license, you cannot hold another type of license. This means one entity may hold licenses in multiple stages of production, possibly controlling cannabis from seed-to-sale.

State residency is required for licensure, as indicated by the following text in the AUMA:

No licensing authority shall issue or renew a license to any person that cannot demonstrate continuous California residency from or before January 1, 2015. In the case of an applicant or licensee that is an entity, the entity shall not be considered a resident if any person controlling the entity cannot demonstrate continuous California residency from and before January 1, 2015.

This provision expires on December 31, 2019, unless the California legislature extends it. This essentially creates a three-year residency requirement for California applicants. It is not clear who will be considered a “controlling” person of an entity and we expect the state to provide guidance on this issue as the AUMA is implemented.

Medical Marijuana. Twenty years ago, California became the first state to implement a workable medical marijuana program and the laws and rules have developed over time. In California, a patient may use medical cannabis upon receiving a approval from a physician. Patients may possess enough cannabis necessary for their personal medical use, but this amount must be reasonable and in compliance with any local ordinances that may limit personal amounts. Patients can purchase cannabis from cooperatives and dispensaries. Patients have the option to obtain a state ID card showing they are allowed to use medical cannabis. Under the AUMA, these ID cards may also allow for a local tax exemption.

The AUMA is intended to regulate the non-medical use of marijuana but, there will be some overlap in the agencies regulating cannabis under the AUMA. The “Bureau of Marijuana Control”, a sub-agency of the Department of Consumer Affairs will regulate and license California’s recreational marijuana market. This sub-agency is distinct from the Bureau of Medical Cannabis Regulation (BMCR) which oversees the medical market. However, the AUMA makes clear that it will “consolidate and streamline regulation and taxation for both non-medical and medical marijuana.” This means the BMC may eventually subsume the BMCR. The AUMA also reinforces stricter requirements on physicians who authorize medical marijuana use.

Californians should look at the cannabis progression in Washington State as an example of what may end up happening with recreational marijuana legalization in California.  When Washington Initiative 502 passed in 2012 and legalized recreational marijuana, many medical marijuana activists were concerned about its impact on medical pot and on July 1, 2016, the two markets (recreational and medical) officially merged. California is distinct from Washington because medical cannabis is already regulated by state and local agencies. Washington’s medical market was largely unregulated when I-502 passed. Time will tell what impact the AUMA has on California’s medical marijuana, but there is a good chance that California too will eventually see a merger of its medical and recreational cannabis regimes.

Bottomline. California legalized medical marijuana in 1996, becoming the first state to allow cannabis for medical use.  The AUMA is a detailed measure that should lead to a robustly regulated marijuana market. California legalization may be the tipping point that leads to legalization at the federal level. California has the potential to be the top cannabis state in the nation (by far), and we expect California’s ranking among the states to only rise. But for now, we rank it number 4, making it  our top state that has yet to implement a recreational program, but behind the three states that already have full-on recreational cannabis programs in place — Colorado, Oregon and Washington.

Our California cannabis attorneys are constantly writing about California’s cannabis laws and so if you want to read more about California, click California cannabis for all of our California articles.