Washington State cannabis delivery serviicesAre cannabis delivery services legal in Washington State? 

Strong demand for home-delivery cannabis services in Washington – and particularly Seattle – is apparent, as demonstrated by the numerous delivery services operating in plain sight, as revealed by a simple Google or Yelp search. Yet, such operations remain illegal following the passage and implementation of I-502. In 2016, Seattle proposed a law to permit a pilot project for legal delivery in Seattle (which failed in the state legislature). This year, Seattle officials are pushing for similar legislation, with certain modifications, that they hope will open the door to cannabis delivery throughout the state.

What’s the status quo in Washington State?

Cannabis delivery services are as old as old-school weed dealing itself. The common trope is of the marijuana dealer who delivers late (and stays past their welcome) – and only after multiple calls or texts. Today’s pot delivery services, particularly in states with legal medical or adult-use cannabis, are exponentially more professional operations – yet, in large part, they remain illegal under both state and federal law. Such is the case in Washington State.

What happened with the 2016 proposal?

Last January Seattle city officials supported Washington State House Bill 2368, which would have authorized a pilot plan for home cannabis delivery in Washington in cities with 650,000 or more people – effectively just Seattle.

HB 2368 was seen by as “Seattle-centric” and lawmakers outside Seattle and greater King County did not vote for the bill because it would not directly benefit their constituents. Also, Washington can be a deceptively conservative in general and in terms of cannabis, especially on outside its urban centers and especially on the East side of the mountains. Ultimately, HB 2368 did not become law.

How does the new proposal differ?

MyNorthwest.com reports that Seattle City Attorney Pete Holmes intends to broaden support for the 2017 bill by allowing home cannabis delivery statewide. Such marijuana delivery services would still be subject to county and municipal regulations and prohibitions.

Will it pass?

The bill’s ultimate fate is unclear. City Attorney Pete Holmes said in January that the bill was in the early stages of finding a bill number and sponsor, though he was optimistic going forward. Ultimately, only time will tell if this or a different bill authorizing cannabis delivery eventually becomes law in Washington State. Though it is far from certain, I think pot delivery services will within the next few years become legal in Washington and I say this because the longer Washington legalization goes on without the sky falling down (and I do not foresee the sky falling down), the more Washingtonians will come to realize it is no big deal and the less they will care about restricting it by doing things like forbidding cannabis deliveries.

Why is this important for the future of cannabis reform in Washington State?

Other jurisdictions with legal medical or adult-use cannabis have experimented with home delivery, and “gray market” home delivery operations are thriving in Washington and other state-legal cannabis states since before legalization. This despite many arrests in Seattle.

The demand for cannabis delivery ensures and proves its durability as a market force. Allowing illegal delivery operations to prosper erodes the legitimacy of legal cannabis markets, and undercuts its economic rationale. Our cannabis clients resent having to pay big taxes and be subject to massive regulations while at having to compete with illegal operations that avoid both of those things. The solution is to permit legal home delivery for medical and/or recreational users and to license and treat those cannabis delivery services  as any other cannabis business.

Why is this important to medical patients and adult-use cannabis consumers?

The ability to legally provide home cannabis delivery services is particularly important to medical marijuana patients with limited mobility or other disabilities that make it impossible or unduly burdensome for them to personally go to a dispensary to obtain cannabis. Also, even adult-use recreational patients can benefit from the convenience and added value of a cannabis delivery service. Just look at Amazon Prime.

For its part, earlier this month a Seattle Times editorial endorsed legalizing cannabis deliveries.

 

Cannabis Business LawyersOur cannabis business lawyers are always getting pitched on “creative solutions” to the cannabis industry’s banking problem. Because marijuana is still federally illegal, most banks will not provide financial services to marijuana businesses, even though FinCEN issued guidelines to allow financial institutions to provide bank accounts to the state-legal pot businesses. Many tout Bitcoin as the solution.

Bitcoin is viewed as the world’s first completely decentralized currency. Unlike the Dollar, the Euro, the Yuan, etc., no central government manages or backs Bitcoin. It is also called a “cryptocurrency” — a digital currency that uses encrypted services to generate units of the currency and to transfer funds.  You can read primers on it here and here. Using a Bitcoin wallet enables customers and businesses to engage in transactions without using paper currency and without going through an intermediary institution like a bank. Its chief appeal to the marijuana industry is that allows for currency transfers with little to no need for a bank. There are though significant issues involved with using Bitcoin in the marijuana industry and law enforcement associates Bitcoin with the illegal narcotics trade (see the Silk Road).

At the beginning of January, Washington State Senator Ann Rivers (who was instrumental in securing passage of SB 5052, which essentially wound down Washington’s existing medical marijuana cooperative system) proposed a bill to ban Bitcoin in Washington State’s marijuana marketplace. Senator Rivers says that her proposed bill to ban Bitcoin was brought to her by “an organization” looking to preserve “the transparency that we have in our legalized marijuana system in our state.” The eight-page SB 5264 adds to the definitions section of RCW 69.50.101 (Washington’s Controlled Substances Act) the term “virtual currency,” and then proceeds to ban it for marijuana sales. Under the bill, “virtual currency” would be defined as follows:

a digital representation of value used as a medium of exchange, a unit of account, or a store of value, but does not have legal tender status as recognized by the United States government. “Virtual currency” does not include the software or protocols governing the transfer of the digital representation of value or other uses of virtual distributed ledger systems to verify ownership or authenticity in a digital capacity when the virtual currency is not used as a medium of exchange.

The bill then states that “[a] marijuana producer, marijuana processor, or retail outlet must not pay with or accept virtual currency for the purchase or sale of marijuana or any marijuana product.”

The Bitcoin ban bill was debated at length in Olympia and Senator Rivers’ cited to the Cole Memo prohibiting the “shrouding” of anyone who participates in Washington’s marijuana industry as its justification. Senator Rivers contends that BitCoin can’t meet the 2014 FinCEN transparency guidelines. Tom Parker and Kenneth Berke of PayQwick also testified that Bitcoin does not satisfy FinCEN transparency guidelines and allowing it for Washington State marijuana businesses will invite federal enforcement and thereby harm the cannabis industry as a whole. On the other side of the argument, Ryan Hamlin and Jon Baugher of POSaBIT testified that BitCoin is perfectly traceable, auditable, verifiable, and transparent, and that the state needs to better understand BitCoin transactions before it bans its use in the marijuana industry. James Paribello, legislative liaison for the Washington State Liquor and Cannabis Board, testified that the Board essentially has no opinion on the use of BitCoin or its proposed ban, so long as the Department of Financial Institutions allows it, which it currently does.

Given the uncertainty of the state-legal marijuana industry under Trump and Sessions and the precarious staying power of the Cole Memo and the FinCEN guidelines, Bitcoin may just be too risky for Washington State’s marijuana industry. But if the state can get educated about and comfortable with BitCoin, virtual currency may be here to stay in the Evergreen State’s marijuana industry.

Stay tuned.

California cannabis marijuanaLast Friday, the California Bureau of Medical Cannabis Regulation (BMCR) announced in a press release that it has begun seeking applicants to participate in a Cannabis Advisory Committee. The role of the Committee will be to help the Bureau and other state agencies – the Department of Food and Agriculture (DFA) and the Department of Public Health (DPH) – develop cannabis “regulations that protect public health and safety while ensuring a regulated market that helps reduce the illicit market for cannabis.”

The Committee is required under Proposition 64 and is one of several steps needed if California is to keep its promise to begin issuing cannabis business licenses by Prop 64’s January 1, 2018 deadline. The agencies still have their work cut out for them, including the challenge of reconciling the conflicting provisions under the Medical Cannabis Regulation and Safety Act (MCRSA) and Proposition 64.

The Bureau and other state agencies have been holding pre-regulatory meetings throughout California over the past year to gather information from cannabis stakeholders, which it is now using to draft initial state regulations for the various cannabis license types. According to the Bureau’s communications director, Alex Traverso, the Cannabis Advisory Committee will meet several times during the next year to review drafts of regulations and share their opinions to ensure that California rule makers are on the “right path.”

They are specifically seeking input from representatives of the cannabis industry, labor organizations, local or state law enforcement, state or local agencies, and from communities disproportionately affected by past federal and state drug policy, as well as cannabis cultivators, environmental experts, patient advocates, physicians, public health experts, social justice advocates, individuals with expertise in regulating intoxicating substances for adult use, and individuals with expertise in the medicinal properties of marijuana.

The application to join the Cannabis Advisory Committee includes requests for any relevant work history in the cannabis industry, and past or present affiliation with a cannabis company, relevant qualifications to serve on the Committee, an explanation of why you wish to serve on the committee, and any potential conflicts of interests. Applicants will also need to provide four references and submit a resume and letters of recommendation. In addition, selected committee members may be required to complete a Fair Political Practices Commission (FPPC) Form 700, Statement of Economic Interest disclosing their personal assets and income.

Committee members will be appointed by the Director of the Department of Consumer Affairs (DCA), Awet Kidane. The DCA is not looking to fill a specific amount of committee seats, but instead the committee’s size will be determined by the number of qualified applicants. Also, the positions on the Cannabis Advisory Committee are voluntary, which means you will not be paid for serving on the Committee, but members are entitled to receive reimbursement of their travel expenses to approved meetings, which will be held in the state’s capitol in Sacramento.

If you’re interested in applying, the bureau says it will keep the application process open for at least a month. For those currently involved in or hoping to join the California cannabis industry, this is an important opportunity to help shape the laws that will impact your/our future. The best way to affect marijuana law and policy is to get involved, whether it’s at the local, state, or federal level.

Washington state cannabis licenseAdvocates for cannabis reform often point to favorable studies documenting the positive medicinal and wellness effects of marijuana to debunk federal law scheduling of cannabis as a substance on par with heroin. Opponents of cannabis reform invoke statistics that purport to show a relationship between cannabis and crime and violence. What both sides must agree upon, however, is the need for new, in-depth, and nuanced research of legal cannabis’ effect on society. At least if they belive in scientific research over anectdote.

Washington State is  moving in this direction with its cannabis research licenses. Here is what you need to know about these cannabis research licenses.

What is a Washington cannabis research license? Washington’s cannabis research license has been set up to facilitate further study of cannabis’ scientific, medical, and industrial properties and applications. According to Washington statute RCW 69.50.372, marijuana research license holders  may “produce, process, and possess marijuana for … limited research purposes.” The law restricts the scope of permitted research to the generously broad categories of: tests of chemical potency and composition; clinical investigation of cannabis-derived drugs; tests regarding the efficacy and safety of cannabis as a medical treatment; and genomic or agricultural research.

Along with a whole host of other factors, these new cannabis research licenses will help solidify Washington state – more specifically the Seattle area – as a hotbed for cannabis research. Existing Seattle cannabis and biotech and technology firms (almost all of which are quite open to cannabis), along with the city’s vibrant vibrant start-up scene should combine to accelerate worthy cannabis research for a wide range of applications.

What is the latest regarding Washington cannabis research licenses? The Washington state legislature passed a law authorizing licenses for researching cannabis’ medical properties, chemical composition, and agricultural potential last year. Following a rule making period, the Washington State Liquor and Cannabis Board has indicated it will begin accepting applications March 1, 2017. However, absent swift action by the Washington state legislature, this date will probably get pushed back by a requirement in the research licensure law discussed below.

Why might there be a delay in implementing cannabis research in Washington? The law that created cannabis research licenses also mandates that applicants and their research projects be vetted and approved by third-party scientific reviewers. The reviewers are required to audit the research and its reports. This is a an understandable precaution given the state law’s conflict with federal law (which still pretty much makes cannabis illegal for any purpose), and a fair method for ensuring the licenses are being used for their intended purpose.

The problem is that Washington State has not yet approved any third-party scientific reviewers, and no such approvals appear to be forthcoming. Many expected Life Sciences Discovery Fund to serve as a scientific reviewer, but for what appears to be funding reasons, it has not stepped up. Nor unfortunately, have either the University of Washington or Washington State University or any of the other institutions of higher learning in the state. Until a third-party scientific reviewer is approved, applicants will be in limbo.

The new cannabis research law also requires the Washington State Liquor and Cannabis Board select a scientific reviewer to review the research project and determine the merit of its quality, design, and impact; the adequacy of its personnel, expertise, and other functional capacity; and whether the quantity of marijuana cultivated matches the needs of these objectives. No scientific reviewer, no cannabis research.

Why is this important? Lack of legal and high level cannabis research is a classic “chicken and egg” problem for cannabis legalization. Cannabis is illegal in large part because the powers that be claim it to have no legally recognized medicinal or therapeutic value. And yet — surprise, surprise, efforts to conduct high level research that might show the contrary gets suppressed by a lack of legal access to cannabis and by a reluctance by many to fund research that could be shut down as illegal. Something will have to give in order to overcome this impasse, and it is not sure when or how that might happen.

As cannabis lawyers, we find all of this extremely frustrating, as it not only means that those needing cannabis for medical reasons are cheated out of their medicine in states where cannabis is not legal even for medical treatments, but it also means that in cannabis legal states like Washington, far too many patients do not not get the ideal strain and quantities and ingestion method for their particular conditions because there is no high level research on these things. It also means that countries like Israel and Canada will continue to surpass the United States in cannabis research and technology.

Bottom Line: Do not expect your Washington State cannabis research license soon. And that is too bad.

California marijuana license
California marijuana licenses: start now, but stay flexible

California lawmakers have been tasked with the difficult challenge of reconciling the Medical Cannabis Regulation and Safety Act (MCRSA), which legalized commercial medical marijuana activities, with Proposition 64, which legalized recreational marijuana use for all adults and is set to begin licensing commercial recreational businesses by January 1, 2018. We’ve previously blogged about this challenge and the state’s efforts to meet the 2018 deadline here, here and here.

The many conflicts between the MCRSA and Prop 64 include different timelines, license categories, rules on ownership, residency requirements, and tracking systems. Another key difference is that the MCRSA places limits on vertical integration, generally allowing cannabis licensees to hold state licenses in up to two separate categories and only in certain combinations. The MCRSA also does not allow licensed cannabis cultivators and manufacturers to hold a marijuana distribution license. Licensed cannabis cultivators and manufacturers in the State of California instead must work with an independent distributor to transport cannabis products to labs for testing and quality assurance before they enter the consumer market.

The California cannabis industry is divided on both vertical integration and distribution issues, and the side you take most likely depends on your views on allowing big business to operate under the new regulated cannabis regime. Growers and dispensaries in California are also divided on the issues. California dispensaries generally believe that the use of independent distributors is unnecessary and will ultimately increase costs for the consumers, small mom-and-pop operations worry that without limits on vertical integration they will be squeezed out by bigger, well-funded investments groups.

In contrast, Prop 64 places no limits on vertical integration, except that all testing labs must be independent and large Type 5 grows will not be able act as their own distributors (but these licenses won’t even kick in until 2023). For those hoping to create a vertically integrated cannabis business in California in 2018, Prop 64 offers a nice alternative to avoid the MCRSA’s limits and independent distribution requirements altogether.

However, this option could be gone by the time state licenses are issued. As California legislators work to develop regulations for both the MCRSA and Prop 64 that can operate simultaneously and in congruence, special interests are sending their lobbyists to the Capitol to try and influence the upcoming laws. Labor unions, investors, and entrepreneurs are all seeking to shape the laws that will most favor their members and bottom lines for when the California cannabis gold rush starts in earnest.

The coalition of Teamsters, local government, police chiefs, a Sacramento distribution company called RVR, and the California Growers Association (CGA) that helped draft the MCRSA bills wants to see the same limits on vertical integration and independent distribution requirements extended to recreational businesses under Prop 64. On the other side, cannabis manufacturers, the United Food and Commercial Workers (UFCW), and the California Cannabis Industry Association (CCIA) want to see a more free-market approach under the current Prop 64 model. They argue this is the model California voters supported when they passed Prop 64 last November.

To make changes to Prop 64, California legislators will need to pass any amendments by a two thirds vote. We advise cannabis license hopefuls to start NOW to prepare for California cannabis licensing, but remain ever mindful that much can change between now and January 1.

The Emerald TriangleCalifornia Cannabis: Trinity County is a legendary marijuana cultivation region in California. Since passage of the Medical Cannabis Regulation and Safety Act (MCRSA), the three counties that make up the Triangle, Mendocino, Humboldt, and Trinity, have all been examining local marijuana regulations for cultivation. With Proposition 64, it’s becoming ever more important for local governments to set rules for their local marijuana markets through local licensing and permitting, and the Emerald Triangle has begun doing exactly that.

To date, Humboldt has adopted regulations and their application window for cultivation permits has come and gone. Mendocino is still weighing permitting and zoning ordinances in deciding how to regulate cultivation within its borders. Most recently, Trinity County decided to extend its deadline for commercial cultivation registration to February 28th.

So, if you haven’t had the chance to apply for a Trinity cultivation registration permit, you still have a bit of time to do so. And here’s what you need to know to secure one of those coveted permits from the Trinity County Planning Department:

  1. Trinity is only allowing for cultivation under the MCRSA and Proposition 64 at this time. And under cultivation, Trinity will only permit Type 1, 1B, 1C or Type 2 or 2B cultivators, which represent relatively small-sized grows.
  2. Applicants have to show that they’re registered with the North Coast Regional Water Quality Control Board and that they’re in good standing with the Board’s order (#2015-0023) regarding waste discharge and water quality.
  3. Applicants have to apply for and secure a Board of Equalization (BOE) seller’s permit.
  4. You cannot have any “serious felony convictions” or a Schedule I, II, or III felony (excluding non-serious felony convictions for marijuana-related crimes).
  5. Applicants have to demonstrate at least one year of residency in Trinity County prior to the application date.
  6. Applicants have to submit an accurate site plan of the entire parcel.
  7. Applicants that are business entities have to provide a breakdown showing the ownership of the entity.
  8. Proof of a deed to the cultivation land or a lease authorizing cultivation on the proposed land is required.
  9. Applicants have to provide to the County one of the following documents:
    1. Documents of incorporation
    2. Documents of taxes paid to BOE
    3. Proof of contracts with dispensaries
    4. Receipt of a BOE Seller’s number
    5. Employer Identification Number
  10. Only one application countywide may be submitted on behalf of one person, entity, or per legal parcel.
  11. Grow site registration is limited to 500 applicants. Thus far, County records show only 12 registrations have issued.
  12. There are also various setback and zoning requirements where marijuana cultivation is not allowed, including the following:
    1. Within 1,000 feet of any youth-oriented facility, a school, any church, or residential treatment facility and within 500 feet of an authorized school bus stop.
    2. In any location where marijuana is visible from the public right of way.
    3. A legal parcel without a permitted/legal housing structure, or without an active building permit.
    4. Within the Trinity County jurisdiction of the Whiskeytown-Shasta-Trinity National Recreation area and within the lease lots within the Ruth Lake Community Services District.
    5. Within the Timber Production Zones with an exception for applicants who can show enrollment under/compliance with the Regional Water Board’s order #2015-0023.
    6. Within the R1, R2, and R3 zones.
    7. Within 350 feet of a “residential structure” on any adjoining parcels.
    8. Within 30 feet from any property line.

Applicants also must satisfy a variety of performance to keep their registrations, including noise level standards, surface water restrictions, water diversion restrictions, erosion restrictions, fencing, security and storage requirements, lighting restrictions, and applicable California Fire and Fish and Wildlife standards.

As for fees, for 2016 Type 1 and 2 grows, you’re looking at a $2,500 fee “plus $1,000 towards the general plan update.” For registration after 2016 (assuming the County still allows it), Type 1 and 1B cannabis grows will have to pay $4,000 plus $1,000 towards the general plan update, Type 1C grows will have to pay $2,000 plus $250 towards the general plan update, and Type 2 and 2B grows will pay $5,000 plus $1,000 towards the general plan update.

Trinity’s commercial cultivation program permit application is relatively straightforward. Applicants must first schedule an appointment with the Department of Planning and then submit their application (with all required documentation and attachments) at that appointment. The actual permit will only issue after your cannabis cultivation application is approved and and after an initial onsite inspection ensures your application actually reflects what you’ve built out and set up for your marijuana grow site.

With February 28 fast approaching anyone interested in securing a Trinity County cultivation license should definitely get moving right away to gather up the documentation necessary to submit a top-tier and timely application to the County.

 

Cannabis Marijuana pot weedThe world of cannabis has been abuzz since November with anxiety over what a Trump administration could mean for the industry and the future of state- and federal-level cannabis reforms. This was only made worse by the nomination of notoriously anti-marijuana senator Jeff Sessions as Attorney General. Following his party-line approval by the Senate Judiciary Committee yesterday, Sessions is likely to be confirmed by the full Senate by a similar vote in short order. Though hope springs eternal, some in the cannabis industry are bracing for the worst and looking for ways to ensure the rapidly growing industry’s does not go to pot (pun intended) under Trump.

One recent source of optimism is last week’s announcement that Boulder County, Colorado, District Attorney Stan Garnett will be part of a group of prosecutors advising the Trump administration on marijuana policy. The group – comprised of 14 district attorneys, including some from weed-friendly states California and Oregon – is part of the National District Attorneys Association, a prosecutor and criminal justice policy think tank. Advocates for relaxed marijuana laws hope Garnett’s appointment foreshadows a group that will be a voice of reason to the administration and a force against rolling back marijuana reforms in legal states.

Yet it remains unclear exactly what role the NDAA group will play in advising the administration and how its cannabis agenda will take shape. After all, in discussing his selection, Garnett (who is also Colorado’s NDAA state director) remarked that he “always end[s] up on the more liberal position than anyone else, particularly on marijuana.” This observation is borne out by a report entitled “Policy Positions on Control and Enforcement” adopted by NDAA in 2005. Though dated, it reflects NDAA’s most recent official positions on cannabis reforms – and it is not a pretty picture.

In the report, NDAA states that it “opposes the legalization of illicit substances” and notes that it “specifically opposed” California’s 1996 legalization of medical marijuana. It goes on to state that NDAA “opposes the opposition of any state legislation or adoption of voter initiative that legitimizes and legalizes the ‘medicinal use’ of marijuana.” NDAA also alleges in the report that the cannabis reform movement’s “strategy is to legalize all illicit drugs” using “the sick and dying as pawns” and “myths” that cannabis is not harmful, among other claims. One might assume that the NDAA’s position likely evolved in the intervening years, but, according to Garnett, the group’s first meeting saw some prosecutors urge that the governor of every medical and recreational cannabis state be sent a letter demanding closure of all cannabis businesses in 90 days. Garnett, to his credit, “was not shy” about denouncing the idea, but one must wonder how much one or even a small contingent of forward-thinking committee members can affect institutional policy.

Let’s face it people, prosecutors are not generally friendly to cannabis.

It also appears the group’s role and influence in the Trump administration has been overhyped. As reported by Leafly, the Director of Policy and Government affairs at NDAA said in a statement that “[c]ontrary to other reporting, the working group is not affiliated with any other organization or entity, including the incoming administration.” So do not get your hopes up that some pro-cannabis Justice League of prosecutors is about to save the day if Sessions decides to crack down on weed.

It is undoubtedly a positive development that Garnett and other pro-cannabis reform prosecutors are in a position to help shape an important trade group’s position on marijuana. But, industry stakeholders and advocates should temper their expectations for the impact and direction of the NDAA taskforce.

Like pretty much everything else related to cannabis and the Trump administration, the safest stance is probably wait and see.

California marijuanaWe previously wrote about possible delays to California’s cannabis state licensing program due to conflicts between the state’s new medical and recreational laws under the Medical Cannabis Regulation and Safety Act (MCRSA) and the Adult Use of Marijuana Act (AUMA), respectively. The AUMA, aka Proposition 64, was passed by California voters last November and required state agencies begin issuing licenses by January 1, 2018 (hereinafter “the 2018 deadline”).

Last week, we provided an update on the work California legislators have been doing to get the state ready to issue licenses. Lori Ajax, the Chief of the Bureau of Medical Cannabis Regulation (soon to be the Bureau of Marijuana Control), promised audiences at a recent cannabis event that licenses would be issued by the 2018 deadline set under Prop 64.

However, California lawmakers are not so sure. On Monday, January 30, 2017, state Senate committees held an oversight hearing to discuss whether California agencies are on track to meet the 2018 deadline. During the hearing, Sen. Jerry Hill voiced “a considerable amount of skepticism” that the state would meet the deadline. Though lawmakers believe some agencies will be able to start processing applications by 2018, they doubt they will be able to issue all of the “tens of thousands” of licenses applied for by that time. Once the cannabis license applications are received, they could take months to process and complete the necessary background checks.

As Sen. Mike McGuire so aptly put it, the state is “building the airplane while it’s being flown,” and thus “it’s not realistic that all of the Proposition 64 rules and regulations will be in place by the new year.” The state’s process for rule-making includes the potential for further delays as public feedback could require a major reworking of regulations (followed by further feedback and more reworking) while new legislation could rewrite rules or change the process entirely (we covered proposed pot legislation here, here, and here).

Ajax admitted not everyone will receive their California cannabis license on January 1, 2018, but instead some could receive temporary licenses while the rest of the applications are being processed. She also stated that California’s state marijuana regulations will be in place by the 2018 deadline through a streamlined, “emergency regulation” process.

Ajax and her 11-person staff (six positions remain unfilled) are working hard to meet the deadline, but there is still a lot left to do. They have yet to convene the advisory committee required under Prop 64 to advise the Bureau and state agencies on drafting standards and regulations for marijuana businesses. Prop 64 also requires implementing a marijuana track and trace system the state has yet to develop. Besides creating the computer program behind the system, the government process will also involve long timelines for drafting proposals, selecting vendors, and completing a statewide rollout. Ajax has stated that applicants may not be included in the track and trace system by the 2018 deadline.

It’s currently unclear what would happen if California is unable to meet the January 1, 2018 deadline. Some argue it is better to have a well-crafted system later, than risk an ineffective system and a thriving illegal market. Since medical cannabis businesses can continue operating until state licenses are issued, the effect of any delay will fall mostly on prospective recreational cannabis businesses.

Help WantedTwo weeks ago, we wrote that the Oregon legislative session would begin this Wednesday, and that 28 proposed cannabis bills graced the legislature’s website. Since that time, we caught wind of SB 301, a tidy little bill that would abolish the right of Oregon employers to fire their “at will” employees for off-duty cannabis use. To our knowledge, Oregon would be the first such state to take this step.

SB 301 is short, sweet and even subtle, as it refrains from mentioning the words “cannabis” or “marijuana” altogether. Instead, it amends an existing statute that prohibits an employer from mandating “that any employee or prospective employee refrain from using lawful tobacco products during non-working hours.” (Our emphasis.) Proposed SB 301 removes the “lawful tobacco products” language, and replaces it with language covering any “substance that is lawful to use under the laws of this state.” Of course, that includes pot.

Like most laws, proposed SB 301 does contain a couple of exceptions. In the first, an employer could require an employee to abstain off-hours when the restriction relates to “a bona fide occupational qualification” (think: safety). In the second exception, employers would still be free to can their employees for “the performance of work while impaired.” Obviously, this could apply to someone who dabs and then walks into work; but it could apply equally to someone who shows up high on prescription drugs, or drunk, or even hung over.

In the case of cannabis, we have written many times—here and elsewhere—about the court-tested right of employers to fire their hapless employees for off-duty use. We have also wondered aloud: why do employers even care? As it stands, Oregon is one of many states that has grappled with these issues: in a well known 2010 case, Emerald Steel v. BOLI, the Oregon State Supreme Court held that even disabled, medical marijuana card holders are not protected from the cudgel of an employer’s zero-tolerance drug policy. Other state courts have ruled similarly.

With SB 301, the Oregon legislature is doing what its citizens should expect: it is considering the effects of state-legal cannabis on peripheral laws, while looking after the civil rights of its citizens. We hope SB 301 passes in something like its present form, and we expect similar changes in other jurisdictions in the coming months and years. If an employee performs her job safely and well, off-duty cannabis use is irrelevant.

 

 

 

 

Los Angeles Cannabis lawyersSince passage of Proposition 64 in California last November, our California cannabis lawyers have been getting calls nearly non-stop about what it takes to secure a license to operate a marijuana business in the City of Los Angeles. Some are asking us about buying a Proposition D-compliant dispensary state license now to secure a California retail cannabis license in the future.

Because of Proposition D, there is no legal avenue for anyone to start new marijuana businesses in the City of Los Angeles or for anyone to legally purchase any of the 135 existing Proposition-D compliant dispensaries. But the tides may be shifting for the L.A. marijuana scene. On March 7 of this year, Angelenos will be voting on two ballot initiatives that could bring more regulation and oversight to marijuana businesses within Los Angeles city limits and that may, under certain circumstances, allow for an expansion beyond the existing 135 marijuana dispensaries.

In case you missed it, Proposition D, which passed in 2013 and was implemented in 2014, was intended to reduce the number of dispensaries within Los Angeles city limits to 135 – the number of dispensaries operating before September 14, 2007. A 2012 UCLA study estimated that Los Angeles had at least 472 dispensaries, and the city estimated that in 2013, when Proposition D passed, the city had around 700 dispensaries. Over the last few years, the City of Los Angeles has shut down hundreds of medical marijuana businesses that failed to meet Proposition D requirements for immunity. But new dispensaries pop up to replace those that have been shut down. The city has also fought hard to enforce a ban on cannabis deliveries and the California Court of Appeals has upheld that ban.

Los Angeles’s medical marijuana situation is reflected in California’s Medical Cannabis Regulation and Safety Act (“MCRSA“) of 2015. The MCRSA requires all applicants to first secure “local approval” before they can receive a California state cannabis license, with local approval meaning some form of local license, authorization, or permitting. Under the MCRSA, Los Angeles essentially received a carve out to be able to continue enforcing its Proposition D, regardless of whether a marijuana business receives a state license.

Then, realizing that Proposition D does not qualify as local licensing, permitting, or even authorization (since it’s really just a registration and taxation measure), combined with the fear that Los Angeles may never enact any form of “local approval” to enable marijuana businesses to secure state licenses, the California State legislature, tried to pass AB 2385, which would have dropped the local approval requirement for Los Angeles. Under AB 2385, marijuana business applicants under the MCRSA that could show compliance with Proposition D would be eligible to receive a California cannabis license. However, the governor vetoed AB 2385. Because Proposition 64 itself provides no special treatment for Proposition D, Los Angeles marijuana businesses will still need to comply with local laws to open their doors under the new recreational laws. What all of this means is that Los Angeles could be stuck with Proposition D and that means it will either have no medical marijuana businesses at all or only the 135 existing dispensaries assuming they all go recreational.

Until perhaps March 7. On March 7th, Los Angeles will vote on two ballot measures to replace Proposition D, which can only be repealed and replaced by a vote of the people. The first ballot measure, called the Cannabis Enforcement, Taxation and Regulation Act (“CERTA“), is backed by the City of Los Angeles. The second ballot measure is called the Los Angeles Marijuana and Regulation Safety Measure and that one was drafted by the United Cannabis Business Alliance Trade Association (“UBCA”).

The CERTA measure sets the stage for the City to enact whatever rules and laws necessary to regulate City of Los Angeles “cannabis activity” in the context of California’s new marijuana laws, while also creating new criminal and nuisance penalties and implementing new business taxes on marijuana sales. It also gives priority status in “processing of applications” to the existing 135 Proposition D dispensaries, but it does not say that the City is limited to regulating only those 135 dispensaries nor does it forbid the City from creating regulations for other marijuana businesses like cultivators and manufacturers.

The UCBA  ballot measure is much more comprehensive than the CERTA. This measure would create the Los Angeles Department of Medical Marijuana Regulation to oversee the Collective Commercial Cannabis and Commercial Cannabis permit programs, which would cover both medical and recreational marijuana businesses. This measure would also allow for permitting of cannabis cultivation, manufacturing, transportation, testing, and distribution businesses. Like the City supported measure, this measure too will give licensing priority to existing 135 Proposition D dispensaries; it calls for mandating that the City continue to allow these 135 cannabis dispensaries to operate and for these dispensaries to get their required permitting ahead of any new dispensary applicants. It also provides that if not all of the 135 existing dispensaries apply for and receive the required permitting, the City may allow additional dispensaries to participate in the Los Angeles cannabis market and that the City cannot have less than 135 dispensaries in operation. The measure also sets forth how the permit application process will work and the zoning and setback requirements required for all permit applicants.

Importantly, as of December of last year, UCBA has decided to formally support the City ballot measure. Nonetheless, the UCBA measure will still be on the ballot in March.

Though Forbes is predicting L.A.’s medical marijuana market could reach $1 billion, that’s not going to happen anytime soon unless the City starts allowing for significantly more marijuana commerce. The March 7 vote is crucial to the future of marijuana in Los Angeles as it will determine who can run or invest in a marijuana business in the City of L.A. and what it will take to do so.

Stay tuned.