Akshat represents clients in a variety of nonimmigrant and immigrant visa matters, and excels in providing diligent advocacy and simplified immigration solutions to budding entrepreneurs, established companies, and growing families.

cannabis marijuana immigrationOn January 16, 2019, each of the three California cannabis agencies dropped a final set of regulations. In many senses, the Bureau of Cannabis Control’s (“BCC”) regulations were the most comprehensive and expansive (we summarized some of the highlights here, and summarized the highlights of the California Department of Public Health’s final regulations here). In one area in particular, the BCC’s regulations may have some unintended and far-reaching effects: immigration.

For some reference, one of the biggest changes to the BCC’s regulations is in the “ownership” disclosure requirements, which now will require disclosure of persons as potential owners who may be far removed from the actual licensed entity. To recap, in the post linked above, we wrote:

[The BCC’s] entity ownership requirements kick in in any situation in which a company owns a licensee—not only where the ownership is based in equity (remember that ownership can also be based on direction, management, or control of a licensee or other grounds). If an entity is considered an owner, then anyone with a financial interest in that entity must be disclosed to the BCC and may be considered an owner.

This is a tremendously significant requirement and means that virtually everyone in the corporate chain must be disclosed (and probably must provide all of the many significant and burdensome disclosures). For example, if John Smith directly owns 1% of the BCC licensee ABC Retailer and does not exercise any control over ABC Retailer, he will be considered a financial interest holder as opposed to an owner.  But if he owns 1% of XYX Holdings, which has a 20% stake in ABC Retailer, he will need to be disclosed to the BCC and may be considered an owner.”

What this could mean in other words is that more people, and people higher up a corporate chain, may need to make “ownership” disclosures. One of those disclosures is the requirement per BCC Regulation 5002(c)(20)(D) to provide a Social Security Number (“SSN”) or individual taxpayer identification number (“ITIN”), and another is the requirement to obtain a live scan. These are significant requirements for foreign persons who “own” cannabis businesses and, as described below, could affect their immigration status.

SSNs are available for residents and citizens of the United States. ITINs may be available in limited circumstances to foreign persons who have a need for tax identification purposes in the United States, but they are somewhat complex to obtain and require certain documentation (either a federal income tax return or some “exemption” documents). And live scans are federal background checks that land in federal databases, and as a result, in hot water.

The reason background checks for foreign nationals are problematic is that any direct or peripheral involvement in the cannabis industry is incompatible with the immigration laws of the United States. This applies to everyone who is not a United States citizen, including lawful permanent residents (i.e., green card holders), those living, studying, and/or working in the United States under an authorized nonimmigrant visa, those temporarily visiting the United States for business or pleasure, and of course, those who have no legal status in the United States.

As explained previously, even where a foreign person is traveling to a state where marijuana is legal, federal law applies at all U.S. ports-of-entry and preflight clearance locations (the “border”). The U.S. Customs and Border Protection (“CBP”) officer at the border has the legal authority to question the foreign person about the purpose of the visit and has advance access to the list of airline passengers on each flight and the license plate of each vehicle waiting at a border checkpoint.

By the time a foreign person is greeted by the CBP officer, seemingly unrelated dots between a web search and live scan and other databases have already been connected for the officer to use in questioning the foreign person about his connection to a cannabis business.

If the foreign person wants to lie about his involvement, he should absolutely not. The CBP has broad authority to search electronic devices, including cell phones and laptops. If the CBP officer finds any information to contradict the foreign person’s statements, it can potentially permanently ban him or her from entering the United States because of fraud or misrepresentation, and not just for violating the Controlled Substances Act.

Under the BCC’s new ownership regulations and its live scan requirement, a few things are clear. First, persons who earlier may not have qualified as owners now might. This may include a host of foreign citizens who now need to obtain ITINs and undergo live scans. Second, live scans are part of a federal database, so federal agents may be able to stop and ask clients questions about why they have undergone live scans. Moreover, and third, under the BCC’s live scan memo (linked above), live scan forms won’t be sent until an application is made, so foreign persons entering the United States to undergo a live scan will by definition already have applied for a cannabis application and thus may risk being turned away.

What’s clear is that ownership of a cannabis business is a risk when it comes to immigration. The BCC’s newest regulations may pass that risk on to a host of new persons. Stay tuned to the Canna Law Blog for more developments. In the meantime, for more on immigration and cannabis, check out the following:

U.S. border policy on Canadians and marijuana is tough.
On the eve of the Canada’s cannabis legalization, the U.S. Customs and Border Protection (“CBP”) held a teleconference to explain the agency’s enforcement policy and field questions from journalists.

The on-the-record teleconference featured the head of the CBP’s Office of Field Operations, which has a staff of 28,000+ employees and an operating budget of $5.2 billion to oversee the agency’s operations at 328 ports of entry and air preclearance locations worldwide.

CBP officials confirmed that U.S. government policy remains unchanged in the face of cannabis legalization in Canada: past use of, and any affiliation with, cannabis is grounds for getting a lifetime ban from entering the U.S. without a waiver, as explained in a previous post.

The key takeaways from the teleconference are as follows:

  • Possession: Individuals attempting to cross the Canadian-U.S. border while possessing marijuana are subject to arrest and prosecution. If prosecution is deferred, the individual is potentially subject to a fine of $5,000.
  • Amnesty or Pardon for Past Use: U.S. law will not recognize any amnesty or pardon by Canadian authorities for cannabis-related convictions. Admitting to a CBP officer that you used marijuana any time before legalization is the equivalent of a formal court conviction for that crime and you will likely be denied entry into the United States.
  • Cannabis Industry Workers: Those who legally work in the Canadian cannabis industry must provide details about their role and convince U.S. border officers that their trip to the U.S. is purely personal. Cannabis workers will likely need to prove that while in the U.S., they will not engage in any networking or strategic meetings, presentations, marketing efforts, or any manufacturing or distribution activities with customers or cannabis industry colleagues.
  • Cannabis Investors: Investors who knowingly financed and furthered the growth of the cannabis industry will almost certainly be denied U.S. entry and they risk a lifetime ban. Exceptions to this rule may be made for individuals whose mutual fund investment portfolio happens to have, without their knowledge, some stock in cannabis companies.

There appears to be some latitude at the border for occasional users of marijuana who start using marijuana post-legalization, and can demonstrate to the CBP officer’s satisfaction that they will not consume marijuana while in the U.S., even in states that have legalized it. Testing this theory, however, is for the brave who will put their hand in the crocodile’s mouth after being told that the crocodile does not bite.

u.s. border customs marijuana cannabisCanada’s cannabis legalization creates yet another wrinkle in the relations between the U.S. and its northern neighbor.

U.S. Attorney General Jeffrey Sessions harbors a well known hatred towards anything cannabis and he clearly has no love for Canada’s Cannabis Act either. What will this mean though for Canadians who are 100% legally involved in Canada’s cannabis industry when coming to the United States?

The answer came last week, when U.S. Customs and Border Protection (“CBP”) issued its Statement on Canada’s Legalization of Marijuana and Crossing the Border:

[a] Canadian citizen working in or facilitating the proliferation of the legal marijuana industry in Canada, coming to the U.S. for reasons unrelated to the marijuana industry will generally be admissible to the U.S. [H]owever, if a traveler is found to be coming to the U.S. for reason related to the marijuana industry, they may be deemed inadmissible. (Emphasis supplied).

Though this statement is a welcome surprise, it still provokes skepticism from U.S. immigration lawyers who have seen countless foreign nationals banned for life from entering the U.S. because they once used marijuana or were once associated with the cannabis industry.

Under the U.S. Controlled Substances Act (“CSA”), passed by U.S. Congress in May 1971, cannabis is classified as a Schedule I drug, which is reserved for substances like heroin and LSD, among others, that: (i) have a high potential for abuse; (ii) have no currently accepted medical use in treatment in the U.S.; and (iii) lack accepted safety for use under medical supervision.

U.S. federal law – more specifically the Immigration and Nationality Act (“INA”) — governs entry into the United States and under the INA, a “conviction” for controlled substances renders a foreign national inadmissible into the U.S. INA’s definition of “conviction” expands beyond a formal finding of guilt by a court of law to include instances where a foreign national admits to the essential elements of the crime under oath to a U.S. consular or CBP officer. For example, by answering “yes” to the question, “Have you ever smoked pot?”

Even a foreign national who has never consumed marijuana could be declared inadmissible under the INA based on his or her involvement in a legal cannabis business, either as “a knowing aider, abettor, assister, conspirator, or colluder with others” or “an illicit trafficker” of a controlled substance. Earlier in the year, we saw two examples of this when Canadian businesspersons Sam Znaimer and Jay Evans were banned for life from entering the U.S. because of their intended affiliations with U.S. cannabis industry.

Of course, lying about the use of or affiliation with marijuana would also render a foreign national inadmissible and you should avoid this at all costs. CBP has the legal authority to search electronic devices, and if it finds conflicting and/or incriminatory evidence about a foreign national’s actual or intended activities, that foreign national may be refused entry into the U.S. or even given a lifetime ban.

Once declared inadmissible, a foreign national needs a waiver of inadmissibility from the CBP to enter the U.S. These waivers are discretionary, costly, time-consuming, and limited in validity to between one and five years. Even with a waiver, a foreign national will typically face secondary questioning and delays each time he or she attempts to enter the U.S., even when the purpose of the visit is purely personal.

Foreign nationals have also been historically denied entry for profiting from the drug trade. Because of this, cannabis lawyers were concerned that virtually all foreign nationals lawfully engaged in Canada’s cannabis industry would be deemed inadmissible even if coming to the U.S. for purely personal reasons.

The recent statement from the CBP appears to exempt individuals who seek to enter the U.S. for reasons unrelated to cannabis. However, the process of admitting foreign nationals into the U.S. remains discretionary and subjective and only time will tell just how exactly the new policy will be applied at U.S. ports of entry.