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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.

 

On November 8, 2016, Donald Trump defeated Hillary Clinton in the US Presidential election. That same day, voters in California, Nevada, Massachusetts, and Maine legalized marijuana for recreational use, and voters in Florida, Arkansas, North Dakota, and Montana approved medical marijuana initiatives. For supporters of marijuana, Election Day was bittersweet; the overall success of marijuana ballot initiatives was undercut by a potentially hostile new administration.

Now that we have a year’s worth of Trump administration comments and action on cannabis, it’s a good time for us to access where things are with this administration.

1. Donald Trump changed his tune on drug policy before becoming President. Donald Trump has been a wildcard on marijuana, having made statements on every side of the issue. In 1990, Trump told the Sarasota Herald-Tribune that US drug enforcement efforts were “a joke” and advocated for legalizing all drugs to “take the profit away from these drug czars.” During his campaign, Trump responded to a question about Colorado cannabis legalization as follows:

I say it’s bad. Medical marijuana is another thing, but I think [recreational marijuana] it’s bad. And I feel strongly about that. If they vote for it, they vote for it. But they’ve got a lot of problems going on right now, in Colorado. Some big problems. But I think medical marijuana, 100 percent.

2. President Trump has barely discussed cannabis since becoming President. Trump appears to have publicly commented on cannabis but once since he became president when sports journalist Jim Gray asked him whether NFL players should be allowed to use medical cannabis and Trump replied by saying he had “no opinion on it. They’re going to have to take a look at that. They’re going to talk with the league, they’re going to be talking to, obviously, government officials wherever it may be.” This Trump statement is hardly illuminating regarding his current position on cannabis.

3.  Jeff Sessions hates cannabis.  Trump appointed Jeff Sessions as Attorney General. Sessions has a long history of being vehemently anti-marijuana. As a Senator, Sessions often criticised President Obama’s “hands-off” approach to marijuana and once stated that “we need grown-ups in charge in Washington to say marijuana is not the kind of thing that ought to be legalized, it ought not to be minimized, that it’s in fact a very real danger.” He also went so far as to say that “good people don’t smoke marijuana.” Sessions’ hatred for cannabis has not cooled since taking over as Attorney General and he made the following statement earlier this year:

I reject the idea that America will be a better place if marijuana is sold in every corner store. And I am astonished to hear people suggest that we can solve our heroin crisis by legalizing marijuana—so people can trade one life-wrecking dependency for another that’s only slightly less awful. Our nation needs to say clearly once again that using drugs will destroy your life.

4. Sean Spicer warned of a crackdown on recreational cannabis that hasn’t happened. In February, then Press Secretary Sean Spicer made comments that sent tremors through the legal cannabis industry when he predicted “greater enforcement” of the Controlled Substances Act in recreational states. Spicer stated, “[t]he president understands the pain and suffering that many people go through who are facing, especially terminal diseases, and the comfort that some of these drugs, including medical marijuana, can bring to them,” Spicer went on to tell reporters that states’ allowance of marijuana for recreational purposes “ is something the Department of Justice, I think, will be further looking into.” Fortunately, this prediction has not come true.

5. Sessions is evaluating the Cole Memo. At his confirmation hearing, Attorney General Sessions said that he intended to consider the viability of the Cole Memo:

The Department of Justice under Lynch and Holder set forth some policies that they thought were appropriate to define what cases should be prosecuted in states that have legalized, at least in some fashion marijuana, some parts of marijuana…. But, fundamentally the criticism I think was legitimate is that [the policies] may not have been followed. Using good judgment about how to handle these cases will be a responsibility of mine.

Sessions was critical of the Cole Memo during his confirmation but he has not yet rescinded the memo or its underlying policies. In March, Sessions reportedly reassured some GOP senators that he will not be moving away from the Cole Memo and the Obama-era deference to state-legal cannabis programs. But the Huffington Post uncovered a July 24, 2017, letter Sessions sent to Washington State Governor Jay Inslee that was harshly (and inaccurately) critical of Washington State’s marijuana regulatory system. Earlier this week, Sessions confirmed that his office is continuing to follow the Cole Memo with regards to state-legal marijuana.

Trump as president so far seems not to care much one way or the other about cannabis legalization. In the meantime, cannabis legalization continues to move forward.

 

Washington and Federal Cannabis lawsLast week, the Federal Department of Justice (DOJ) filed a motion with the Ninth Circuit Court of Appeals to stay or remand appellate proceedings in its case against Rhonda Firestack-Harvey, Rolland Gregg and Michelle Gregg, the remaining members of the Kettle Falls Five, because it does not have funds to continue the prosecution. The Kettle Falls Five is the name given to a group of medical marijuana growers in Kettle Falls, a town in North East Washington. The group consisted of Rhonda Firestack-Harvey and Larry Harvey, their son Rolland Gregg and his wife Michelle, and Jason Zucker.

The Kettle Falls Five were charged by the federal government after a 2012 raid on their farm in Northeast Washington. The group was collectively growing medical cannabis plants in an amount permitted by state law. The federal government vigorously prosecuted the Kettle Falls Five over the last five years. The feds originally sought 10-year mandatory prison terms. The feds dropped charges against Larry Harvey who was battling stage four pancreatic cancer. Mr. Harvey passed away in August 2015.

Jason Zucker pleaded guilty and testified against the other defendants prior to trial. He was sentenced to 16 months of prison time based on his cooperation.  The remaining defendants faced charges of growing, possessing, and distributing cannabis, in addition to charges relating to firearms found on the same property as the cannabis grow. Rhonda, Rolland, and Michelle were acquitted of all charges except growing cannabis. Michelle and Rhonda received a sentence of one year and a day and Rolland received a sentence of 33 months.

The Kettle Falls Five appealed to the Ninth Circuit. The DOJ was expected to continue its vigorous prosecution, which makes its recent motion to stay or remand the case quite a surprise. In its motion, the DOJ provided the following explanation:

This motion is based upon Congress denying funding to the Department of Justice for the prosecution of medical marijuana patients in states where medical marijuana is lawful. The purpose of this motion is to acknowledge that the United States was not authorized to spend money on the prosecution of the defendants after December of 2014 because the defendants strictly complied with the Washington State medical marijuana laws.

This refers to the Rohrabacher-Blumenauer Amendment which limits prosecution of state-compliant medical marijuana actors.  As part of a federal budget deal in December 2014, Congress cut off funds for the federal prosecution of medical marijuana growers and users in states where medical cannabis is legal, so long as those actors are following state law. Since 2014 the Amendment has repeatedly been renewed.

The DOJ’s motion also cites United States v. McIntosh,  in which the Ninth Circuited decided the Rohrabacher-Blumenauer Amendment prohibited the DOJ from “spending funds for the prosecution of individuals who engaged in conduct permitted by the state medical marijuana laws and fully complied with the laws.” The DOJ’s motion states that the “prohibition regarding DOJ expenditure of funds applies even though the prosecution was properly initiated prior to [Rohrabacher-Blumenauer’s] enactment.”

The DOJ asks the court either to either back off on the appeal or to send the case back to the trial court. This is promising as it appears the DOJ may have finally seen the writing on the wall and is going to drop its case against the Five. However, it may also mean the DOJ is attempting to hold off on prosecuting the defendants to see if Congress reaffirms the Rohrbacher-Blumenauer Amendment, which is not guaranteed, especially given the current political status of our federal government. It should go without saying that Jeff Sessions has openly lobbied Congress against the Amendment.

In any event, this is an opportunity for defense counsel to ask the judge to toss out the case, which we fervently hope will be its eventual outcome. On a broader scale, this motion shows that the Rohrabacher-Blumenauer Amendment is a powerful tool to limit federal prosecution of medical cannabis growers.

BuzzFeed recently reported on Target’s short-lived effort at selling cannabis-based products online. By the end of the day on which the story ran, the major retailer had already removed the product from its website. The Phoenix New Times quoted Target spokesperson Kate Decker as saying, “We started carrying Charlotte’s Web hemp extract items last week on Target.com. After further review, we have decided to remove it from our assortment.” However, the Phoenix New Times reported earlier in September that Target was selling CBD products online. Decker could not confirm exactly when Target started selling CBD. The only certainty is that it ended the same day as BuzzFeed’s article.

The thing is that many online retailers (WalMart, Groupon, and Amazon) sell or have sold CBD online. This is in part likely because of the complex legal status of CBD. The Drug Enforcement Agency’s (“DEA”) stance is that CBD, and other cannabinoids derived from cannabis, are Schedule I substance under the Controlled Substances Act (“CSA”), regardless of their source. Last year the DEA created a rule defining “marihuana extract” as an extract “containing one or more cannabinoids derived from any plant of the genus Cannabis,” as marijuana, a Schedule I controlled substance. Use of “any” means it applies to any derivative of the cannabis plant including, CBD and other cannabinoids found in cannabis. This far-reaching definition, on its face, purports to make parts of the cannabis plant that were seemingly legal illegal.

Setting aside the Rule, there are three scenarios in which cannabis extracts are arguably legal under federal law. The first being when extracts are derived from the “mature stalk” of the cannabis plant because the CSA’s definition of marijuana “does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.” 21 USC § 802(16). The DEA has clarified that the Rule does not include portions of the plant specifically exempt from the CSA’s definition of marijuana but also maintains that products that contain any meaningful amount of CBD can be derived from the mature stalks.

The second scenario is when extracts are derived from an industrial hemp plant lawfully grown in compliance with section 7606 of the 2014 US Farm Bill (“the Farm Bill”). The Farm Bill allows states to enact pilot programs for hemp research making hemp legal in the state’s borders. Hemp cultivated in compliance with a State’s program is expressly legal under the Farm Bill. Extracts from compliant hemp are legal in the State in which they were derived though the sale of these products in other states is not explicitly allowed.

The final scenario is when products are derived from imported hemp. In the early 2000s, two cases out of the Ninth Circuit, Hemp Indus. Ass’n v. DEA, 357 F.3d 1012 (9th Cir. Cal. 2004) and Hemp Indus. Ass’n v. DEA, 333 F.3d 1082 (9th Cir. 2003) determined that the DEA cannot regulate hemp products simply because they contain trace amounts of THC. This is because some portions of the cannabis plant are explicitly outside the scope of the CSA and the DEA was not permitted to expand its scope to encompass all parts the plant. At the time of the ruling, it was illegal to grow hemp so it only applied to hemp imported from outside the USA. However, its holding could also apply to hemp grown pursuant to the Farm Bill. In other words, marijuana extracts from non-psychoactive (industrial) hemp with only trace amounts (or less) of naturally occurring THC are permitted under the Ninth Circuit’s ruling.

The Hemp Industries Association has sued the DEA over the “marijuana extract” rule and that case is still pending and until it is decided, uncertainty remains as to the legality of CBD products. The DEA may very well lose because the Rule appears to conflict with the Farm Bill and the Hemp Industry cases from the early 2000s.  Nonetheless, despite potential legal flaws, the Rule is currently in place and anyone who distributes “marijuana extracts” is a potential target of the DEA. This is likely why online retailers like Target have flirted with selling CBD products online but often end up pulling products.

 

Unlike other states with recreational cannabis, Washington does not allow for home cultivation of recreational cannabis. However, that could change soon as SB 5131 requires the Washington State Liquor and Cannabis Board (LCB) to study the viability of home cultivation. The LCB will hold a public hearing on Wednesday, October 4, 2017, at 10:00 AM on whether the State should allow home grows of recreational marijuana.  Written public comments may be submitted through October 11 at rules@lcb.wa.gov or hard copy at PO Box 43080, Olympia, WA 98504.

The LCB will hold a public hearing on Wednesday, October 4, 2017, at 10:00 AM on whether the State should allow home grows of recreational marijuana.  Written public comments may be submitted through October 11 at rules@lcb.wa.gov or hard copy at PO Box 43080, Olympia, WA 98504.

The LCB must consider home cultivation in light of the Cole Memorandum, the Obama-era policy statement from the Department of Justice that tacitly permits states to legalize marijuana so long as those states enact strong and effective regulations. The Cole Memo outlines eight enforcement priorities:

  1. Preventing the distribution of marijuana to minors;
  2. Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
  3. Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
  4. Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
  5. Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
  6. Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
  7. Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
  8. Preventing marijuana possession or use on federal property.

The LCB has opposed home cultivation in the past. In 2015, Washington lawmakers considered a bill that would have allowed cultivation of up to six cannabis plants. In response, the LCB sent a letter outlining the Board’s concern that unregulated home grows would increase the occurrence of all eight enforcement priorities outlined in the Cole Memo.

The LCB worries that home cultivation will lead to diversion. Washington producer, processors, transporters, researchers, and retailers must all use “seed-to-sale” traceability software. As the name suggests, a cannabis plant is monitored throughout its life to prevent cannabis from being diverted to other states, to minors, or to the black market.

The LCB is seeking public input on three proposed options:

  1. Tightly Regulated Recreational Marijuana Home Grows. This option would impose a strict regulatory framework. Home cultivators would need a permit to grow legally. Permit holders could then purchase plants from licensed producers. Each household would be allowed four plants and all plants would be tracked in the same traceability system used to monitor commercially grown cannabis.  The LCB would impose requirements to ensure security, preventing youth access, and preventing diversion. Both the LCB and local authorities would monitor home grows. Cannabis processing would be subject to the same restrictions as apply to medical cannabis (e.g., no combustible processing).
  2. Local Control of Recreational Marijuana Home Grows. Like Option One, this option would require a permit, require safeguards to prevent diversion, limit each household to four plants, and allow permit holders to purchase plants from producers. Option Two would not require home cultivators to use the State’s traceability system. It also would give greater authority to local jurisdictions to create more restrictions and to authorize, control, and enforce the home grown program.
  3. Recreational Home Grows are Prohibited. The third option is to maintain the status quo and prohibit home cultivation.

The LCB must report its findings to Washington’s legislature by December 1, 2017. Lawmakers provided the LCB with no additional funds, meaning the Board must conduct its study without expanding its budget. There is no guarantee that anything changes but this is could be the beginning of recreational home cultivation in Washington.

Over the weekend, I attended CanEx Jamaica in Montego Bay. The event focused on the business and policy of cannabis in Jamaica and abroad. Jamaica decriminalized cannabis in 2015, imposing a fine for possession of less than two ounces of cannabis rather than possible jail time. Jamaica also has legalized cannabis for medical use, but is still in the process of implementing a regulated program.

Jamaica is facing challenges in regulating a plant that has long been celebrated in Jamaican culture despite legal prohibition. Ganja, as it is known on the Island, has deep cultural and religious significance. It is a sacred herb in the Rastafarian religion. Its religious and recreational use on the island has been widespread for years. As a result, many Jamaicans are not excited about it being regulated. I went to this event for two reasons. One, because Hilary Bricken, our lead cannabis lawyer out of our Los Angeles office would be speaking there. And two, because our cannabis practice has always been an international one, and that has been accelerating in the last few months as Barcelona, Spain, (where we have an office) continues to liberalize.

Dr. Jalani Adwin Niaah, a professor at the University of the West Indies at Mona and Rastafarian, gave a presentation on Rastafarian Dispensing and Advocacy. He noted an increased interest in ganja from local business leaders after it was decriminalized. He fears though that commercialization of Jamaica’s medical cannabis will leave Rastafarians behind and cannabis as a sacrament will become marginalized. Dr. Niaah suggested Rastafarian’s hosting “herb camps” where they could grow and dispense ganja for religious purposes while also providing guidance to Jamaicans and visitors who want to use ganja for healing and wellness. Dr. Niaah proposed these camps would give Rastafarians a place in Jamaica’s regulated cannabis market. Jamaican law allows cannabis for religious purposes, but it is not clear these sorts of camps would qualify under this exemption.

Hilary Bricken hosts a panel on Cannabis Policy in Jamaica.

Hilary Bricken from our office moderated a panel on cannabis policy that included Florida attorney Michael Minardi, entrepreneur Sidney Himmel, Dr. Lorenzo Gordon of Jamaica’s Ministry of Health, and Greg Douglas, CEO of Jamaica’s Cannabis Licensing Authority.

Dr. Gordon and Mr. Douglas provided insight into the challenges Jamaica faces as two of its regulatory bodies work together to establish Jamaica’s medical cannabis scheme. The Ministry of Health regulates cannabis processing, strains, and products. It looks at the scientific side of cannabis, studying the percentage of CBD and THC in each strain. This Ministry also requires a microbiological analysis of each product and provides training for physicians who wish to recommend cannabis. The Cannabis Licensing Authority focuses on location, security, and cultivation. As the title suggests, it also will eventually provide licenses to cultivators and dispensaries.

Mr. Douglas expressed the need for the two agencies to work together to send a unified message and provide a consistent process for applicants hoping to obtain a cannabis license. He also acknowledged the importance of cannabis in Jamaica saying “in Jamaica, ganja is cultural, not just a matter of money.” Mr. Douglas maintains that the emotional impact of ganja in Jamaica must be taken into account in creating a regulated industry.

The elephant in the room was the impact United States Government policy has had and will continue to have on Jamaica’s cannabis regime, especially considering the Trump administration has been hostile to cannabis. Both Jamaica and the US have entered into treaties prohibiting the manufacture and distribution of cannabis and other drugs. The US wields significant influence over international trade and could force its will on a small nation like Jamaica. At one point in the panel discussions, Hilary asked whether Jamaican government officials see the US as a bully. Both Jamaican officials gave diplomatic answers, acknowledging they are aware of the United State’s position on the subject and how it is necessary to “consider” the international environment when implementing Jamaica’s regulatory regime.

Though over half the states in the US have legalized medical cannabis and eights states (plus Washington DC) allow cannabis for recreational use, the United States is still viewed internationally as somewhat of a drug law dinosaur with sharp teeth. Many of the speakers and attendees talked of how Canada and Israel (and to a lesser extent Uruguay and Spain) are model nations for cannabis research and policy. Dr. Gordon stated he hoped Jamaica could be an international leader in cannabis as well. See Marijuana Legalization: The International Edition

 In addition to Hilary’s panel, CanEx hosted Montel Williams for a keynote address, held a job fair for individuals interested in working in cannabis and hosted a number of other panel discussions on topics like “Women in Cannabis”, “Finance and Trade”, and “Arts and Entertainment.” The event was well attended and very informative. If you regret missing it this year, I highly recommend attending in 2018.
Great locale and great speakers. What more could you want?
Daniel Shortt and Hilary Bricken at CanEx Jamaica.

On September 1st, I’ll be joining Hilary Bricken in Montego Bay for the CanEx Jamaica Business Conference and Expo. This two-day event features a conference on day one and a job expo on day two. Hilary will speak at the conference alongside cannabis entrepreneurs, doctors, and fellow cannabis industry leaders, including Montel Williams, an outspoken advocate for medical cannabis. CanEx will connect professionals across the Caribbean, Latin America, Europe, and North America interested in opportunities and developments in the cannabis industry.

Jamaica is a fitting locale as cannabis has played a significant role in its history and culture. Starting in 1655, Jamaicans were subject to slavery under British rule until an abolitionist uprising ended the practice in 1838. The end of slavery created a demand for labor on the island. Workers from India traveled to Jamaica and brought the cannabis plant with them. Linguistic scholars determined that the term “ganja” is rooted in Hindi. Cannabis quickly spread around the Island as the Jamaican climate is ideal for cannabis growth, allowing multiple harvests in a given year. Cannabis use became a tenet of the Rastafarian religion which emerged in the 1930s and rose to prominence in Jamaica.

Despite cultural associations with cannabis, Jamaica outlawed cannabis by passing the Ganja Law of 1913. Jamaica’s government pushed back against its international reputation as a pot-friendly nation by strictly enforcing cannabis prohibition until recently. But Jamaica’s attitude changed in 2015 when Jamaica decriminalized marijuana. Jamaica then legalized medical cannabis the following year.

CanEx Jamaica reflects an emerging interest in cannabis on a global scale. America has taken much of the media spotlight when it comes to cannabis reform, but it is important to realize that the push for legalization extends far beyond US borders. It is truly a global movement and my firm’s international attorneys are constantly answering inquiries from business people from around the world interested in cannabis across the globe. Our lawyers in our Spain office often represent foreign businesses that want to expand to Spain and Spanish and Catalon businesses that want to expand beyond Spain. Countries like Australia, Bangladesh, Cambodia, Canada, Chile, Colombia, Costa Rica, the Czech Republic, Germany, India, Israel, Jamaica, Mexico, the Netherlands, Portugal, South Africa, Spain, and Uruguay have all legalized cannabis to some degree. Israel has long been a leader in researching medical cannabis and has its own robust medical program. Canada has begun the process of legalizing recreational cannabis across the country and Uruguay has already done just that. An international cannabis marketplace is quickly developing as more cannabis businesses look to take their expertise beyond their own borders. CanEx is a great opportunity for entrepreneurs from across the world to meet and connect the emerging market and we hope to see you there.

You can find more information on international cannabis on the following post.

 

Washington State Cannabis LawyersThe Washington State Liquor and Cannabis Board (LCB) yesterday rescinded its interim policy prohibiting a business or individual from owning multiple cannabis producer licenses. Now, a business and its principals can own up to three cannabis production licenses, which is up from just one license.

Though the LCB’s own rules (WAC 314-55-075) state that “any entity and/or principals within any entity are limited to no more than three marijuana producer licenses,” as of 2014, it restricted cannabis producers to no more than one producer license. Our Washington State cannabis lawyers never liked that restriction as we thought it encouraged illegal grows and bad behavior. See Washington LCB Producer License Roll-Back May Encourage Black Market Growers

The LCB announced its decision to rescind its one producer license policy at yesterday’s LCB meeting and noting how Washington State cannabis producers had been pushing to be able to expand and how the LCB’s own rules (WAC 314-55-075) allow ownership of up to three producer licenses. The LCB said it was time for the Board to “get out of the way” of Washington State cannabis producers.
We wholeheartedly agree.

To be clear, this shift in LCB policy towards producer licenses does not mean the LCB will be accepting new producer applications or expanding canopy space for existing producers; the LCB will not issue producer licenses to any new applicants nor will its policies on canopy space change. What this announcement does mean though — and this is a big deal — is that anyone who already holds a Washington State producer’s license will now be free to expand its cannabis production capabilities and canopy by purchasing other licensed producer businesses (up to two more). We know there is a massive pent-up demand for such purchases and sales because hardly a week goes by without one of our Washington State cannabis producer clients telling us of their desire to expand their production operations (mostly to better achieve economies of scale), and we also get frequent calls from companies (and clients) wanting to sell their production operations.

What we predict will happen in the market is a massive consolidation of smaller and/or struggling cultivators who will sell their businesses to larger-scale producers that are well organized and well capitalized. For years we have suspected this market consolidation of cannabis producers would occur in Washington and we see it likely to happen in other states as well.

If you are contemplating buying or selling a Washington cannabis production business/license you should be sure to check out the following:

 

 

Washington State New Cannabis lawsIn 2015, Washington passed Senate Bill 5052, which allowed medical marijuana patients and their designated providers to grow cannabis plants for personal medical use and band together to form medical marijuana cooperatives. That bill did not provide a legal pathway for cooperatives, medical marijuana patients, or designated providers to acquire plants. It also did not allow retail sales of plants directly to consumers. In 2016, the Washington Legislature passed legislation allowing cooperatives to purchase plants from licensed marijuana producers, but failed to address the ability of other patients to acquire plants.

Washington lawmakers recently addressed this issue with Senate Bill 5131, which allows qualifying patients and designated caregivers to purchase cannabis plants directly from licensed marijuana producers. A “qualifying patient” is a person who has been recommended medical marijuana by a healthcare professional and a “designated caregiver” is a person the qualifying patient designates in writing as authorized to procure medical cannabis. Qualifying patients can enter into a medical marijuana authorization database and receive a recognition card from the state. Not all qualifying patients enter the database and so some qualifying patients do not hold recognition cards. Carrying a recognition card brings advantages, such as tax discounts and the right to purchase larger quantities of marijuana in a single transaction.

All Washington marijuana patients can grow marijuana for their personal use, unlike recreational users, but qualifying patient cardholders can grow more. Cardholders may cultivate six cannabis plants at home (up to fifteen plants if their physician recommends it) which can yield a maximum of eight ounces of useable marijuana. Cardholders can also join state-registered medical marijuana cooperatives to cultivate marijuana with four other patients. Patients who are not cardholders may grow up to four cannabis plants and possess up to six ounces of useable marijuana produced from those plants, but cannot join a cooperative.

SB 5131 also allows qualifying patient cardholders to purchase immature plants and clones:

Qualifying patients and designated providers, who hold a recognition card and have been entered into the medical marijuana authorization database, may purchase immature plants or clones from a licensed marijuana producer as defined in RCW 69.50.101.

The Washington State Liquor and Cannabis Board (LCB) recently issued an interim policy statement that describes how members of cooperatives, cardholder, and cardholder’s designated providers can purchase cannabis plants and seeds but makes no mention of how patients without qualifying patient cards can purchase seeds. The LCB is mandating that Washington State cannabis producers receive documentation before selling plants or seeds. Members of a cooperative must show a valid recognition card and a copy of the letter from the LCB confirming the person is part of a registered cooperative. Qualifying patients must show a valid recognition card. It appears that there still is no means for patients who do not enter the database and receive a recognition card to legally obtain seeds to grow their own medical cannabis.

The LCB’s policy statement provides additional guidance on the sale of plants and seeds. Immature plants or clones are defined as plants that have no flower, are less than 12 inches in height and less than 12 inches in diameter. Producers must abide by security and traceability requirements including a 24-hour waiting period imposed on all cannabis transfers. Patients and providers must notify a producer 24 hours before picking up plants or seeds. All transfers must occur on the producer’s licensed property and deliveries are prohibited. Cooperatives, patients, and caregivers are not permitted to purchase more plants than they were authorized to grow by a physician or under Washington law. The patient or caregiver must buy the plant in person and producers cannot sell to anyone other than those who called in on a product. Sales tax applies to the sale of plants or seeds, but the state’s marijuana excise tax does not.

You can find more on SB 5131 at the following links:

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

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

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

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

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

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

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

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

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

 

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

Cannabis legalization Washington Oregon California

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

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

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

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

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

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

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