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John represents large and small businesses in complex litigation throughout the country, especially patent, copyright, and trademark disputes. A leading litigator out of Harris Bricken's Portland office, John’s intellectual property cases typically involve representing clients in cannabis, high tech, hardware, software, consumer products, and e-commerce matters.

Mediation and arbitration are the two major “alternative dispute resolution” (ADR) techniques used in business disputes. We’ve discussed arbitration in cannabis cases in several previous blog posts, here, here, here, here, and here. Although arbitration gets more attention these days than mediation (see the Supreme Court’s recent arbitration decision), mediation is probably the most commonly used form of ADR in cannabis businesses.

Some basics:

Arbitration is essentially stripped-down litigation, in which a third party lawyer or judge decides issues of fact and law, in a setting that in some cases is less formal and costly than going to court. Both litigation and arbitration are usually binding. Both result in an order than can be enforced like any other court order, e.g., by garnishing the losing party’s assets.

Mediation differs from arbitration in that the mediator cannot require the parties to resolve the dispute. Her role is to help parties work together to find a solution to their problem, that they both can agree on. If mediation is successful, the parties often enter into a written settlement agreement, resolving the dispute.

How mediation works in a cannabis dispute:

For our discussion, imagine a dispute between co-owners of a marijuana dispensary. Hopefully, the owners have a solid operating or shareholder agreement with a dispute resolution clause requiring mediation before litigation can be filed. Even without such a clause, once a dispute arises, the owners can make an on-the-spot agreement to mediate.

The parties must next choose a mediator. In a business dispute, it is important to choose someone who is not only an experienced mediator, but also has experience in the subject matter of the dispute. One of the responsibilities of a mediator is to give each party its real world options if those parties settle, or fail to settle, the dispute. Particularly in a cannabis case, with overlapping local, state and federal laws that are changing sometimes every week, a mediator must have knowledge not only of the applicable laws, but of the business environment.

It is important that the mediator be completely disinterested in the outcome. The mediator’s primary objective is not in benefitting either side, but in settling the dispute, if possible.

Mediating parties are often represented by counsel, although this is not necessary, especially early on in the process. Each party must present the mediator with its version of the facts and what outcome it is seeking. This can be done in written submissions before the mediation, or in oral discussions at the mediation itself. Each party can choose to share their correspondence with the mediator, or not, depending on that party’s mediation strategy.

The mediation will usually take place in a location where each party can have private discussions with the mediator. Once a party has explained its side, the mediator can ask questions, probing areas of agreement or disagreement. A good mediator will not just ferry offers between the parties, but will privately advise each side about its goals and how they can be achieved. A very good mediator will give each side candid advice about the likelihood of success before an arbitrator or a court, and will advise not only on the out of pocket costs but the opportunity costs that occur when a party chooses to spend its time litigating rather than running its business.

Mediations are often set for a single day, although multi-day mediations are common in complicated cases. Once initial information is exchanged, the mediator will work towards a solution that each side can live with, moving back and forth between each party’s room. If a solution is reached, the mediator should put at least the most important points of the solution in writing, and have each party sign the agreement.

If the mediator does not believe that the parties will settle now, she may call off the mediation for the day. She may also ask the parties to agree to meet again to continue the mediation, or to take additional steps, such as exchanging information, before reconvening. It is not uncommon to mediate at several points in the dispute resolution process, as each party gets more information about its own and the other party’s position. It may take several mediations to reach a settlement.

Next week, we will examine how a party can increase its likelihood of success at a mediation. While you can’t always get what you want….

gardner marijuana cannabis
Martin Sheen? Or Cory Gardner? Either way, good news!

In January 2018, Cory Gardner, Colorado’s junior senator (and Martin Sheen doppelgänger) made news by announcing that he would block Trump Administration Department of Justice appointments after Attorney General Jeff Sessions released a memo suggesting that U.S. Attorneys could consider prosecution of federal marijuana laws despite state legalization. In keeping his promise, Gardner has held up about 20 DOJ nominees proposed by the Administration.

Senator Gardner released the following statement today, April 13, 2018:

“Since the campaign, President Trump has consistently supported states’ rights to decide for themselves how best to approach marijuana. Late Wednesday, I received a commitment from the President that the Department of Justice’s rescission of the Cole memo will not impact Colorado’s legal marijuana industry. Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.

Because of these commitments, I have informed the Administration that I will be lifting my remaining holds on Department of Justice nominees. My colleagues and I are continuing to work diligently on a bipartisan legislative solution that can pass Congress and head to the President’s desk to deliver on his campaign position.”

White House legislative affairs director Marc Short confirmed on Friday that Trump “does respect Colorado’s right to decide for themselves how to best approach this issue.”

While no specific legislation has been announced, the Washington Post reports that “Gardner has been talking quietly with other senators about a legislative fix that would, in effect, make clear the federal government cannot interfere with states that have voted to legalize marijuana.”

Sessions has been on the outs with Trump since he recused himself from the Mueller Russia investigation. The Trump Administration’s willingness to back off from Sessions’ attempts to revise the Cole Memo suggests a further wedge between the President and his Attorney General.

Or not. Consult the oracle at Twitter for the latest.

marijuana cannabis FDA
Can GW Pharma get there with Epidiolex?

In previous posts we’ve discussed the process for FDA approval of cannabis drugs. Today’s topic is GW Pharmaceuticals, a British biotech company focusing on prescription cannabinoid medicines, including developing and commercializing pharmaceutical products which address clear unmet needs.

GW Pharmaceuticals was founded in the UK in 1998 by two British biotech entrepreneurs, Dr. Geoffrey Guy and Dr. Brian Whittle. The Company is well known to many in the cannabis industry, because it was able to obtain UK licensing for broad pharmaceutical research and development into cannabis and its active compounds, including delivery methods other than smoking.

One of GW Pharmaceuticals’ first products was Sativex, an oral mucosal spray containing the cannabinoids CBD and THC, indicated as a treatment for spasticity due to multiple sclerosis. Sativex is available by prescription in the UK, EU, Canada, New Zealand and Israel. It is not approved in the United States.

GW Pharmaceuticals is now focusing on FDA approval of its liquid formulation of pure plant-derived CBD, called Epidiolex. Conditions for which Epidiolex is initially being tested are severe epilepsy syndromes including Dravet syndrome, Lennox-Gastaut syndrome, Tuberous Sclerosis Complex, and Infantile Spasms. GW Pharmaceuticals has obtained Orphan Drug and Fast Track designations from the FDA for research on Dravet syndrome. Phase 3 trials for efficacy and monitoring of adverse reactions have already shown positive effects in reducing certain seizure types from patients taking Epidiolex.

As part of its rulemaking process, FDA’s Peripheral and Central Nervous System Drugs Advisory Committee will hold a public meeting on April 19, 2018 to consider the New Drug Application (“NDA”) submitted by GW for Epidiolex. This will include oral presentations from the public, and will be webcast. We encourage any aspiring FDA applicants in the CBD space to watch the presentations.

GW Pharmaceuticals has also recently received Notices of Allowance for five new Epidiolex patent applications that will be listed in the Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”) if the NDA for Epidiolex is approved. These patent claims cover methods of treatment of treatment-resistant epilepsy with CBD oil, sometimes in combination with other compounds.

Besides Epidiolex and Sativex, GW Pharmaceuticals continues research and development on cannabidivarin, known as CBDV. Currently, Phase 2 trials for efficacy and side effects are underway for CBDV as a treatment for epilepsy, and Phase 1 trials for safety and dosage are underway using CBDV for autism spectrum disorders. Also in GW Pharmaceuticals’ R & D pipeline are Phase 1 and 2 cannabinoid studies for neonatal hypoxic-ischemic encephalopathy, glioblastoma, and schizophrenia.

Without a doubt, GW is in the vanguard of cannabis biotech companies. It now employs over 500 researchers, who have conducted over 50 Phase 2 and 3 clinical trials on cannabis-based compounds. GW has shown that it can develop and acquire regulatory approval for a cannabis pharmaceutical (Sativex) outside of the U.S., and develop a commercial market for this product.

GW Pharmaceuticals has also had great success so far with the FDA, taking its Epidiolex drug from Investigational New Drug Application to New Drug Application in less than four years. Interestingly, GW Pharmaceuticals has stated that if and when the FDA approves the NDA, it will seek to have it categorized as a Schedule IV drug under the Controlled Substances Act. Schedule IV is defined as drugs with a low potential for abuse and low risk of dependence. Currently, the lowest schedule designation of a cannabis drug is for Marinol, which is Schedule III. (A synthetic THC drug, Syndros, was recently moved to Schedule II).

Regardless of how Epidiolex might be scheduled, its potential approval by the FDA would be a major step forward for cannabis pharmaceuticals. Be sure to tune in on April 18 for further developments.

As noted before in this blogHemp Industries Assoc. v. DEA, pending in the U.S. Court of Appeals for the Ninth Circuit, appeals the DEA’s final administrative rule creating a new drug code number for “marihuana [sic] extract,” defined as “containing one or more cannabinoids that has been derived from any plant of the genus Cannabis.”  Petitioners, a cannabis industry trade group and other industry participants, argue that DEA’s rule effectively reschedules CBD as a Schedule 1 drug under the Controlled Substance Act (CSA), in violation of the Farm Act of 2014, which allows the states to set up pilot hemp programs. The DEA counters that this rule does not restrict substances that were not previously controlled, but simply adjusts DEA’s methods for tracking substances that Congress put in Schedule 1.

On February 15, 2018, a Ninth Circuit panel of three judges heard oral argument. You can watch the argument here. Because federal appellate courts never issue decisions at oral argument, we won’t know how the court decides for several months. But watching the argument gives some clues to how the judges are thinking about this case.

Before you watch, consider first that this case is a challenge to a rule made by the DEA, a federal administrative agency exercising rule-making power expressly delegated to it by Congress. Under established law, the court must defer to the DEA’s exercise of this power. The court may set aside DEA’s rule only if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.” The court’s review is narrow: it must simply determine whether the DEA articulated a rational connection between the facts found and the choice made. As long as the DEA’s decision was “based on a consideration of relevant factors and there is no clear error of judgment,” the agency’s action is not arbitrary and capricious.

Second, consider that there are many administrative procedures that must be followed before a petitioner can even ask for review of an agency rule. All rulemaking is open to public comment by any interested party. If you fail to weigh in at the rulemaking procedure, you may not get to complain in court. Also, the petitioner has to show particular identified harm that it will suffer because of the rule.

Third, keep in mind that lower appellate courts such as the Ninth Circuit will often (though not always) try to decide a case on the narrowest grounds possible. This means that these judges may choose to decide on a technicality or procedural issue, rather than reaching the merits of the claim. That could very well happen here.

Keeping these points in mind, observe that the judges ask the lawyers: isn’t this rule just a change in the numbering system used by DEA made in order to facilitate record-keeping and reporting activities? Of course, the DEA lawyer agrees, while the cannabis industry lawyer strongly disagrees. Also notice that the judges continue to press the cannabis lawyer about whether evidence supporting harm claimed to be suffered is found “in the record.” This is an important point, because courts of appeal are not allowed to refer to facts that were not brought up in the original proceeding– in this case, the rulemaking process. Finally, there is no discussion about whether de-scheduling CBDs is a good or a bad policy. That is not an issue raised by this case, and the panel will almost certainly not address this in its opinion.

It is also worth reading a brief filed not by the parties to this case, but by several members of Congress who are appearing as amici, that is, friends of the court, Their brief supports the cannabis industry group, broadly arguing that DEA had no authority to issue its rule. The amicus brief also broadly urges that the Farm Act of 2014 allows states to effectively legalize CBD sales. Although many of the amici were among those who voted for the Farm Act, this brief is unlikely to sway the judges, who will likely say nothing about what the Farm Act does or doesn’t cover.

Check back in a few months, when we will discuss the opinion of the panel. My guess is that the opinion will narrowly decide the case, perhaps on procedural grounds, but that there will be no controlling ruling on scheduling of CBDs, keeping this area of law as confusing as ever. Stay tuned.

As we’ve discussed before on this blog, cannabis can be and is being patented. It is important to remember that patents are a balance between competing social values. In classical legal theory, patents exist to encourage innovation by offering innovators a limited monopoly in return for making inventions, and eventually releasing them to the public. Although the common law disfavors restraints on trade such as patents, the prevailing theory is that granting a partial monopoly is justified by the social benefit of innovation. This is known as the contract model of patents. Whether this model really produces net social utility in particular cases, or ever, is hotly debated.

What isn’t debated is that the contract model fails if what is patented is not new. One of the biggest challenges of our patent system is determining what is “new enough” to reward with a patent. In general, the patent system examines novelty by comparing a claimed invention to existing products (known as the “prior art”) that are in the same or related fields. (In some patents, an invention must also be “non-obvious” in light of prior art. I don’t address obviousness here.) The practical problem is searching the historical haystack for the needle of relevant prior art. Searching the text of patents is relatively easy. But most of the world is not patented, and is more difficult to search; e.g., plants and other living things are not text-searchable. So how do we keep living prior art, such as cannabis strains, available to the public and not covered by the patent monopoly?

This question is being addressed by an Oregon non-profit, the Open Cannabis Project (“OCP”) (full disclosure: I am a legal advisor to the OCP). According to the OCP:

Cannabis is in danger of going the way the rest of agriculture has gone: toward monoculture, centralization, and restrictive patenting…The growing wave of legalization – and the intellectual property competition that comes with it – may have the unintended consequence of narrowing and restricting [cannabis] diversity….Open Cannabis Project (OCP) was established by industry leaders to resist these forces and to protect the genetic diversity of the Cannabis plant as well as the economic diversity of the cannabis industry….

To keep existing cannabis strains freely available to the public, the OCP is building an open-source repository of genetic and chemotypic data. This repository will serve as a source of prior art, useful to the U.S. Patent and Trademark Office (“Patent Office”) and to the cannabis industry. Several labs have already pledged to contribute existing data to the repository, which is now being stored at the National Center for Biotechnology Information. The OCP’s aim is to have a comprehensive set of genetic data for all cannabis varieties that are either naturally occurring or which have been previously available to the public. Either one of these conditions renders such varieties unpatentable.

The OCP holds great promise in its goal of keeping existing cannabis strains from coming under the control of one commercial entity or another. Some questions remain, however. For example, there is sometimes a mismatch between what the Patent Office considers when it reviews plant novelty, and what is available in genetic data. Hopefully the OCP and other cannabis industry players will be able to work with the Patent Office and perhaps Congress to address this and other concerns. Given the availability of cannabis patents and the size of the industry, there is a lot at stake.

marijuana RICOWe’ve previously discussed several civil cases in Oregon where private parties sought to shut down cannabis grow operations under RICO (Racketeer Influenced and Corrupt Organizations Act), claiming that the grow was part of a criminal conspiracy that would drive down property values (see our RICO series here, herehere and here).

Today, we have an update on two marijuana RICO cases elsewhere the country, one in Colorado, and the other in Massachusetts.

Colorado: In a previous post, we discussed Safe Streets Alliance v. Alternative Holistic Healing, LLC, a case from Colorado. This case is notable because the 10th Circuit Court of Appeals has already issued an opinion addressing several key legal issues, giving the litigants the go-ahead to try their case. In dicta, the 10th Circuit noted that at trial, it was possible that a judge or jury would determine that the plaintiff’s land was actually more valuable because of its suitability for cannabis cultivation. Although the 10th Circuit’s opinion only technically applies in the states of Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming, other trial and appellate courts will consider the opinion as “persuasive” authority, in other RICO cases.

This case is now scheduled for trial beginning in late August 2018. Assuming this case does not settle, and regardless of the verdict, the result will likely have far-reaching impact on potential RICO actions nationwide. As to the trial itself, many issues will be raised, from admissibility of evidence to expert testimony. One or more of those issues will likely be appealed again to the 10th Circuit. Future litigants are likely to use the trial record as a guide to bringing and defending these RICO cases.

Massachusetts: In Crimson Galeria v. Healthy Pharms, the plaintiff, a Harvard Square property owner, claims that Healthy Pharms, a neighbor and prospective cannabis operation, will diminish the value of plaintiffs’ property. As claimed in the lawsuit, “amongst other matters, marijuana businesses make bad neighbors, which include without limitation, emitting pungent odors, attracting undesirable visitors, increasing criminal activity, driving down property values, and limiting the rental of premises.” As with the Safe Streets case, one wonders whether suitability for cannabis sale actually increases the value of the land.

The lawsuit also alleges that local and state government agencies, including the state Department of Public Health and the city of Cambridge are “facilitating and encouraging violations of the federal drug laws by licensing and permitting marijuana businesses.” One of the plaintiffs’ claims is that the federal Controlled Substance Act (CSA) “preempts the practice of state and local officials in Massachusetts of issuing licenses to operate marijuana businesses.” The 10th Circuit addressed similar preemption arguments, ultimately finding that the plaintiffs had no claims on which relief could be granted. But Massachusetts is in the 1st Circuit Court of Appeals, and the 1st Circuit judges will not be bound by the Safe Streets opinion (although they almost certainly will consider it).

It is at least theoretically possible that the 1st Circuit could find differently than the 10th Circuit, causing a circuit split that would have to be decided by the U.S. Supreme Court. That would be a doozy.

Previous posts have discussed cannabis patents, here, and here, and here. Today I explain the basics of how to read a patent. Why would you want to do such a thing? If you are in the cannabis business, you may own a patent, or be threatened of infringing one. The tips below will give you a good start on understanding what a patent means.

Today I focus on utility patents, which are about 90% of all patents. (The other major category is design patents.) Utility patents can cover such things as cannabis plants, or methods of making cannabis plants. Utility patents have four basic parts: introductory material, drawings, the specification, and the claims. To read and understand a patent, you should be be familiar with each of them.patent marijuana cannabisUnsurprisingly, the introductory material is at the beginning of the patent (shown above). It starts out with the patent number, the date the patent was issued, the inventor(s), and the assignee — if there is one. It also provides the filing date of the patent, which is usually several years before the issue date. The next important part is the “references cited,” a list of prior art that the patent examiner looked at. There is also a short “abstract,” a sort of summary of the invention, often followed one or two pictures of the invention. While the abstract and the opening pictures can give a good idea of what is to come, they do not define the invention. More on that later.

Next are a series of stylized line drawings or charts. While making patent figures is an art, the figures are not intended to be artistic. Rather, they are there to help the reader understand what the invention is, and perhaps how it is used. Like the abstract, the figures do not define the invention. In fact, some of the figures may not refer to the invention at all.

Following the figures is one or more pages of text in 8 point type, set out in two columns separated by a narrow column of numbers. This is generally referred to as the “specification,” or “spec” (although technically the specification also includes the figures and the claims). The specification usually gives the background of the invention, a summary of the invention, often a brief description of the drawings, and then a “detailed description of the invention.” This sets out the nitty gritty technical details of the patent, usually making reference to the various drawings by number. Although the specification gives this detailed description, once again, it does not define the invention.

Finally, tucked away at the very back of the patent, shyly hiding behind the specification, are one or more patent claims. The claims are numbered, and always start with “What is claimed” or “I claim” or “we claim” or similar language. What, you may ask, do these puny claims do? Well, they define what has been invented, that is, what is covered by the patent. They are the equivalent of the deed to your house, which describes, in somewhat technical terms, exactly where your property begins and ends.

So how do you make sense of all of this? I suggest that you start with the introductory material. Then turn to the claims. Keep in mind that in order to infringe a patent claim, whatever is accused of infringing must have every single thing listed in the claims.  If the claim is for a hybrid cannabis plant, which produces a female flower comprising CBD content of >3% and a terpene profile of alpha phellandrene, a plant that has only 2% CBD won’t infringe.

Next, look at the drawings and the specification. I usually print out an extra copy of the drawings and have them open when I read them. Once you have done that, you can go back to the claims with a better understanding. Often, claims only contain part of what is in the specification. But the claims are the key to knowing what the patent is about.

Most importantly, have fun! You could be reading the tax code.

 

cannabis marijuana intellectual property
It can be tough to decipher who owns your cannabis business IP, if you don’t write it down.

An important question for any cannabis business is: who owns the company’s intellectual property (IP)? The easy way to answer this question is to work it out before any dispute. The much, much harder way is to litigate. As noted in a famous oil filter commercial, “You can pay me a little now. Or you can pay him a lot later!”

The two most common situations where IP ownership disputes arise in a marijuana business are between the owners of a company, and between the company and its employees. Here are some tips on how to handle each situation.

IP ownership in an entity: IP is a capital asset of a cannabis company, and like all other capital assets, e.g., grow equipment, real property, office furniture, software, etc., should be owned by the cannabis company itself, as provided in the entity operating agreement. Issues can occur, however, when the entity wants to use IP that is already owned by a member/owner of the entity.

In particular, many operating agreements provide that a member contributes her IP as initial capital. There is nothing wrong with this, in theory. Intellectual property, like real property or other assets, can be contributed as capital provided that the operating agreement properly values and accounts for the asset. But problems can occur when the operating agreement does not legally transfer title in the IP to the entity. In such a situation, the “contribution” may be more like a license, which can be revoked. If the contributed IP is the primary brand name of the company, this could give the contributing shareholder undue leverage if she wants to withdraw from the entity after the company has built equity in the brand name. A significant number of operating agreements do not properly transfer title to the trademarks, copyrights, or patents that are being contributed. Without the appropriate transfer, this is a time bomb waiting to explode, in a courtroom near you.

IP ownership of employee creations: The conventional wisdom is that everything that is created by a company’s workers automatically belongs to the company as “work for hire.” While there is a federal copyright statute that refers to works for hire, the rules are much narrower than conventional wisdom suggests. This often causes conflicts between employers and employees about patents and copyrights, which in turn lead to litigation.

There is an easy way to avoid the work-for-hire minefield, called an employee IP agreement (“EIA”). An EIA is a written agreement that defines which creations are the employee’s, and which are the employer’s. For example, where a new employee has already created IP before her employment, the EIA could provide that the employee retains title to all disclosed preexisting IP, but is required to assign any future IP created in the scope of her work to the employer. EIAs also often address creations done outside of the workplace or outside of the scope of employment, and may provide for invention bonuses or other incentives. The key is that the EIA allows the parties to define their ownership of worker creations, without having to rely on the limited default rules that exist in federal and some state law.

***

IP ownership agreements: don’t leave the dispensary without one! For parts 1 – 3 of this series, check out the following:

Cannabis legaization and federal law
We are hoping for a good roll from the Christie case

Christie v. NCAA is a U.S. Supreme Court (SCOTUS) challenge to the federal law that bans states from allowing sports gambling. Though nothing in Christie addresses cannabis directly, SCOTUS’s decision, due out next year, could give Congress a tool to ban states from allowing legal marijuana.

In 1992, Congress passed the Professional and Amateur Sports Protection Act (PASPA), which prohibits states (save for some that were grandfathered) to “authorize” gambling on sports. The state of New Jersey, which was not grandfathered, passed laws in 2012 to authorize sports betting. In a federal case, the state admitted that these laws violated PASPA, but argued that PASPA unconstitutionally allowed the federal government to “commandeer” the state to enforce federal law. The Court of Appeals found that the Constitution’s anti-commandeering doctrine (derived from the 10th Amendment) didn’t apply here because PASPA didn’t affirmatively require New Jersey to do anything, but simply prohibited it from enacting laws that allowed betting on sports. The Supreme Court declined to review the Court of Appeals’ decision.

In 2014, New Jersey passed a new law that merely repealed existing its laws prohibiting sports betting. The Court of Appeals was unconvinced that the new law was any different than the 2012 law. According to the Court of Appeals, the difference between “authorizing” sports gambling and “repealing” laws that prohibited sports gambling was insignificant. The result in either case was that New Jersey allowed gamblers in New Jersey to bet on sports, which was banned by PASPA.

This time SCOTUS took notice and agreed to hear the case. New Jersey’s brief before SCOTUS argues that under the anti-commandeering doctrine, it makes no difference whether the federal law prevents a state from repealing a law or affirmatively forces it to pass a new law. Either way, the federal government is forcing New Jersey to regulate conduct that its voters would rather leave unregulated. At least one amicus curiae brief argued that upholding the lower court’s decision would allow Congress to require states to affirmatively ban medicinal or recreational cannabis, denying the states their traditional role as experimenters in parallel legal regimes.

On December 4, 2017, SCOTUS heard oral argument in Christie v. NCAA. While it is difficult to predict the final decision simply from oral arguments, at least one noted commentator opined that “Justices seem to side with the state on sports betting.”

But what will happen to state-legalized cannabis if SCOTUS goes the other way and upholds the lower court’s decision? Nothing at first. Christie will only decide the question of whether the lower court properly found that PASPA applies to the New Jersey law. Although Justice Sotomajor mentioned marijuana in passing at oral argument, the issue of state marijuana regulations is not before SCOTUS in Christie. In the future, however, it is at least conceivable that Congress could take its lead from such a ruling and pass a law that requires states to repeal their legal cannabis regulations.

 

cannabis litigation
Cannabis litigation is its own thing

Two previous posts (here and here) discussed the McCart v. Beddow case, in which an attorney who was fed up with cannabis grows next to her rural home filed RICO (Racketeer Influenced and Corrupt Organizations Act) claims against dozens of defendants who allegedly participated in a criminal enterprise that damaged her by diminishing her property value, among other things. The defendants aptly described the lawsuit as an “attempt to put some shiny federal lipstick on an otherwise quite beleaguered pig of a state-law nuisance claim.”

The McCart case appears to be wending its way towards settlement.  Although motions to dismiss the complaint were filed, the plaintiff never responded to them and the court never addressed the merits. We probably won’t get to see the terms on which the parties settled, as settlements are usually kept confidential.

Meanwhile, the same attorney has filed a similar lawsuit on behalf of property owners in the Lebanon/Albany Oregon area, against various grow defendants. Ainsworth v. Owenby, Case 6:17-cv-1935, D. Or. It will be interesting/important to see how the RICO/nuisance claims hold up this time around.

In the meantime, this case nicely highlights how cannabis litigation can be so different from other litigation; who brings a RICO claim against their neighbors? Which is a perfect segue to tell you how I and three of our other Oregon, Washington and California cannabis litigation lawyers will be putting on a FREE webinar on January 11. Go here for full information and to sign up.