united nations international marijuana cannabis
Will they get it right this time?

Cannabis prohibition under U.S. federal law is nonsensical and causes many problems, from oppressive taxation to civil rights violations. Under international law, however, things may be even worse. Fortunately, it was reported this week that the United Nations (U.N.) will finally take a closer look at cannabis prohibition this fall. It was also reported that the World Health Organization (W.H.O.), an agency of the U.N., has recommended that cannabidiol (CBD) no longer be controlled under international law. Both developments are terrific news.

For public international law nerds, like me, the question of why international law is more intractable than U.S. law on marijuana is fun stuff. The short answer is that cannabis, along with opium poppy and coca bush, is restricted not just through “scheduling”, but by the core text of the principal treaty at issue. This means that under international law, 185 or so countries are going to have to agree to amend the Single Convention on Narcotic Drugs of 1961 (“Single Convention”) (specifically, Articles 1, 22, 28 and 49) in order to truly end prohibition. Then, cannabis would also need to be removed from the Single Convention’s Schedules I and IV. All of that is no small feat.

Still, it isn’t impossible that the Single Convention would be amended to loosen or abolish restrictions on cannabis. The treaty was amended once before, by the 1972 Protocol, which inter alia amended Article 22 to require nations to actually enforce laws on their books against both poppy and cannabis cultivation. Since 1961, the U.N. has also taken other action on controlled substances, mainly through the Convention of Psychotropic Substances of 1971 (which will need amending one day, too) and the Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988. So, the U.N. does re-think its stance on controlled substances from time to time, and for better or worse.

Like other international treaties that deal with drugs, the Single Convention is not self-executing. This means that signatory countries must pass domestic legislation to fulfill their treaty obligations. For its part, the U.S. passed the federal Controlled Substances Act (“CSA”) back in 1971. Unlike with the Single Convention, cannabis is not included anywhere in the body of this law. Instead, “marijuana” and other items are listed on separate “schedules” to the CSA. Each schedule then dictates the extent to which those items are controlled. “Marijuana” is a Schedule I drug with “no accepted medical use” and a “high potential for abuse.” That’s not so different than the Single Convention’s placement of “cannabis” at its Schedules I and IV, reserved for drugs that are “particularly liable to abuse and to produce ill effects” and where “such liability is not offset by substantial therapeutic advantages.” It’s important to note that even if the Single Convention were abolished entirely, its legacy would live on in the CSA and other domestic laws of its signatories, until those laws were also repealed.

Because the Single Convention has not been amended with respect to cannabis legality, it is controversial whether the U.S. has acted lawfully in allowing many of its states to promulgate medical and adult use marijuana programs in defiance of that treaty and the CSA. Recent U.S. delegations to UNGASS have made the argument that there is “sufficient flexibility” under the Single Convention to accommodate what has occurred under our federalist system of government. That’s a topic for another day, but suffice it to say that the “sufficient flexibility” argument is a thin one.

Many countries are no longer bothering with legal arguments, and simply ignoring their treaty obligations altogether. Canada and Uruguay are signatories to the Single Convention, and those countries have fully legalized sale and distribution of cannabis. Canada, for one, likely won’t even bother to withdraw from the Single Convention or submit reservations: It will just violate the treaty. Other countries around the world, from Israel to Germany to Columbia to Australia, have also pushed ahead to import or export medical marijuana in recent years. And many more, like the Netherlands and Spain, license or tolerate commercial or quasi-commercial marijuana activities.

Clearly, the Single Convention is outdated when it comes to cannabis prohibition, and global enforcement against licit marijuana economies is both impractical and legally problematic. In the coming months and years, countries will continue to legalize marijuana in abnegation of their treaty obligations, whether for moral or economic reasons. So let’s hope that the U.N. starts by acting on the W.H.O. recommendation to loosen controls on CBD, which shouldn’t be terribly difficult. But most importantly, let’s hope for an enlightened “big picture” approach on cannabis, even if that takes some work.

vape marijuana cannabis
Is the vape industry in real trouble?

Like so many other U.S. industries, the U.S. vaping industry is now in the crosshairs of a 25% tariff on products imported from China. The first two waves of President Trump’s proposed tariffs against China covered about $50 billion worth of Chinese products but they did not include any vaping products. After China retaliated and proposed its own equivalent tariffs on an estimated $50 billion worth of U.S. products imported into China, President Trump proposed a much bigger third list of China products to cover an additional $200 billion in imports from China. This third list targets vaping devices, vaping parts, and batteries from China. Because our law firm’s marijuana business lawyers represent so many companies involved in various aspects of the vaping industry, we are hearing a earful about how these tariffs will “decimate” the nascent industry.

The U.S. vaping industry is indeed particularly exposed to these tariffs. Though much of the e-liquid used for vaping is made in the United States, almost all of the vaping hardware is imported from China. Just as Gillette makes the most money selling razor cartridges and not razors, many U.S. vaping companies chose to focus on the higher margin e-liquids, rather than lower margin vaping devices. Some have noted that there are no U.S. companies that produce any vaping hardware products. We are hearing of how many vape and cannabis retail shops will be unwilling or unable to pay the extra 25% tariffs because they do not believe they will be able to pass these extra costs on to their customers. If this does prove true, the vaping industry will indeed be decimated.

Fortunately, there is still time for vaping companies to seek a tariff exemption for certain vaping products. The U.S. Trade Representative will accept comments until September 6 on whether entire categories of products listed on the third wave of proposed tariffs — the $200 billion in imports from China — should be exempted. There likely will be yet another chance to make more product-specific exclusion requests later in the fall.

For an exclusion request to have any realistic chance at being granted, marijuana and related vaping companies should address the following factors:

  • A description of the physical characteristics (dimensions, material composition, etc.) of the particular vaping products and the 10 digit subheading of the HTSUS tariff category applicable to those products.
  • Whether the particular vaping product is available only from China. In addressing this factor, requesters should address specifically whether the particular vaping product and/or a comparable product is available from sources in the United States and/or in third countries.
  • Whether imposition of additional duties on the particular vaping product would cause severe economic harm to the requester or other U.S. interests.
  • Whether the particular vaping product is strategically important or related to “Made in China 2025” or other Chinese industrial programs.
  • Requesters must provide the annual quantity and value of the Chinese-origin product the requester purchased in each of the last three years. If precise annual quantity and value information are not available, USTR will accept an estimate with justification.
  • Requesters may also provide any other information or data they consider relevant to evaluating their request.

The process for reviewing and deciding on these exclusion requests will not result in any immediate decision but the hope is that a favorable decision eventually will allow for refunding the tariffs paid.

The goal is to have the USTR review the comments and grant exclusions, particularly for products that are not made in the United States and can only be sourced from China. The last time similar tariffs were applied on steel products back in the early 2000s, many exclusions were granted that helped ease the impact of the tariffs on downstream users.

There have already been many opposing comments and exclusion requests submitted for the first two waves of proposed China tariffs. Many of the opposing comments have noted how the proposed tariffs on the Chinese products have nothing to do with  Chinese practices of stealing or extorting intellectual property from U.S companies, which are the reasons claimed for invoking the China tariffs in the first place. Many have also objected to how these tariffs are not likely to change how China respects intellectual property  rights, but will have a catastrophic effect on certain American companies.  What was a booming U.S. vaping industry now faces going bust with the proposed tariffs. If you are in the vaping industry, now is the time to do what you can to prevent this.

Editor’s Note: A version of this post previously appeared on our law firm’s China Law Blog. It focuses on the vaping industry but much of it holds true for a host of other U.S. industries caught up in the tariffs as well. The bottom line is that the situation for products and companies that will be hurt by these tariffs is not good and the chances of overturning the tariffs are in most cases less than 50 percent. But in many cases the situation is not yet hopeless and it behooves you to try.

With implementation of Canada’s Cannabis Act (the “Act”) set for October of this year, many of our clients owning brands that will be sold in both the United States and Canada are beginning to wonder what the implications of new branding and marketing regulations will be. So far, more than 1,500 trademark applications for cannabis and cannabis-related products have been filed with the Canadian Trademark Office, and that number is certain to grow as legalization rolls out.

The Act, through its regulation of packaging, addresses many of the same concerns as certain state statutes in the U.S.: preventing false and misleading advertising and prohibiting advertising that is appealing to children. Some of the key prohibitions contained in the Act are on testimonials and endorsements, the use of real or fictional people, characters or animals, and branding or packaging that connotes “glamour, recreation, excitement, vitality, risk or daring.” Interestingly, there was discussion in the government’s Proposed Approach to the Regulation of Cannabis of implementing a plain packaging regime, something we’ve long suspected could be applied to cannabis.

The new regulations will require that all cannabis products be packaged in a manner that is tamper-evident, child-resistant, prevents contamination, and keeps cannabis dry. Packaging must be opaque. Pursuant to the Proposed Approach to the Regulation of Cannabis, licensed processors must label the package in which the cannabis product is contained in both French and English, and the following information would be generally required:

  • Name and contact information of the processor who packaged the product;
  • Product description;
  • Product lot number;
  • Product weight or volume, depending on the product class;
  • Packaging date (and expiry date, if one has been set);
  • Recommended storage conditions;
  • THC / CBD content (expressed as the percentage of THC / CBD the product could yield, and by unit or dose, if applicable); and
  • Inclusion of the statement: “KEEP OUT OF THE REACH OF CHILDREN”.

Under the Act, it is prohibited to promote cannabis in a manner that is false, misleading or deceptive, or that is likely to create an erroneous impression about its characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks. This aligns well with what we’ve seen in U.S. jurisdictions with regulated cannabis.

However, interestingly, the Act also prohibits promotion of cannabis brands using foreign media:

“It is prohibited to promote … cannabis, a cannabis accessory, a service related to cannabis or a brand element of any of those things in a publication that is published outside Canada, a broadcast that originates outside Canada or any other communication that originates outside Canada.”

This regulation could have serious implications for brands that are looking to position themselves not only in Canada, but also in other jurisdictions, including the U.S. The Canadian government has made it a priority to ensure that companies cannot evade the Act’s advertising and promotion restrictions by merely promoting the products abroad.

Sponsorship by Canadian cannabis companies will also be prohibited (perhaps even if a particular brand is only sponsoring events or individuals abroad). As such:

“It is prohibited to display, refer to or otherwise use any of the following, directly or indirectly in a promotion that is used in the sponsorship of a person, entity, event, activity or facility:

  • A brand element of cannabis, of a cannabis accessory or of a service related to cannabis; and
  • The name of a person that
    • Produces, sells or distributes cannabis,
    • Sells or distributes a cannabis accessory, or
    • Provides a service related to cannabis.”

Clearly, the implications of Canada’s cannabis advertising regulations will be far-reaching once they are implemented in October. For brands that intend to have a presence in both the U.S. and Canada, it will be particularly important to ensure that no advertisements or promotions produced in the U.S. run afoul of the Act, as they could ultimately jeopardize the license(s) in Canada and open the responsible individuals up to liability. Having an understanding of how Canada’s rules will impact your brand, if you intend to expand beyond the U.S., will be critical in the coming months.

netherlands holland cannabis marijuana

Everyone knows the Netherlands (especially the City of Amsterdam) as a pot capital of the world. Ironically, cannabis sales in the Netherlands are illegal. The country has decriminalized its use and possession to a certain extent, but law enforcement may impose a fine or misdemeanor upon a person in possession of marijuana-based drugs. However, the government has made it clear that prosecution of cannabis possession, in particular, is the lowest enforcement priority and there will likely never be a criminal investigation over cannabis prosecution.

Because of this, cannabis coffee-shops (i.e., retailers) have proliferated in the Netherlands. The government allows cannabis coffee-shops to sell cannabis to anyone as long as they follow certain regulations. Specifically, coffee-shops are not allowed to: (1) advertise, (2) trade in hard drugs, (3) sell drugs to minors, or (4) sell drugs in quantities of more than 30 grams. They are also responsible for preventing any public disturbance or nuisance.

Although there is a system in place for selling cannabis in the Netherlands, the cultivation and producing of cannabis is illegal. Retailers must rely on the black market to supply their stores. In order to combat the growth of the illegal market, the Netherlands’ government introduced a proposal that would allow certain Dutch states to legally produce and sell cannabis for a four-year trial period. This regulated supply chain for cannabis would allow certain suppliers to cultivate cannabis without facing arrest. This program will also implement government oversight into the cannabis market, requiring product testing and proper packaging. European governments are hoping this program can give lawmakers a clear understanding of what a legal cannabis market might look like in their nations. The bill is scheduled for a vote of Parliament this summer.

Additionally, the Netherlands has moved towards providing medical cannabis for patients. Under the proposed legislation, patients will be able to go to a designated pharmacy with their prescription and obtain cannabis. The government is also planning on working with designated cultivators to grow “pharmaceutical-grade cannabis” for qualifying patients.

All in all, things are moving forward on legalization. On the other hand, public cannabis consumption recently has seen its first restriction in The Netherlands. The Hague has become the first Dutch city to ban cannabis consumption in public. This ban has come as a response to the numerous complaints of residents and visitors of unwanted cannabis smoke. Coffee shops will have to monitor their odors to ensure that on-site consumption is not causing an unwanted nuisance. Certain legislators have also pushed for initiatives that would only allow for Dutch residents to purchase cannabis and cannabis products. However, those have mostly been abandoned.

The Netherlands’ cannabis policy is in flux due to the semi-legal market. If the pilot program succeeds and the Netherlands moves towards legalization, the Country could become one of the first legal cannabis countries. As an international law firm with offices in nearby Spain, we are always keeping tabs on new cannabis markets that arise in around the world. Although the Netherlands seems to be a “pot haven,” many changes still need to be made to have a completely legalized system.

canada public company marijuana
Coming to a cannabis business near you?

We represent investors from all over the world making plays in state-legal cannabis. The phenomenon began in earnest a couple of years ago, when Oregon became the first U.S. state to open its marijuana industry to non-residents. Some of those early deals were backed by Canadian public money, and the phenomenon of Canadian investment has only increased over time. In 2018 alone, we have closed three good-sized acquisitions in Oregon on behalf of Canadian public companies, with still more in the hopper here and in California.

The fact that Canadian money is flowing into adult-use states has received an uptick in media attention lately, especially after Toronto-based Cronos Group Inc. became the first cannabis stock to list on the NASDAQ exchange last month. Cronos Group is a large company, although it is outside of the “big four” Canadian public cannabis companies—consisting of Canopy Growth Corp, Aurora Cannabis Inc., Aphria Inc. and MedReleaf Corp.—each of which is valued at more than C$1 billion. According to Bloomberg, pot companies on Canadian exchanges have a combined market value of about C$32 billion. That’s a lot of buying power.

Most of the Canadian companies we represent are not new companies, and most of them were not cannabis companies until recently. Instead, the preponderance were junior mining companies, of all things. These stagnant prospector vehicles generally ceased operations when the Canadian mining industry faltered around ten years ago. Some of them still hold permit rights to mining claims in Canada and other countries, which remain present as curious footnotes on their listing materials. Generally speaking, though, the companies are little more than resuscitated shells that have paid ongoing listing fees on the prominent Toronto Stock Exchange (TSX) or the more limited TSX Venture Exchange (TSXV) over the past decade.

Resuscitated junior mining companies have inherent value for cannabis investment because they are already publicly listed, and do not have to undergo a full securities commission review or file a prospectus in order to access public money. They are perfect vehicles to raise money quickly. As such, many new entrants go public via a reverse takeover and use the old mining company (or oil and gas company) shell as the listing vehicle. There are probably 40 or so of these former shells now operating in the cannabis space, and our understanding is that clean shells are getting harder to find.

As far as new cannabis listings in Canada, including for U.S. companies, the go-to exchange is the Canadian Securities Exchange (CSE). That exchange lists close to 60 cannabis-related companies, many of which are U.S. entities raising cash north of the border due to the near impossibility of acquiring a spot on a U.S. exchange. As with the junior mining companies, a significant portion of the cash raised by CSE marijuana companies is being plowed into U.S. based enterprises. Other CSE-listed companies are focused on the imminent Canadian national market, and a few are making inroads in Europe, South America and elsewhere.

Given the influx of new marijuana listings on Canadian exchanges, and the uptick of industry consolidation generally, we do not expect the surge in Canadian investment to slow down anytime soon. Most of the deals we are seeing involve the acquisition of a controlling interest in a closely-held U.S. pot venture by the widely-held Canadian entity (usually through a subsidiary). Valuation is all over the board, and consideration often includes a mix of cash, debt and stock in the public entity.

Back when most of these junior mining companies were formed, it’s safe to say that no one expected they would one day be prospecting cannabis in California, Oregon and further afield. Then again, regulators in those states likely did not foresee what foreign investment might look like back when they opened the gates. In all, the Canadian listing phenomenon is another fascinating turn in the development of state-legal cannabis. You can expect many more to come.

marijuana ireland cannabis
The Irish will celebrate with beer, not cannabis, on St. Paddy’s.

Happy St. Patrick’s Day!

Given the origin of the holiday, we write to update you on the regulation of cannabis in Ireland. Historically, Ireland has had a conservative cannabis policy due to the nation’s heroin epidemic, among other factors. In 1977, the government enacted the Misuse of Drugs Act (the “Act”) making it unlawful to produce, possess, and supply controlled substances, including cannabis. That remains the law today.

Violations of the Act distinguish between personal use and possession for sale or supply. Possession of cannabis for personal use is punishable by a fine for the first or second conviction, and then punishable by up to one year in prison for the third or subsequent offenses. Penalties for possession to sell or supply controlled substances are imprisonment based on the conviction. There are larger penalties in place for drug trafficking.

Interestingly, the Act grants the Minister for Health the authority to issue licenses to manufacture, distribute, and sell controlled substances. In 2002 and 2003, GW Pharmaceuticals were granted a license to perform medical trials for Sativex, a cannabis extract spray common in European countries. There have been other instances where individuals were granted a license for personal use for medical issues.

In 2017, a bill was introduced that would legalize cannabis for medical conditions. The bill would allow cannabis to be prescribed by registered doctors and remove cannabis from the Act. The government allowed the bill to progress through the legislature despite it having some flaws. The bill is still pending approval from the committee, but there does not seem to have been much movement since November.

Although Ireland lags behind some of its neighboring European countries in regards to cannabis legalization, in recent years, the country has seen some welcome progress. As an international law firm with offices in nearby Spain, we are always keeping tabs on new cannabis markets that arise in around the world.

Sláinte!

Our Barcelona office continues to keep tabs on Spain’s vibrant cannabis industry, which is different than anything going on in the United States, or anywhere else in the world for that matter. Last week, the 15th annual Spannabis conference showed that the country’s enthusiasm for marijuana has not diminished in the least, and that Spaniards continue to adapt and push forward within a unique state environment.

Spain’s lack of regulations for cannabis use, its criminal laws against cannabis, and the country’s failure to enforce those criminal laws, presents a unique view of use, possession, and cultivation of cannabis. Unlike the United States, Spain’s laws do not distinguish between medical and recreational cannabis use and/or possession. The Spanish Justice refers to substances listed in the 1961 Single Convention on Narcotic Drugs (the “Narcotics List”) as either banned or controlled. The Narcotics List contains most illegal drugs, including cannabis. According to the Spanish Criminal Code, it is considered a criminal offense to develop, produce, or sell any of the substances on the Narcotics List, or engage in any activity designed to encourage their consumption. A distinction is made between substances that cause serious damage to health and other substances that the law considers less harmful.

In Spain, it is illegal to sell cannabis; however, the government does not prosecute the personal and private consumption of cannabis. Case law has developed several factors to determine what quantity of cannabis amounts to personal use and therefore is not a crime. These factors include the quantity of the drug, whether the person is a regular consumer, the amount of cannabis the person has been consuming, previous criminal records of trafficking, etc. The consumption of cannabis in public places or public buildings is always considered illegal and those activities can elicit fines from 100 € to 600,000 € depending on the specific case.

The “public place” embargo has resulted in the creation of private cannabis social clubs, which are non-commercial entities that provide “members” with cannabis to meet their personal needs. Membership to these social clubs is gained either: (1) through invitation by two or more members or (2) by showing a medical report that states the person has an illness for which cannabis is recommended. Consumption in these social clubs is tolerated because this is considered consumption in a private setting.

At present, social clubs will not see interference from police or other government enforcement bodies as long as consumption remains in the private, closed setting, there is restricted access, and consumption is not visible for the general public. Social clubs have been raided in the past, but largely because they did not strictly follow those previously stated consumption guidelines. In that sense, compliance is not difficult.

Cannabis social clubs are allowed to possess cannabis because they are possessing what is considered necessary for personal consumption of their members. Social clubs are permitted to hold the amount of cannabis to supply their members’ demand and consumption. The social clubs must keep meticulous records, which are accessible and able to be produced upon government inspection. Clubs are subject to criminal penalties for failing to provide the necessary records.

Making things even more interesting, Spain is comprised of autonomous regions that may create separate regulations to govern their individual region. Recently, the region of Catalonia (in which the city of Barcelona is located) has been at the center of the cannabis market in Spain. In July 2017, the Catalonian government enacted a statute regulating cannabis social clubs, including: their form of entity, membership rights and obligations, self-sustainability, production and transport, publicity, zoning and building requirements, and special treatment of medical users. The statute was a large step towards legalizing and regulating the cultivation, consumption, and distribution of cannabis; however, the Spanish central government suspended the passage of the statue, claiming it was unconstitutional and the Catalonian Parliament lacked the authority to enact it.

It is an interesting time for cannabis in Spain, to say the least. We will continue to update periodically as things unfold.

International CannabisThis post is a follow-up to one I wrote a year ago about foreigners investing in U.S. marijuana businesses. What are the legal ramifications of the reverse? If marijuana business is fully legal in a foreign jurisdiction (think Uruguay or Canada in the near future), can a U.S. resident contribute cash in exchange for stock of a company that cultivates and sells marijuana in that jurisdiction? This is timely because Constellation Brands, the New York-headquartered owner of Corona beer and other holdings in the alcohol industry, agreed to buy a significant stake in Canopy Growth Corporation, a Canadian publicly traded cannabis cultivation company. Are they breaking the law? It’s not as simple a question as one might think.

Reuters ran a story on this topic a few years ago. In that piece, the DEA spokesperson and a financial institution money laundering risk specialist respectively implied and stated outright that such activity violated U.S. law. The DEA spokesperson said that the DEA would be “most interested in those types of activities.”

To our knowledge, the U.S. has never brought charges against a U.S. investor in these limited circumstances, so we don’t have any case law directly on point. But we can review the primary statutes that cannabis investors should be worried about —the Controlled Substances Act and the criminal money laundering statutes.

It is a general rule in the U.S., as stated in 2016 by the Supreme Court in RJR Nabisco Inc. v. European Cmty, that without “clearly expressed congressional intent to the contrary, federal laws will be construed to have only domestic application.” This means statutes that are silent on where they have effect will generally be interpreted as applying only to activities in the United States. And the U.S. does have laws on the books that are intended to be applied outside the United States. For example, the Controlled Substances Import and Export Act (21 U.S.C. § 959) outlaws possession of controlled substances overseas with the intent to import them into the United States. That’s one of the statutes that the U.S. used, for example, to go after Manual Noriega in the 1990s. To be clear, this statute wouldn’t apply to Canadian operations that have no intent to export marijuana to the United States and intend to only sell it within the Canadian regulated market.

Reading the text of the domestic Controlled Substances Act (21 U.S.C. § 821), there isn’t any clear indication that it is intended to apply to overseas conduct.  And in practice, we haven’t seen the United States try to claim that residents who travel to Amsterdam and use marijuana there have violated U.S. law. To the extent that the same statute exists for both possession of narcotics and manufacture of narcotics, it doesn’t look like extraterritorial application would apply.

Money laundering laws, however, are interpreted as having broad extraterritorial reach. So are U.S. investors in Canadian marijuana businesses in danger of violating those laws? 18 U.S.C. § 1957 makes it criminal for someone to knowingly engage or attempt to engage in a monetary transaction in criminally derived property of a value greater than $10,000 when such property is derived from “specified unlawful activity.” This law applies even if the offense takes place outside the United States if it involves a U.S. person or business entity formed in the U.S. “Specified unlawful activity” includes a laundry list of crimes, including violations of the Controlled Substances Act. So that doesn’t look great.

But here’s the thing — if the domestic Controlled Substances doesn’t apply because it only applies in the U.S., and if the Controlled Substances Import and Export Act doesn’t apply because there is no intention to send marijuana product to the United States, then a reasonable argument would be that the business of a Canadian licensed marijuana company would not constitute “specified unlawful activity.” And the money laundering law wouldn’t apply.

Therefore, Constellation Brands has a solid argument that it isn’t violating U.S. law by making an investment into the Canadian marijuana industry. There a bunch of caveats here, and there’s no way for a blog post to have a full legal analysis, and the DEA may well disagree with this interpretation even if it were an airtight legal analysis. Most U.S. banks will still shy away from offering any services connected with marijuana businesses even in countries that have legalized completely, including Uruguay. But at the end of the day, prosecutors would have an uphill climb if they truly wanted to go after a U.S. resident for investing in a foreign marijuana business that intends to serve that foreign market and is fully compliant with the laws of that nation.

Canada cannabisIt has been a while since we looked at how our good neighbors to the north have been doing with their legalization effort. Uruguay is still the only country to implement a nation-wide legalization system including legalized sales, but it has run into some implementation problems because of lack of access to the American financial system. Canada has a stronger domestic financial industry than Uruguay and both the Bank of Montreal and Toronto –Dominion Bank, among others, appear to have more tolerance for the marijuana industry. But as has been reported over the last couple of weeks, things have not been simple in Canada, where the government has announced that it plans to legalize marijuana by July 2018.

In the United States, most state legalization measures have occurred through ballot measures as opposed to through legislative processes. That approach comes with both pros and cons. On one hand, a ballot measure process can occur relatively quickly. An initiative is drafted by a campaign using whatever stakeholders the campaign wants to assist in drafting, the campaign goes out to get sufficient signatures to put the initiative on a ballot, people campaign for and against the measure, and the people all vote on the measure on a pre-determined date. Once you get past the initial drafting stage, there isn’t much in the way of horse-trading. The measure is what it is. The legislative process, on the other hand, is a never-ending process of starts and stops. Legislation can be drafted, amended, put forth for debate, and withdrawn countless times before it ever gets voted on.

Many stakeholders in Canada have been voicing their concerns about Canada’s proposed legislation. As it stands, the law would give significant authority to individual provinces to develop and implement distribution networks. But many of the provinces have viewed that grant of authority primarily as an additional cost burden. So, Prime Minister Trudeau’s government moved to increase local revenues by adding a 10 percent excise tax. Though this isn’t enough to stop the Premiers from Manitoba, Quebec, and Nova Scotia from grousing that the revenues won’t be very high, it is a push in their direction.

One interesting wrinkle in Canada is the level of potential government involvement in cannabis sales. Ontario, Alberta, and Quebec are all looking at publicly participating directly in the retail system. Ontario plans to open 40 stores through its Liquor Control Board by next summer. This hasn’t been met with enthusiasm by local consumers, who fear government involvement will lead to inferior product on store shelves. Other commentators and industry watchers fear public cannabis monopolies in Alberta and Ontario will open the door to continued illegal market activity.

But as we have seen across the United States, opening a legal marketplace takes a long time and it seems unlikely that by July 2018 Canada will be bustling with open marijuana retail stores packed with product, whether government-owned or privately owned. It looks like the liberal government is moving forward with full steam, but there will continue to be fits and starts along the way before the Canadian market is close to being settled. But on the bright side, even if local retail marijuana isn’t available, Canada Post, the Canadian version of the U.S. Post Office, is going to start delivering recreational marijuana through the mail as soon as legalization moves forward. Maybe physical retail marijuana’s main fear shouldn’t be government regulation — it should be mail-based competition.

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.