Monday, November 30, 2020

Mexican Senate Votes To Legalize Cannabis…But Activists Criticize The Measure

Activists say that the cannabis legalization bill that is being advanced is deeply flawed.

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Massachusetts Lawmakers Approve Adult-Use Cannabis Home Delivery

Recreational consumers of cannabis can soon get home delivery in Massachusetts.

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Balm, gel, roll-on: 3 CBD topicals to soothe your aches and pains

Learn how to find the right CBD topical for you and discover innovative new formats from Forma CBD that deliver relief.

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3 must-have cannabis gifts

Survey says Canadians are gifting each other these 3 types of cannabis this holiday season

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Spark up! It’s legal to smoke weed in Arizona starting today

State officials certified the election results this morning. That means it's now legal to possess and enjoy marijuana in Arizona.

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Historic Congressional vote to legalize marijuana is expected later this week

After delaying until after the election, Democrats are bringing the MORE Act to the floor.

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The Roll-up bonus: The making of ‘Dazed & Confused,’ the best stoner non-stoner movie ever made

In this special holiday bonus episode Bruce talks with Melissa Maerz, author of "Alright, Alright, Alright: The Oral History of Richard Linklater's Dazed and Confused."

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Oregon Cannabis Leasing: Will Oregon Cannabis Businesses Affected by the Wildfires Get Help?

lease oregon fires

Between COVID-19 and the wildfires it has been quite a year for Oregon cannabis. One the one hand, sales were up significantly through mid-summer, on the other hand, many growers, especially in southern Oregon and Lane County were significantly adversely affected by the wildfires that consumed much of the State.  As we wrote about in September here, one in five licensed businesses were in evacuation protocols. Marijuana businesses affected by the fires were ineligible for federal disaster relief and dispensaries in Portland were targets of break-ins at least 47 times over the summer. Perhaps one bright spot, if you can call it that, has been the eviction moratorium.

Regular readers may recall that on April 1, Governor Brown signed Executive Order 20-13, which imposed a temporary moratorium on evictions in response to the COVID-19 outbreak. Order 20-13 was set to expire on July 1, 2020, and so the Oregon Legislature took up House Bill 4213 (“HB 4213”) in order to extend the moratorium on residential and commercial evictions for nonpayment of rent. Governor Brown signed HB 4213 into law at the end of June. The Governor issued another order, Executive Order 20-56 in late September, extending the moratorium until the end of the year – but only for residential properties.

On November 22, Oregon lawmakers took up a proposal to extend the state’s residential eviction moratorium and create an assistance fund to assist landlords. (Hat tip to Jamie Goldberg of the Oregonian).  This new proposal would extend the moratorium until June 30, 2021 and require tenants to pay all back rent on July 1. What does not appear in the Rent Housing Stabilization Proposal that I reviewed is any protection for commercial renters.  Maybe this is a good thing, maybe not.

We would like to see lawmakers consider special protections and programs for Oregon cannabis businesses affected by the wildfires who are ineligible for federal assistance. (Though Senators Wyden and Merkeley have sponsored a bill change to that at the federal level.) Finally, it is a time to be thankful and I would like to thank the Oregon cannabis businesses that launched a relief fund in Jackson County to help people who lost their homes.  You can find out more at the Jackson County Fire Relief Fund by United Way webpage– and donate – here.

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Sunday, November 29, 2020

México: Viene La Legalización de Cannabis. Y Usted…¿¿Se Lanza Ahora?? 

 

mexico cannabis

Esta semana la Cámara de Senadores aprobó una iniciativa que contiene el borrador de una Ley Federal para la Regulación del Cannabis (le “Ley del Cannabis”), la cual contiene reformas a la Ley General de Salud, así como al Código Penal Federal, y fue modificada por una útil Adenda. La iniciativa así modificada se encuentra en camino a la Cámara de Diputados para su discusión y, si todo sale bien, aprobación. Ésta es una gran noticia para la industria cannábica mexicana.

Aunque la iniciativa sometida en un principio a consideración de los Senadores presentaba rasgos previsibles (y quizá otras restricciones, más alarmantes), la Adenda resulta sumamente prometedora. Prevemos que, de aprobarse por la Cámara de Diputados, la Ley del Cannabis será publicada junto con el Reglamento Médico que comentaremos líneas abajo. México estaría con ello legalizando de golpe la totalidad del mercado cannábico, para todos los usos.

Un poco de contexto: como reporté previamente en este blog, con las reformas de 2017 a la Ley General de Salud y al Código Penal Federal se legalizó la cannabis con fines médicos y de investigación, incluyendo su uso, posesión, consumo, exportación e importación. En 2018, la Suprema Corte de Justicia generaría jurisprudencia al declarar, por quinta ocasión, la inconstitucionalidad de la prohibición del derecho al autoconsumo y el autocultivo para fines recreativos por parte de mayores de edad, y ordenaría a la Secretaría de Salud, la COFEPRIS (Comisión Federal para la Protección contra Riesgos Sanitarios) y demás organismos responsables promulgar la legislación necesaria para armonizar con la sentencia emitida, garantizando así, el suministro, distribución y venta de la cannabis.

El año pasado, una sentencia de la Suprema Corte de Justicia impuso el mandato a la Secretaría de Salud de emitir la legislación secundaria que permitiera hacer efectivas las reformas de 2017 antedichas, correspondientes al uso médico y de investigación, imponiendo para hacerlo como fecha límite (prorrogada) septiembre de 2020. El Reglamento aún no se publica. Pero, en el lado positivo, la iniciativa que acaba de ser aprobada por la Cámara de Senadores sí busca cumplir con el mandato de la Suprema Corte de 2018, el cual impuso una fecha límite para legislar el uso adulto, igual prorrogada ya algunas veces y que hoy vence el 15 de diciembre de 2020.

La Ley del Cannabis reglamenta el uso adulto o recreacional y el industrial (cáñamo). No obstante, expresamente deja fuera el uso médico, terapéutico o paliativo. Ello se debe a que 1) el uso médico ya es legal, como consecuencia de las reformas de 2017, mencionadas arriba y 2) dicho uso será expresamente reglamentado por un Reglamento Médico cuyo borrador –entendemos- está listo, y que esperamos sea publicado en el Diario Oficial de la Federación casi o al mismo tiempo que la Ley del Cannabis, de aprobarse.

Dicho lo anterior, a continuación, presentamos los cambios más disruptivos contenido en la Ley del Cannabis:

  • Se consolida el porcentaje del 1% en adelante en concentraciones de THC como el estándar base para considerar al cannabis como psicoactivo, lo que significa que México seguirá el estándar internacional y no el norteamericano.
  • El uso adulto, así como la posesión de hasta 28 gramos de cannabis se vuelven legales para mayores de 18 años.
  • Las personas físicas finalmente podrán solicitar permisos de autoconsumo y autocultivo para uso adulto: hasta 6 plantas por titular y 8, cuando en un domicilio habite más de un titular de permiso. No habrá necesidad de instalar barreras físicas para consumir: será suficiente asegurarse que el humo no llegue a menores de edad o fumadores pasivos.
  • Se crea el concepto de “asociaciones de consumo de cannabis psicoactivo”, una asociación civil sin fines de lucro donde titulares de permisos individuales de autoconsumo y autocultivo pueden realizar juntos las actividades inherentes al uso adulto, bajo requerimientos específicos y siempre que mantengan una distancia de, al menos, 500 metros de cualquier área recreativa, escuela, espacio libre de humo, etc.
  • Se prevé el otorgamiento de licencias para las siguientes actividades, de acuerdo a los fines permitidos: cultivo, transformación, comercialización, importación o exportación (aunque en este caso, no para cannabis psicoactivo) e investigación. Las licencias incluirán autorización para actividades auxiliares a aquéllas que se autorizan: transporte, almacenamiento y, en el caso de las licencias de cultivo y transformación, venta al siguiente eslabón de la cadena productiva, siempre que el comprador sea titular de la licencia correspondiente.
  • Se permitirá la verticalidad de licencias, y no habrá restricción alguna a partes relacionadas para solicitar otras licencias, lo cual abre la posibilidad de generar alianzas que cubran la totalidad de la cadena productiva. Sin embargo, la Secretaría de Salud y la Comisión Federal de Competencia Económica mantendrán la prerrogativa de restringir e incluso revocar las licencias, basados en consideraciones de competencia económica o justicia social. Se espera que las autoridades analicen el ejercicio de estas facultades caso por caso.
  • Las licencias de cultivo ampararán una extensión límite de 8 hectáreas a cielo abierto y 2 mil m2 bajo cubierta por titular. Se dará preferencia en su otorgamiento a aquellos grupos considerados vulnerables o afectados por el sistema prohibitivo (indígenas, ejidatarios, campesinos, etc.). Sin embargo, si un miembro de alguno de esos grupos desea solicitar una licencia, deberá obtener autorización previa de las autoridades ejidales correspondientes.
  • Los extranjeros, bajo las restricciones al capital extranjero ya contenidas en la Ley de Inversión Extranjera, podrán constituir una sociedad mexicana para solicitar sus licencias. 
  • Se creará el Instituto para la Regulación y el Control del Cannabis (el “Instituto”), un organismo desconcentrado de la Secretaría de Salud, que tendrá a su cargo todos los aspectos relaticos al control de la industria, lo que incluye las políticas y lineamientos para el otorgamiento de licencias.
  • Se reglamentará el cáñamo, si bien superficialmente.

Como puede verse, la iniciativa aprobada y su contenido son muy buenas noticias y, si no se modifica en demasía en la Cámara de Diputados, podría allanar el camino para que México se vuelva, gracias a su posición geográfica (al lado de los dos mayores mercados cannábicos del mundo) y clima, en una potencia industrial y mercado global para el cannabis.

Ahora bien, es importante que entendamos tres cosas:

Primero, usar cannabis ya es legal, gracias a las reformas de 2017 y a la jurisprudencia emitida por la Suprema Corte. Solamente no se encuentra reglamentado, que es lo que mantiene a la industria en un estado de incertidumbre jurídica.

Segundo, la existencia de reglamentación en sí misma importa más restricciones a las actividades que la falta de ella.

Tercero, si bien el cannabis será completamente legal una vez que la Ley del Cannabis y el Reglamento Médico sean promulgados, eso no significa que usted podrá solicitare licencias en cuanto dicha legislación entre en vigor. El Instituto debe constituirse, emitir su estatuto orgánico, lineamientos, etc. Así, una vez que ello ocurra, se deberá esperar 90 días para poder solicitar licencias de investigación, mientras que deberá esperarse 6 meses para licencias que amparen actividad con cannabis no psicoactivo y 18 meses para los permisos y licencias que involucren uso adulto y cannabis psicoactivo. Por lo que se refiere a licencias de cultivo, no podrán solicitarse mientras el Instituto no emita lineamientos de testado y trazabilidad.

Lo anterior resalta la conveniencia de solicitar licencias cannábicas antes de que la legalización tenga lugar. Sí, buscar licencias sin mediar un marco regulatorio puede ser más difícil, pero si las otorga la autoridad, necesariamente serán de alcance más amplio que las licencias que se otorguen una vez que entren en vigor la Ley del Cannabis y el Reglamento Médico. En efecto, como he escrito anteriormente, pueden evitarse las restricciones que se impondrán a la inversión extranjera en la industria cannábica, así como aquéllas que se impondrán a las licencias en cuanto a su verticalidad, amplitud de las actividades autorizadas y delimitación geográfica. Más allá de eso, los primeros solicitantes que tengan éxito estarán a años de distancia de sus competidores en términos de sentido local para los negocios, comprensión de las necesidades de los consumidores y, sobre todo, participación de mercado. Todo esto compensa con creces el solicitar licencias con anticipación y pelear legalmente cualquier negativa o rechazo de sus solicitudes. Después de todo, los mismos transitorios de la Ley del Cannabis prevén que “[t]odos los procedimientos, recursos administrativos y demás asuntos relacionados con las materias a que refiere este Decreto, iniciados con anterioridad a su entrada en vigor, se tramitarán y resolverán conforme a las disposiciones vigentes en ese momento.”

Así que ya lo saben: se viene un boom del mercado, pero hay que ir por esas licencias HOY.

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Saturday, November 28, 2020

Ketamine, Psilcobyin and New Drug Therapies (Part 2): The Webinar Video Replay

Psychedelic Webinar

For anyone who was not able to join our Q&A webinar last week on psychedelics, we’ve got you covered! Below, please find the full webinar for your viewing pleasure.

If you missed part one of this two-part webinar, you can watch it HERE.

 

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Friday, November 27, 2020

House Of Representatives Schedules Vote On MORE Act

The U.S. House of Representatives is planning to vote on the MORE Act in the first week of December.

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Georgia Accepting Applications for Medical Cannabis Production

The process for getting licensed will be competitive.

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Big Zig-Zag bundles make holiday shopping ridiculously easy

Limited-edition, Zig-Zag bundles are loaded with your favorite papers and smoking accessories.

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2020 Holiday Gift Guide: Proper Puffs

Our Proper Puffs are the perfect cannabis gifts for yourself or a friend. Check out this section of the Leafly 2020 Holiday Gift Guide for gifts from $50-100.

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Cannabis Trademarking in Brazil

brazil cannabis

An appeals court in Brazil is set to consider the issue of cannabis-related trademarks, and in particular their registrability under the country’s Intellectual Property Law (LPI), which forbids the registration of marks “contrary to morals and good customs” (Article 124, III).

One of the key issues at the intersection of cannabis law and cannabis business is the protection of the intellectual property rights (IPR). This is a frequent topic on this blog, with my colleague Alison Malsbury in particular keeping close tabs on developments in the United States. Having spent a significant part of my career working with international brands to protect their IPR in emerging markets, I’ve seen how intellectual property law is usually one of the “early movers” as a country’s legal system adapts to changing economic realities. Companies will be wary of engaging in even basic activities in a new market if they cannot obtain at least de jure protection for their trademarks.

Not surprisingly, IPR protection is also one of the first issues to come up as legal systems begin to respond to the increasing normalization of cannabis. In this, Latin America and Brazil in particular are no exceptions. One common tension is between the natural desire of cannabis entrepreneurs to protect their creations and distinguish their products from the competition, and legal provisions that deny IPR protections to certain products, as a matter of public policy. The LPI’s prohibition on marks “contrary to morals and good customs” is a textbook example of the latter. (For a great example of how these tensions manifest themselves outside both the trademark and cannabis contexts, read about the Oncomouse.)

In some instances, the determination of whether a mark runs afoul of Article 124 is uncomplicated. For example, the National Institute of Intellectual Property’s (INPI) Trademark Manual uses a swastika and the word mark KU KLUX KLAN as examples of marks that are not registrable under any circumstances.

With cannabis, however, the line is not as clear. The Trademark Manual itself provides some leeway. The evaluation of whether a mark is contrary to morals and good customs “should take into account the characteristics of the product or service market that the mark aims to distinguish, such as the type of target audience (general or specific), as well as the distribution, marketing and advertising channels of the products or services in question.”

In practice, this has led to apparent inconsistencies. According to one intellectual property lawyer quoted by Valor Econômico in an article about the topic, the process is “super subjective.” For example, INPI approved the mark ULTRA 420 for a tobacconist, while rejecting the mark 4EVINTE for a different tobacconist (4EVINTE sounds like 420 in Portuguese).

The tobacconist seeking the registration of the 4EVINTE has appealed INPI’s decision in the Federal Regional Court of the First Region (TRF1), based in Brasilia. TRFs are roughly equivalent to the U.S. Courts of Appeals, and as often happens in the United States, there is contrary jurisprudence in a different region, specifically the Rio-based TRF for the Second Region (TRF2). According to the Valor Econômico article, this summer the TRF2 denied the application for registration of the BRAZILIAN CANNABIS and BRAZILLIAN [sic] MARIHUANA marks.

It is worth pointing out, however, that although INPI rejected the marks on moral grounds, the TRF2 “understood that they have no distinctiveness, that is, they use generic terms that designate characteristics of the products to which they refer – cigarettes without tobacco and herbs, for medicinal purposes, derived from cannabis.” It is hard to see how the 4EVINTE mark could be turned down for being generic, which might require the TRF1 to confront the morality issue.

Compared to some of its neighbors, Brazil has been timid when it comes to cannabis legalization. That said, as the region’s largest economy (and one of the world’s largest), the country holds incredible promise, not just as a consumer market, but as a hotbed of research and innovation. And as the trademark tiffs demonstrate, Brazilian cannabis entrepreneurs are ready to roll.

In all, it is a market worth watching, and by that we mean Brazil generally. Despite COVID woes, “The Brazilian economy in 2020 and 2021 (will) be less affected than that of the median of emerging countries,” in part due to a robust fiscal response by the government to offset unemployment. With the incorporation of São Paulo-based attorney Rodrigo Guedes Nunes, Harris Bricken is well positioned to assist clients with any legal matters in Brazil.

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Thursday, November 26, 2020

Happy Thanksgiving from Canna Law Blog!

Here’s to a happy Thanksgiving for everyone out there, along with friends and families.

We are thankful for the privilege of working with so many great people and companies every day, and in such a dynamic area of law and policy.

Enjoy the holiday! We’ll be back tomorrow.

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Wednesday, November 25, 2020

The Roll-up #173: Why we’re thankful for the garbage year of 2020. Yes, 2020.

This week Bruce, Alyssa, and Hannah chew through 2020 and all its robust, savory goodness.

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Detroit City Council Approves Adult-Use Cannabis Sales

Looks like Detroit is getting into the legal cannabis game!

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Can THCV really curb the munchies?

Check out these promising studies and find out where to buy THCV.

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Detroit okays 75 retail marijuana shops; half will go to legacy residents

Two years after Michigan legalized weed, Detroit approved a licensing plan that offers city locals a chance to enter the industry.

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Medical Cannabis Advocate And Innovator Rick Simpson Opens Up About Stroke Recovery

Lauded cannabis innovator Rick Simpson and his family are asking for assistance as he recovers from a stroke.

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Fewer Teens are Seeking Treatment for Cannabis Use in Legal States

In states with legal cannabis, studies find that fewer teenagers are put into treatment for consuming pot.

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Limited-run live resin vapes highlight rare, exclusive strains

For ROACH, it’s about quality and passion—not quantity. Here’s why you should get ready to try their next batch.

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Combining cannabis with psychedelic mushrooms: Recipe for mind expansion or a bad trip?

Some report an intensified psychedelic experience. For others, the two don't mix well. The science is just getting started.

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Citywide Psychedelic Decriminalization Doesn’t Protect Commercial Activities

psychedelics psilocybin decriminalization

Over the last year, a handful of cities have passed decriminalization measures for psilocybin and other plant psychedelics. Denver was the first jurisdiction to pass a decriminalization measure, and Oakland, Santa Cruz, Ann Arbor, and most recently, Washington, D.C., followed suit.

Each of these decriminalization measures is different, but fundamentally they are the same in that they do not actually make psychedelics legal. All they really do is direct law enforcement in those cities to make enforcement of existing criminal laws a low priority, and only then for non-commercial possession and use. Decriminalization measures don’t change state or federal law, and even don’t really change local law.

These limitations on decriminalization are pretty significant. First off, law enforcement is generally not precluded from making arrests, just directed to make them a low priority. This still gives law enforcement discretion to make arrests. Second, decriminalization is generally limited to specific non-commercial activities. While using or possessing certain psychedelics may be “protected”, engaging in commercial activities is not.

It is clear that even in decriminalization jurisdictions, commercial sales are not yet authorized. We want to examine two case studies following the implementation of various decriminalization efforts to show how risky things can be.

Let’s start in Denver, the first city to decriminalize psilocybin. In late September 2020, a man pleaded guilty in federal court to possession of psilocybin with intent to distribute. Sentencing is set for early December 2020. According to a press release by federal prosecutors:

According to the stipulated facts contained in the defendant’s plea agreement, Milner had a sophisticated psilocybin mushroom cultivation operation in his Denver apartment.  His bedroom had a large climate-controlled tent, equipped with lights, fans, humidification and de-humidification devices, and other equipment to aid in the cultivation of psilocybin mushrooms.  Milner began to cultivate and distribute psilocybin mushrooms from his apartment in November of 2018.  He conducted sales under the name “Happy Fox Edibles.”  Milner promoted this name through the media and was the subject of several news articles and videos related to his cultivation and sale of psilocybin mushrooms.

The defendant’s arrest and plea all happened well after Denver decriminalized psilocybin mushrooms. The facts make clear not only that decriminalization is not binding at all on federal authorities, but also that sales of psilocybin are not protected.

Now, let’s turn to Oakland, the second city to decriminalize psychedelics. In late 2020, Oakland law enforcement apparently raided the Zide Door Church of Entheogentic Plants. Apparently, Oakland law enforcement noted that in contrast to other local psychedelic organizations, Oakland believed Zide Door was operating as a for-profit business. This was apparently the motivating factor in the raid, and it’s unclear whether any of the allegedly nonprofit organizations have been raided. We want to be clear that these are only allegations at this point and the burden will be on law enforcement to prove its case going forward.

Raids and arrests like this will just be the tip of the iceberg. Many organizations will ultimately interpret decriminalization efforts at carte blanche to engage in commercial activities, and some of them are likely to face the ire of law enforcement. Unless and until states or the federal government actually legalize and regulate psychedelics, organizations operating in the space will face immense risks. Stay tuned to Canna Law Blog for more developments on the psychedelics front.

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Instagram keeps deleting Canada’s legal cannabis accounts

Cannabis is legal across the country but Canadian cannabis retailers continue to be booted off the social media platform.

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Tuesday, November 24, 2020

Successful Cannabis Initiatives In Three States Face Legal Challenges

State residents in Montana, Mississippi, and South Dakota voted for cannabis legalization. But it's still a battle.

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Pairing beer and weed: a match made in heaven

Cannabis and the hops in beer are cousins, and go together perfectly. Check out our guide on how to pair the two.

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California Claims Cannabis Billboards Have Been Displayed Improperly

California may soon crack down on billboards advertising cannabis.

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LED grow lights are more affordable than ever for cannabis cultivators

Spider Farmer is the hottest new thing in grow lights—and they're available at a fraction of the price of other big brands.

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Cannabis advice: Infused Thanksgiving cooking tips

Don’t get guests too high. Who’ll do the dishes?

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Florida high school official fired for using legal medical marijuana

Gulf War veteran Mike Hickman used legal medical cannabis instead of dangerous opioids. When district officials found out, they fired him.

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FREE Webinar – Cannabis in the U.S. and E.U.

Cannabis in the U.S. and E.U.

REGISTER HERE!

Join Harris Bricken, in partnership with German-based law firm KFN+ and Swiss-based law firm Froriep for a FREE webinar on Thursday, December 17th, at 8:30am PT/ 5:30pm CET to learn about cannabis and hemp CBD abroad.

Harris Bricken’s international cannabis and hemp CBD attorneys, Griffen Thorne and Nathalie Bougenies, are partnering with Kai-Friedrich Niermann (KFN+) and Daniel Haymann (Froriep). During this FREE hour-long webinar, the panel will answer your questions and cover the status of cannabis and hemp CBD regulation in the European Union and Switzerland, U.S. import, sale, and marketing issues, and foreign direct investment, among many other topics.

The panelists will spend the final 15 minutes answering attendee questions. Make sure you submit any questions you may have regarding cannabis and/or hemp CBD in the U.S. or E.U. when you register!

Register HERE today!

 

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Monday, November 23, 2020

Maine’s First Month Of Legal Marijuana Sales Total $1.4M

Maine is seeing significant success in their recreational cannabis industry.

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Assembly Committees in New Jersey Senate Advance Cannabis Bill

Legal cannabis is inching closer to becoming a reality in the Garden State.

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Cannabis’ Black Friday is called Green Wednesday: It’s already lit

Pre-rolls, vape carts, edibles are hot in legal stores before the tense Thanksgiving break

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Stuck in one of Florida’s medical marijuana deserts? Help may be on the way

The state's dispensaries tend to cluster in cities and along the coasts, leaving rural inland patients stranded. But that may be changing.

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When are cannabis tours and tasting rooms coming to Canada?

You can already taste the wares at wineries and breweries, so when can we expect Canadian growers to offer on-site cannabis tastings?

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Lawsuit Challenging California Cannabis Deliveries Dismissed, But Status Quo Remains

california cannabis delivery fresno

On November 17, 2020, the Fresno County Superior Court dismissed a lawsuit filed by 24 California cities seeking to invalidate state cannabis regulations that allow delivery of cannabis to customers in jurisdictions that have banned retail commercial cannabis activity. Many industry players and media are touting the dismissal as a “win” for California cannabis companies. We have a different take. That’s because after the dismissal, cities and counties are still allowed to ban delivery. It’s just that the state Bureau of Cannabis Control (BCC) will not be compelled to enforce those prohibitionist local ordinances.

As we explained last year, the plaintiffs in the action sought to invalidate and permanently enjoin enforcement of Title 16, section 5416(d) of the California Code of Regulations. According to plaintiffs, Regulation 5416(d) permits the delivery of commercial cannabis to a physical address anywhere in the state, which conflicts with the plain language of Business and Professions Code sections 26090 and 26200. Business and Professions Code section 26090(e) allows deliveries of cannabis, but only if such operations comply with local law. Section 26200(a) allows a local jurisdiction to regulate or completely prohibit the operation of commercial cannabis businesses within its boundaries. Plaintiffs contend that “Regulation 5416(d) is in direct conflict with the plain language of Business and Professions Code sections 26090 and 26200, which guarantee the right of local jurisdictions to regulate or prohibit commercial cannabis operations within their boundaries.”

However, the BCC contended that the issues were not ripe for adjudication, because “Regulation 5416(d) does not directly contradict or preempt plaintiffs’ local ordinances because the regulations does not command local jurisdictions to do anything, and does not prohibit them from doing anything.” The court agreed with the BCC, and stated that, “[s]pecifically, [Regulation 5416(d)] does not command local jurisdictions, including plaintiffs, to permit delivery. Nor does it override their local ordinances prohibiting or regulating delivery.” The BCC pointed out that the delivery regulation applies to state licensees, not local jurisdictions. Therefore, the regulation and plaintiffs’ local ordinances do not occupy the same field and are not in conflict.

While many are framing this as a win for the industry, the decision does nothing more than preserve the status quo. The court pointed out in its decision that “[l]ocal jurisdictions can impose regulatory and health and safety standards that are stricter than state laws. The standards established by the BCC are the minimum standards for licensees statewide, and ‘local jurisdiction[s] may establish additional standards, requirements, and regulations.’ (Bus. & Prof. Code, § 26201). The BCC is not required to enforce plaintiffs’ local ordinances.”

What this decision reinforces is that in fact, local jurisdictions can enact more restrictive regulations that prohibit delivery within their jurisdictional boundaries because state law does not preempt those regulations. Many jurisdictions, including here in the City of San Francisco, have already enacted such prohibitions on deliveries by entities not licensed in that jurisdiction. The issue has been with the ability of local jurisdictions to effectively enforce these restrictions, rather than the validity of the restrictions themselves.

This decision makes it clear that cities and counties can prohibit delivery within their jurisdictional boundaries, but the BCC will not be involved in enforcing those prohibitions, and the task of enforcement will be left up to local jurisdictions.

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Sunday, November 22, 2020

Mexican Cannabis: Legalization is Happening! Are you Ready?

mexico cannabis

This week the Mexican Senate passed a bill containing a draft federal law for the regulation of cannabis (the “Cannabis Law”). The bill includes amendments to the General Health Law and the Federal Criminal Code and is amended by a helpful Annex. The Cannabis Law is being sent to the Mexican Lower Chamber (Cámara de Diputados) for discussion and hopefully, approval. This is very big news for the Mexican cannabis industry.

While the bill originally put on the floor for Senate approval has features we had seen coming (and perhaps some other, more disquieting, restrictions), the Annex was truly encouraging. If the Cannabis Law passes in the Lower Chamber we expect it to be published in tandem with the Medical Regulations discussed below, thereby legalizing the whole cannabis market for all uses in a single coup in Mexico.

A bit of context here: as we have previously reported on this blog, in 2017 amendments to the General Health Law and the Federal Criminal Code allowed: 1) limited cannabis use and consumption for qualified patients, 2) possession for undertaking medical research, and 3) import and export of medical cannabis products. In 2018, Mexico’s Supreme Court declared Mexico’s general prohibition against adult use cannabis unconstitutional and also mandated that the Ministry of Health, COFEPRIS (Federal Commission for the Protection against Sanitary Risks), and various other Mexican governmental agencies issue regulations to establish a commercial cannabis chain for cannabis distribution.

A Supreme Court ruling last year mandated the Ministry of Health to publish regulations for medical use to make 2017 amendments effective by September 2020. However, this has not happened so far. But on the upside, the bill that has just been approved by the Mexican Senate does seek to comply with the 2018 mandate, whose deadline for publication has been pushed back a few times now and is now set at December 15th.

The Cannabis Law regulates recreational and industrial (hemp) use. However, it expressly leaves aside medical use, because: 1) such use is already legal, following 2017 amendments mentioned above and 2) it will be regulated by another set of draft Medical Regulations which we hear are ready, and which we expect will be published in the Federation Official Gazette at or around the same time as the Law if approved.

That said, here are the game changers contained in the Cannabis Law:

  • The 1% and above THC content standard to deem cannabis as psychoactive is further cemented, so Mexico will follow the international and not the American/Canadian standard. Adult cannabis use will be legal for 18 years and older andpossession of up to 28 grams will be fully legal, something that before was only allowed by binding precedent (jurisprudencia).
  • Individuals will finally be able to apply for growing and consumption permits for adult use: up to 6 plants per holder or 8 plants when more than one holder live in the same dwelling. No need to install physical barriers at home to consume: it is enough to ensure that smoke does not reach minors or passive smokers.
  • The concept of “consumption associations” (asociaciones de consumo), is introduced: a non-profit where a group of individual permit holders can conduct cannabis adult use-related activities together, under specific requirements and provided they are established at least 500m away from any recreational area, school, smoke-free area, etc.
  • The law will provide the issuance of licenses for the following cannabis-related activities: cultivation, processing, merchandising, import/export (though these two not for psychoactive cannabis) and research. Licenses will include authorization for ancillary activities: transport, storage and, in the case of cultivation and processing, sale to the next link down the production chain, provided buyer is a license holder, as well.
  • License verticality is allowed and there will be no restrictions for related parties to apply for other licenses, which opens the possibility of creating partnerships that cover the whole productive chain, though it may be restricted by the Ministry of Health or the Federal Economic Competition Commission on social and antirust considerations. This should be dealt with by authorities on a case-to-case basis.
  • Regarding cultivation licenses, each license will cover 1 acre for open-air farming and 1000 sqm indoors, but the limit of licenses per holder has been set at 8 for open air farming and 2 indoor. As for issuance, preference will be given to those population groups deemed vulnerable or disaffected by the war against drugs (indigenous peoples, farmers, etc.). Still, if a member of those groups wants to apply for a license, s/he has to obtain prior authorization from ejido (communal land) authorities.
  • Foreigners, under foreign capital amount restrictions already in place under the Foreign Investment Law, can set up a Mexican company to apply for licenses.
  • A decentralized organ stemming from the Ministry of Health, the Mexican Institute for the Regulation and Control of Cannabis (the “Institute”), will be created tooversee everything regarding control of the industry. This includes defining license issuance policies and guidelines.
  • Hemp will be regulated, albeit superficially, the Cannabis Law contained in the bill does provide for a definition of hemp and for activities that can be conducted with the plant.

As we can see, the bill and its contents are very good news and, if not thoroughly modified by the Lower Chamber, could very well pave the way for Mexico to become–thanks to its geographic location (next to the two largest cannabis markets in the world) and climate–an industrial powerhouse and global market for cannabis.

Still, it is important to understand three things: 1) cannabis use is already legal, thanks to the 2017 amendments and the recent Supreme Court binding precedents (it is just unregulated, which keeps the industry in a legal gray area); 2) regulation in and of itself will always involve more restrictions than no regulation at all, and 3) although cannabis will be fully legal once the Cannabis Law and the Medical Regulations are published, that does not mean that you will be able to apply for licenses immediately upon entry into force. The Institute must first be created and be fully operational. A full 90 days after that happens, you will be able to apply for a research license, whereas you will have to wait 6 months for licenses for activities involving non-psychoactive cannabis and 18 months for adult use permits and licenses. Finally, for cultivation licenses, you may only apply for them once testing and traceability guidelines are published.

The aforesaid highlights the convenience to apply for cannabis licenses before legalization takes place. Granted, licenses might be harder to obtain, but if issued they will necessarily be broader than licenses issued once the Cannabis Law and the Medical Regulations enter into force. Indeed, as I have written previously, you may be able to bypass restrictions on foreign investment, as well as future limitations on verticality, scope of business issues and location strictures. You will also be one step ahead on market knowledge and business acumen.

All of this make it worthwhile to apply beforehand and challenge any rejection or denial of your license application. After all, the law contained in the bill itself provided that any administrative or judicial remedy filed before the law enters into force will be processed and resolved pursuant to the law applicable at the moment of filing.

So now you know: a market boom is coming, but apply TODAY.

Editors’ Note: We will publish a version of this post in Spanish later in the week. Until then, for more on cannabis in Mexico, check out the following: 

 

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Saturday, November 21, 2020

Oregon Cannabis Stories

oregon cannabis

We love our clients. From mom-and-pop shops to multinational corporations, most of them run solid operations and behave themselves pretty well. But when you have hundreds of clients and thousands of transactions over many years in the cannabis industry, you see some crazy things. This list covers crazy things that come to mind in Oregon. This is just for fun.

There was the guy who walked off with a whole bunch of company plants, on camera. Also the brave woman who opened an unlicensed marijuana store on a busy street (and was politely shut down by the Portland police). The same woman for wanting to sue OLCC for not licensing her, although she had not applied. The amazing clients who did not know who owned the LLC they both organized and managed. The opponent who explained away a tax fraud to an arbitrator, saying, “everyone does it. Well, maybe not Mother Theresa! But you know ¯\_(ツ)_/¯”. (He lost.) The shifty bros who wanted big bucks to license a Wu-Tang member’s IP, although they had no demonstrable connection to that member. The corrupt CPA who forged signatures of his client, a famous actress, to invest her money in a cannabis business. The geniuses who built these all-time terrible business structures. The gentleman who closed on a $2 million piece of real estate, made one monthly payment and just… disappeared. The client we sincerely disappointed by not having a ruler available in the office. That $2 million purchaser, who reappeared a year later to “get the property back” only to promptly disappear again (forever?). Nearly every CBD broker I’ve come across, and especially the ones who later popped up as PPE brokers in our law firm’s China practice, in the early days of COVID. The friendly people who sold “shares” in their nonprofit. The awful person who took LLC investment money from our clients, bought land in his own name, drove the cannabis down to Nevada and chased our clients off the property with a gun. The lawyer who sued us for “conspiracy” because our client allegedly trespassed somewhere, and then never served the lawsuit. The lawyers who told people not to file tax returns for 5th Amendment reasons. The client who was disemboweled by a crazy person squatting on his landlord’s property (this was terrible; he survived). The client who reluctantly evicted his tenant, after the FBI arrested that tenant driving across the country with many kinds of drugs. The very thoughtful clients who fired us but promised also to endow a university hemp research center in Harris Bricken’s name after prevailing in their lawsuit. The client who won a hefty six-figure settlement, but wanted to leave it here indefinitely and swing by now and again for walking around money (apparently forever). The guy who asked an OLCC inspector what he could do, right now, “to make this little problem go away.” And last but not least, the clients who played this song on giant speakers when an OLCC investigator came to their property. We lost track of them, somehow.

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Friday, November 20, 2020

The Roll-up #172: Free the Old Guy, Part II: He’s Coming Home

Richard DeLisi was sent to prison decades ago, caught in a marijuana sting operation. He'll finally walk free next month. We talk to one of the lawyers who helped make it happen.

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Get BOGO deals from five CBD this holiday season

Stuff those stockings with buy-one-get-one free CBD + THC products from five.

The post Get BOGO deals from five CBD this holiday season appeared first on Leafly.



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Study Finds 17% Of Patients With Rheumatologic Diseases Are Cannabis Consumers

In a new study, almost 20% of patients with rheumatologic illnesses use cannabis to relieve their symptoms.

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2020 Holiday Gift Guide: Stocking Sesh

The Stocking Sesh section of the Leafly 2020 Holiday Gift Guide is full of stocking stuffers for $50 or less.

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The Leafly 2020 Holiday Gift Guide

It's the most wonderful time of the weirdest year ever. Give your friends and family the cannabis gifts and accessories they've been wanting with the Leafly 2020 Holiday Gift Guide.

The post The Leafly 2020 Holiday Gift Guide appeared first on Leafly.



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A New Way To Engage: The High Times Shop Relaunch

Get ready, friends—the High Times Shop is better than ever.

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The Option of Bankruptcy Grows Clearer for Hemp Businesses

bankruptcy hemp

As we’ve written about before, bankruptcy hasn’t been a viable option for cannabis businesses, including ancillary businesses that derive any portion of their revenue from cannabis. That was expected to change for hemp and CBD businesses after the 2014 Farm Bill, and especially after hemp was legalized as a commodity under the 2018 Farm Bill (and removed from the Controlled Substances Act). But things didn’t change much, notwithstanding a Ninth Circuit suggestion that bankruptcy courts may now be more open to industry debtors. The actual number of bankruptcy plans actually confirmed in the past few years is very low.

Last week however, the Eastern District of Kentucky Bankruptcy Court approved and confirmed Kentucky hemp giant, GenCanna Global/OGGUSA’s Chapter 11 Plan of Liquidation, finally closing one of the first bankruptcy cases for the hemp industry. GenCanna was a vertically integrated hemp producer and CBD manufacturer. This case was particularly tumultuous since its filing in February 2020. Back in October 2019, several contractors and suppliers filed approximately $13 million in liens against GenCanna for its failure to pay. GenCanna was also facing pressure and accusations from farmers who allegedly were asked to expand their acreage to grow hemp while GenCanna knew it wouldn’t be able to honor those agreements. Its bankruptcy petition had listed 81 companies and individuals spread out through Kentucky, other states, and even Canada.

Ultimately, GenCanna ended up selling the bulk of its assets to its lender/creditor MGG Investment Group. The sale, valued at $77 million, allowed MGG Investment Group to recoup its initial investments. The remaining assets will be distributed to the remaining creditors in line of priority.

The hemp industry has definitely had its fair share of hurdles since legalization – there is uncertainty surrounding the regulatory framework, litigation against DEA, ongoing access challenges to bank and other financial services, and of course, the ripple effects of the pandemic. While filing for bankruptcy is certainly not something any hemp business owner wants to consider, at least there appears to be a growing trend of cases across the country confirming that there are options beyond cannabis receivership, or simply winding down without court supervision.

One thing to note is that having bankruptcy as an available option can actually be beneficial because it inevitably shifts the calculus when business disputes do arise. For those who are struggling to stay afloat but still intend to make good on their contracts, having bankruptcy as an option becomes a leveraging chip for a discount or more time. In such cases, a potential creditor really needs to evaluate whether it makes sense to try to work with the potential debtor – if the due diligence shows that aggressively pushing the debtor would lead to bankruptcy proceedings where the creditor might only yield fifty cents on the dollar, it might be worth it to work with that debtor on a slower payment plan.

Of course every situation is incredibly fact-intensive and knowledgeable attorneys should be consulted, but we predict the growing number of confirmed bankruptcy cases in the industry will reduce stigma and result in subtle but meaningful change. We are glad to see things going in the right direction here.

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Thursday, November 19, 2020

Attorney General of North Carolina Calls For Decriminalizing Cannabis

North Carolina's AG is pushing for marijuana law reform in the name of racial justice.

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Key details in New Jersey’s marijuana law could be decided this weekend

Want to grow cannabis at home? Call your state legislator about it today—or it might be too late.

The post Key details in New Jersey’s marijuana law could be decided this weekend appeared first on Leafly.



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PartyNextDoor Drops New Song Collection And A Side Of Weed

Everyone knows that music and cannabis make the perfect pairing.

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Rhode Island Considers Legalization to Solve Budget Crisis

Will Rhode Island be the next state to legalize cannabis?

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Madison, Wisconsin, will stop arresting people for marijuana possession

It's still illegal throughout the state, but Wisconsin's great college town has decided to stop arresting people for small amounts of cannabis.

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Oregon Cannabis Securities Litigation: Another (!) Fraud Lawsuit

securities fraud hemp oregon

The maturation of the Oregon cannabis industry in the past few years has been accompanied by a tremendous increase in mergers and acquisitions and a flood of investment capital into the marketplace.  Not surprisingly our commercial litigators have seen a marked increase in the number of securities lawsuits both here in Oregon and elsewhere.  As we’ve written about extensively, there is a right way and wrong way to raise capital – whether for marijuana or hemp – and all too frequently we see businesses issue “securities” without taking the appropriate steps to ensure compliance with securities laws or investors get fleeced.

An investor lawsuit recently filed in Multnomah County alleging causes of action under Oregon Securities Laws highlights risks to companies, their owners, and investors. The case is Chung v. Martin et al. (Feel free to email me if you’d like a copy of the complaint). Plaintiff David Chung and his company Elevated Society LLC (together “Plaintiffs”) contend that Defendants Martin, Woodruff, We Clone LLC, and We Close Prospect LLC (together “Defendants”) sold unregistered securities in violation of Oregon law and made untrue statements in connection with the sale of securities in violation of Oregon law. According to Plaintiffs, Defendants invited investors to purchase up to 40 units of We Clone LLC at an issue price of $50,000 per unit to raise up to $2,000,000 and promoted the investment through advertisements on bizbuysell.com, videos posted on the internet, and communications with Plaintiffs.

Defendants represented that We Clone LLC would be growing and selling high-quality hemp clones and flowers. Plaintiffs allege Defendants “urged” Plaintiffs to “hurry and invest” as only a limited number of units were available, though in fact no units had been purchased. Defendants promised quarterly payments of profits and issued a private placement memorandum (“PPM”) that included boilerplate securities disclosures. Chung made a $200,000 investment and signed a subscription agreement but received no other documentation of his ownership of the LLC units. He later received a Certificate of Ownership – but for the wrong company.

The Complaint offers a litany of alleged untrue statements and omissions of material fact related to the offer and sale of membership units. These include that We Clone was actually growing hemp outdoors, not indoors as represented; that Plaintiffs needed to act quickly to purchase the units; that other investors had purchased units when no such units had been purchased; that Defendants needed to raise $2 million to make their “scheme” viable; that Plaintiffs would be investing in a “fully operational business” when in fact We Close was not fully operational; that We Clone would be paid for consulting, when in fact only Martin’s other companies were paid for such consulting; that We Clone had a functioning e-commerce platform, when no such platform existed . . . and many other alleged misrepresentations and omissions.

The lawsuit pleads three claims under Oregon securities laws and seeks to hold the individual defendants personally liable along with the defendant companies. Our readers who own or operate companies seeking investment should take note of this: liability for fraud under the Oregon Securities Laws extends very broadly!  For our investor-readers, you may have more power than you think. As always, we are here to help.

For more reading on cannabis securities and the latest on SEC rule updates and cannabis, see:

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Wednesday, November 18, 2020

Utah Lawmakers Considering Medical Cannabis Program Expansion

Utah medical cannabis patients may soon have an easier time accessing their medication.

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More cannabis shops coming to California post-election

Voters approve 32 of 38 local marijuana measures.

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Free Webinar Tomorrow, November 19: Ketamine, Psilcobyin and New Drug Therapies (Part 2)

Psychedelic Webinar

REGISTER HERE!

In case you missed the first webinar, you can WATCH IT HERE.

For the past decade, Harris Bricken attorneys have advised domestic and international businesses and entrepreneurs on rapidly evolving laws and regulations in the cannabis, hemp, and regulated substances industries.

Over the last few years, our attorneys have led the way on advising investors, businesses, and entrepreneurs in emerging drug therapies – psilocybin, ketamine infusion clinics, MDMA and other psychedelic substances. We discussed these topics live back on July 9, and now, by popular demand, we will be hosting a follow up webinar.

On Thursday, November 19, 2020 at 12pm PT, Harris Bricken attorneys will address the results of the elections and other recent developments related to psychedelic drugs and new drug therapies. We will look at the process and results for Measure 109 (psilocybin licensing) and Measure 110 (controlled substance decriminalization) in Oregon, as well as future efforts to decriminalize, protect and regulate psychedelic drug use. The conversation will cover everything from religious exemptions to commercial opportunities.

The panel will be moderated by Vince Sliwoski (Portland), with panelists Griffen Thorne (Los Angeles), Alison Malsbury (San Francisco), and Jesse Mondry (Portland). The panelists will take questions throughout the presentation.

REGISTER HERE!

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Tuesday, November 17, 2020

New Mexico Considering Expanding Medical Cannabis Program

A panel of health care professionals in New Mexico are recommending certain adjustments to the state's medical cannabis program.

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Virginia Governor Announces Plans To Legalize Recreational Marijuana

Virginia's Governor Northam announced his support—and plans—for marijuana legalization.

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Cannabis taxes save 350 jobs in Chicago

Legalizing marijuana doesn't just create new jobs. It saves existing ones, too—ask 350 municipal workers in Chicago.

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Arizona Cannabis: New Opportunities Under Proposition 207

Arizona Cannabis Legalization

As the old adage goes, if at first you don’t succeed, Try, try again. After suffering a close defeat in 2016, Arizona’s new recreational cannabis law passed with 60% of the vote on November 3, 2020. So, if you’re an entrepreneur or weed enthusiast, what happens next and what should you do to prepare for the coming opportunities in Arizona? In this post, we give a quick overview of what was passed in Arizona and some of important parts of the new law to consider, as well as a short checklist of issues to consider.

Although typically referred to as Proposition 207, the new law’s name is the Smart and Safe Arizona Act (“Act”). The new law legalizes the possession of certain amounts of marijuana for those 21 years of age and older. And, in some instances, those with prior (or pending) marijuana convictions can move to have their records expunged. Not a bad add-on!

Don’t forget that Arizona passed another initiative in 2010 that allows the use of marijuana for medical purposes, and that’s still good law too. So, now consumers and patients will both have access to marijuana products in Arizona, although certain differences will remain between those who have a medical “card” and those who are simply purchasing marijuana for their own pleasure. One example is the amount of cannabis an individual may legally have – those with medical cards will be able to own more cannabis than those who are using for recreational purposes only. Also, licensees may now be owned by for-profit, publicly held companies, as opposed to nonprofit entities only.

As part of the Act, Arizona will now allow producers and manufactures of marijuana products to have their products tested by independent, Arizona-based labs (and because labeling must be accurate, testing is imperative). This is a new and exciting opportunity for those interested in the sciences, marijuana and guarantying safe and effective products in the Arizona marketplace. Although start-up costs could be significant with procuring the necessary testing equipment, the potential profits may be worth the investment. There are a few incubators in the Phoenix area, which could be potential locations for start-up companies (depending upon space availability, zoning laws, etc.).

Those wishing to pursue a new license may have to wait a little bit. While there is an “early applicant” period (which runs from January 19, 2021 to March 9, 2021), it’s limited to entities currently licensed as medical dispensaries, with a few other exceptions. Once the early applicant period ends, the State will issue additional licenses on a random basis. There are caps in place for the number of new licenses that will be issued by Arizona, which are based on the number of pharmacies in any Arizona county.

In addition, Arizona will now have a new Social Equity Ownership Program. Under this program, Arizona will issue 26 additional licenses. The purpose of this program is to grant licenses to individuals from communities disproportionately impacted by enforcement of previous marijuana laws.

So what should you do if you’re interested in these new opportunities? Below is a list of issues to consider as you pursue potential opportunities in the Arizona cannabis industry.

  1. Capital. Because cannabis is illegal under federal law, traditional bank loans are very difficult, if not impossible, to find. However, for those who cannot effective bootstrap there are hedge funds, private equity, venture capital and other potential sources of capital. Start-up costs would include licensing fees paid to the State, purchasing inventory for sale, leasing and building out space for a dispensary or another cannabis-related establishment, and of course, funding payroll.
  2. Knowledge is Power. The Smart and Safe Arizona Act is a new law, and soon, new regulations will be released. As with any new statutory regime, there is a lot to learn. And given that this will be a highly regulated industry, knowing the law will be vitally important to your success.
  3. Experience. While new opportunities abound with the Smart and Safe Act, finding and hiring professionals with deep experience in the industry can be invaluable. These individuals have walked the walk and talked the talk. A small investment in professional services, especially early in the process, can pay-off with huge dividends down the road. There are financial professionals, accountants, and attorneys who specialize in cannabis. Experience is worth its weight in gold.
  4. Applications. While applications for new licenses haven’t been released yet, reviewing existing application forms for medical establishments, as well as reviewing the new statutes and regulations (when they’re released), should provide a good understanding of what you will need to do to complete the applications.
  5. Corporate Issues. Existing medical marijuana establishments that also receive the new licenses to sell to the public can now be a for-profit entity (and can now be owned by publicly held companies). It is possible to convert a nonprofit legal entity to a for-profit entity, but there are several steps and possible implications that you should consider before converting.

As with any new industry, there is a lot of excitement in the Arizona marketplace. But there will be a lot to do and learn if you’re new to the industry. Now is the time to start researching and investigating possible cannabis opportunities. Like any other business endeavor, planning, and then executing are the keys to success.

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