OOKA is the first pod-based weed hookah. Find out more about this game-changing vaporizer & how to get yours in California.
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As we recently reported (here), Governor Kathy Hochul signed legislation granting the state Office of Cannabis Management (“OCM”) certain enforcement powers with respect to unlicensed cannabis activity in the State of New York. Several of the new enforcement tools at OCM’s disposal include:
The power to levy Civil Penalties/Fines by the OCM to illicit cannabis shops can be up to $10,000 per day for anyone who cultivates for sale or sells cannabis without having appropriate registration, with an additional civil penalty up to five (5) times the revenue from the prohibited activities possible as well. Additionally, if the shop ignores the demand to cease illicit activities, the civil penalty may be increased up to $20,000 per day.
New York and the OCM have started the crackdown on illicit shops in earnest this week. Governor Hochul announced that 31 stores were issued violations and approximately $11 million and counting has been seized in unlicensed cannabis. It is reported that of the 31 stores, 22 of them were in downtown Manhattan and the rest in the Southern Tier of New York.
By taking decisive action against unlicensed cannabis businesses, New York State is hoping to make significant strides towards cracking down on unlawful cannabis operations that jeopardize public safety and the burgeoning legal market. We will continue to follow this story as we approach New York’s anticipated opening of the adult-use application portal in the fall!
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Please join us on July 25, 2023 at 10am PST for a free webinar on U.S. Import and Export of Marijuana, Hemp and Paraphernalia.
Panelists for this webinar include international trade lawyer Adams Lee, international business lawyer Fred Rocafort, and U.S. cannabis business lawyer Vince Sliwoski. This webinar is moderated by Hilary Bricken, chair of the firm’s controlled substances group.
Many cannabis companies are interested in shipping and receiving various forms of cannabis internationally. These cannabis products may include:
Pathways to import and export many of these products exist, not withstanding reporting to the contrary. Our cannabis business lawyers and international trade lawyers regularly assist clients in cannabis import / export analysis. This analysis always starts with a baseline interpretation of federal law, including but not limited to:
Other legal regimes to understand typically include:
Finally, it’s critical to analyze statements from the U.S. Drug Enforcement Administration (DEA), Customs and Border Protection (CBP) and their personnel.
Critical evaluations may include everything from whether a product is, in fact, a “controlled substance”, to whether a potential importer or exporter would be well served by seeking a formal ruling request from CBP on any category of product. Knowledge of classification protocols, ports of entry and other pragmatic issues are also key.
Please join us for this free webinar on July 25. Questions may be submitted in advance during the registration process, and panelists will also field questions live during the presentation.
For more reading on this topic between now and July 25, check out the following:
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With Glitter Bomb, Golden Goat, and Pellegreeno.
The post Works of Fire: America’s best cannabis for 4th of July 2023 appeared first on Leafly.
CAKE she hits different is charming the Arizona cannabis scene with Cyro-Cured disposables, hot events & fashion-forward apparel.
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The New York City Council (the City Council) is taking matters into its own hands, passing legislation that will hold landlord’s liable for renting space to unlicensed cannabis dispensaries. Last week, on June 22, the City Council unanimously passed the legislation (47 to 0), with one abstention.
Here is City Council Member Lynn C. Schulman’s summary:
“This bill would prohibit knowingly leasing commercial premises to a tenant who uses the premises for the distribution or sale of illicit cannabis or tobacco products without a license. The first time that an illicit cannabis or unlicensed tobacco product seller is found to be operating in leased commercial premises any relevant city agency could issue a warning to the owner of the premises. If an unlicensed seller is later found to be operating in the same commercial premises, the owner would be liable for civil penalties. This bill would also require the city to submit to the Mayor and the Council a quarterly report on enforcement relating to illicit cannabis or unlicensed tobacco product sellers.”
New York City landlords can be fined $5,000 for the first offense and $10,000 for subsequent violations. These are serious financial penalties that are designed to and should disincentive New York City landlords from leasing to unlicensed dispensaries.
The City Council’s efforts to crack down on illicit dispensaries follows New York State legislation that was passed in May of 2023, which authorized the Office of Cannabis Management (OCM) to itself police illicit cannabis activities (check out our breakdown here). The OCM quickly utilized its new authority, when on June 8, 2023, the OCM issued violation notices and cease and desist orders to seven illicit dispensaries in Manhattan.
This sort of enforcement is exactly what is needed to propel New York’s — and New York City’s — legal adult-use cannabis industry forward. Without it, licensed cannabis companies on both the production and consumer sides of the industry will simply be unable to compete. Stay tuned as we get closer to New York’s anticipated opening of the adult-use application portal in the fall!
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Maryland legalization goes hard.
The post Shopping guide to Maryland cannabis legalization appeared first on Leafly.
Cannabis businesses in the U.S. are still suffering under the thumb of federal prohibition, even in 2023.
In this Chambers Expert Focus video, Harris Bricken Partner Hilary Bricken (a Chambers Band I attorney) explains how the federally illegality of cannabis impacts state-licensed cannabis businesses on a day-to-day basis. Federal cannabis prohibitions affects access to financial institutions, federal income tax liability, trademark protection (or lack thereof), and navigating institutional investment.
For more on this topic, please follow us here on the Canna Law Blog.
The post Chambers Expert Focus Video: Hilary Bricken on U.S. Cannabis Businesses appeared first on Harris Bricken Sliwoski LLP.
Nearly 100 Maryland dispensaries will begin selling rec cannabis on July 1.
The post Maryland cannabis legalization begins: Here’s what you need to know appeared first on Leafly.
It’s been an eventful month in Oregon cannabis. Below are some early summer notes on three things we’ve been doing and watching and writing about.
I covered this last month as the ship was going down. Today, the Oregon receivership is now in full swing and we’re getting regular notices. It hasn’t been smooth from my perspective. The receiver initially rejected a raft of leases, including one held by a landlord we represent. We opined that the receiver didn’t appreciate the regulatory implications of taking such action – in particular, the jeopardy caused to the OLCC retail licenses. The receiver eventually reversed course, and asked the Court to allow withdrawal of those lease rejection notices.
I spoke with another lawyer with skin in the game, who called that episode “a colossal waste and embarrassment…”, and other unprintable stuff. Let’s see if anyone objects to the receiver’s petition for any portion of his fees arising from that misfire, or anything else going on here (there’s more to pick at). Overall, we expect ongoing issues given the novelty of the proceeding: neither the Court nor OLCC, nor anyone, anywhere, has seen a court-supervised sell-off of cannabis assets at anything near this scale. (California’s Herbl will be next.)
The Chalice receiver is now soliciting bids for the Oregon businesses and their assets. That sale process is being coordinated with the CCCAA Canadian proceeding I blogged about last month. I’m pretty cynical. I expect most of the unpaid Chalice creditors won’t see a dime, while the receiver and his counsel will be shopping for boats when we’re through. The Canadian lawyers and architects of these proceedings could be shopping for airplanes… whether or not the Oregon assets actually sell.
My colleague Jesse Mondry covered this last week on the blog. The higher-ups I’ve spoken with at OLCC dislike the scope of the Governor’s directive, and I agree with them. Yes, requiring cannabis retailers to certify compliance on marijuana tax payments makes sense. The rest is excessive and a recipe for controversy. It smacks of overreaction by the Governor for taking money from a bad actor. We credit Sophie Peel and Willamette Week for dogged pursuit of the La Mota story, up to that chef’s kiss of a pickleball photo the paper wickedly loves to print. But the collateral damage from these new tax rules, stemming directly from the La Mota saga, will be felt by many in the industry.
Here are a few of the most common questions being batted around today, with respect to the recently adopted, temporary rules:
It’s a really unfortunate turn of events, and pretty much the last thing this beleaguered industry needs right now.
I previewed the Oregon legislative session’s cannabis bills and activity back in January, as I’ve done for each of the past eight years. I mentioned that, more than any specific legislative ask, industry’s request was simply that the legislature “do no harm” in the session. Of primary concern was proposed SB 66, granting increased local marijuana sales tax authority; but a spate of law enforcement bills also raised concern.
The greater session went sideways in at the end of April, when Oregon Senate Republicans staged a walk-out over gun and abortion bills. The walk-out lasted six weeks, with our representatives re-opening for business on June 15th— just 10 days before sin die on June 25th (close of session). To be honest, though, most of the cannabis bills had lost steam by then— including SB 66, and one I actually liked on interstate commerce for certain products.
The exceptions here are three bills that passed: SB 326, HB 2763 and HB 2931.
SB 326 requires the owner of any property where cannabis had been manufactured unlawfully (i.e., outside of the OLCC program), to clean up waste from those operations if notified by law enforcement. SB 326 contains provisions for fines and penalties, and local government authorizations where needed to “abate public nuisance.” Overall, this bill shouldn’t impact regulated industry. As compared to several of the “cannabis policing” bills introduced at the session’s onset, SB 326 is benign.
HB 2763 creates the State Public Bank Task Force. The bill directs that task force to study and make recommendations regarding establishment of state public bank. A report is due September 1, 2024. A state public bank could be a real boon for licensed Oregon cannabis businesses. These businesses currently have a limited number of banking options, which come with limited institutional options, restricted account types and relatively high costs. That said, as someone who hails from the only State in the Union with a state-own banked, I’d be surprised if Oregon gets there. I’m more hopeful for relief via the Safe Banking Act— although I’d love for us to succeed where California failed.
HB 2931 merits more attention than the others. It directs the Oregon Department of Agriculture (ODA), in consultation with the Oregon Health Authority (OHA) and OLCC, to establish a “cannabis reference laboratory to support enforcement of cannabis regulation.” I wrote about the agencies’ push for a state-run reference lab last December. What I didn’t mention was the technical fix introduced in HB 2931, which brings OLCC licensed labs into the definition of OLCC cannabis “licensees” at ORS 475C.009. HB 2931 also prohibits those labs from holding any other type of OLCC license.
Why did everyone, including industry, feel a state cannabis reference lab was needed? First, for as long as the OLCC program has existed (and even before that, in the OHA medical program), agencies have fielded complaints from marijuana and hemp licensees around testing. Those complaints include allegations of labs spiking potency levels on test samples, and allegations of lab falsification of failed test results. From there, you have the related concepts of “lab shopping” by licensees and “pay to play” testing with labs.
State agencies have rightly argued that to properly regulate licensed labs, an independent mechanism to verify test results is needed. Audits have similarly recommended this. The newly created reference lab will provide: a) a neutral, third-party source for testing and re-testing; b) quality assurance review for licensed labs; and c) a mechanism to audit complaints from licensees about faulty lab testing. This is a positive development.
We expect the roll-out of HB 2931 to be fairly smooth. A testing lab for plants and food items already exists at ODA, after all. The OLCC’s proposed budget, found at SB 5519, would also transfer a portion of OLCC’s revenue from cannabis licensing to ODA to help establish this state reference lab. SB 2931 takes effect 91 days from passage; expect roll-out to commence this fall.
The post Oregon Cannabis Round-Up: Chalice Receivership, New Tax Rules, New Laws appeared first on Harris Bricken Sliwoski LLP.
New York State’s recently passed 2024 budget includes many cannabis-related provisions, addressing enforcement, licensure, and penalties, with the goal of curbing the state’s illicit marijuana market. Specifically, Governor Kathy Hochul signed legislation granting the state Office of Cannabis Management (“OCM”) certain enforcement powers.
Several of the new enforcement tools at OCM’s enforcement disposal include:
This legislation also makes it a crime to sell cannabis and cannabis products without a license. It is now a Class A misdemeanor to knowingly and unlawfully sell, give, or cause to be sold any cannabis products without the required license. OCM will have the power to compel a landlord to begin eviction proceedings and separately the power to bring a civil proceeding to permanently enjoin unlicensed activity at a business location.
As it relates to the new tax enforcement, the DOF now is able to conduct regulatory inspections of businesses selling cannabis to determine if appropriate taxes have been paid, and will be able to levy civil penalties in cases where appropriate taxes have not been paid. Presumably, the illicit shops are not paying the requisite cannabis taxes the State has issued. The legislation also establishes a new tax fraud crime for businesses that willfully fail to collect or remit required cannabis taxes, or knowingly possess for sale any cannabis on which tax was required to be paid but was not.
To close the prior loophole, the Budget also definitively states that a license application may be refused to anyone who has possessed or knowingly distributed illicit cannabis. Presumably this only refers to those unlicensed shops, because such a refusal would negate the Conditional Adult-Use Retail Dispensary program.
The power to levy Civil Penalties/Fines by the OCM to illicit cannabis shops can be up to $10,000 per day for anyone who cultivates for sale or sells cannabis without having appropriate registration, with an additional civil penalty up to five (5) times the revenue from the prohibited activities possible as well. Additionally, if the shop ignores the demand to cease illicit activities, the civil penalty may be increased up to $20,000 per day.
Otherwise, existing penalties for improper possession and distribution were increased across the board, including:
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Compliment your visit to the Great Lake State by diving into our list of Michigan’s top cannabis shops. When people think of Michigan, visions of vast lakes and stories from the golden age of the assembly line are sure to come to mind. In 2018, however, these longtime staples of the state were joined by […]
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Enjoy the best legal cannabis in the Rockies with our list of Colorado’s top dispensaries, as chosen by Leafly users Colorado is a state known for many wonders. Though it’s tough to top the splendor of the Rockies, there is unquestionably a staggering wealth of other natural beauty to be enjoyed as well. The same […]
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Ready to elevate your time in Vacationland? Grab a lobster bisque and tuck into our list of Maine’s top pot shops. Beloved for its ragged coastlines and scrumptious seafood, Maine is an East Coast slice of paradise. On the topic of cannabis, however, the constituents of this sometimes sleepy state were among the first to […]
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This Friday June 23rd, Harris Bricken’s Griffen Thorne will present on international and domestic cannabis issues with Dan Rothberg at GGI Global Alliance’s North American Regional Conference in Los Angeles.
Their presentation will give an expert take on these topics:
In the last few decades, U.S. states have began to relax or repeal local cannabis prohibitions in spite of federal and international prohibitions. Certain countries, including Canada, have gone further and introduced full-fledged federal regulatory programs. These new markets create numerous opportunities for business and investment, but at a great cost: U.S. federal prohibition, for example, creates tax headaches, immigration and naturalization concerns, and limitations on access to financial institutions.
The presenters will examine the legal and regulatory issues relevant to international and domestic cannabis, including investment red flags, and how licensed professionals can navigate ethical responsibilities. Dan and Griffen will also discuss intellectual property issues relating to cannabis and CBD.
The post Griffen Thorne Presents on International and Domestic Cannabis Issues at GGI North American Regional Conference appeared first on Harris Bricken Sliwoski LLP.
Fresh G.O.A.T. Milk, hot Trop Cherry, and classic Super Sour Diesel.
The post America’s searing hot cannabis Strains of Summer 2023 appeared first on Leafly.
On June 15, 2023, the OLCC approved temporary rules requiring marijuana retailers to obtain a Certificate of Tax Compliance (“Certificate”) from the Oregon Department of Revenue (“DOR”) as a condition for acquiring or renewing a marijuana retailer license, as well as for changes of ownership and adding someone to a license. These new rules resulted from a directive by Governor Kotek following the La Mota scandal that led to the resignation of the Oregon Secretary of State, Shemia Fagan.
The temporary rules go into effect immediately. But the OLCC will undertake permanent rulemaking this summer to further develop requirements for tax compliance. Also on June 15, the DOR issued a Temporary Administrative Order designed to provide marijuana retailers guidance on how to obtain a Certificate and comply with the new rules. The temporary rules are here, the DOR order is here, and a FAQ on the temporary rules is here.
The temporary rules apply only to marijuana retailers. But comments at the meeting adopting the temporary rules by the OLCC suggest that the Commission may seek to expand the Certificate requirement to other types of licenses.
Some of the key components of the temporary rules are:
There is a lot to digest in the temporary rules and DOR order. This will affect the purchase and sale of marijuana retailers (including anyone bidding on Chalice) and anyone seeking to renew an OLCC license. This looks to make an already depressed industry subject to even more burdensome scrutiny. While we understand the reasonableness of requiring timely sales-tax remittances, these rules go too far, in our opinion.
Stay tuned for more analysis. And, perhaps, start looking for a tax lawyer.
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Last month, Washington governor Jay Inslee signed SB 5367, a largely unpublicized bill “concerning the regulation of products containing THC”. Among other things, the bill amends the definition of “cannabis product” in the state’s Controlled Substances Act to include products with any detectable amount of THC concentration.
Selling such CBD products will require licensure by the Washington State Liquor and Cannabis Board (WSLCB), effective July 23, 2023. The WSLCB is set to vote on initiating the rulemaking process under the state’s administrative procedures act on July 21. Although rulemaking won’t commence for a month, any business manufacturing or distributing CBD products for sale in the state Washington should begin to prepare for this sea change today.
What does SB 5367 do?
The bill amends the definition of a cannabis product in Revised Code of Washington (RCW) 69.50.101 to include “any product intended to be consumed or absorbed inside the body by any means including inhalation, ingestion, or insertion, with any detectable amount of THC” (my emphasis). The former definition of a cannabis product meant “useable cannabis, cannabis concentrates, and cannabis-infused products”. Clearly excluded from that definition were CBD products with a THC concentration of less than 0.3%, as that threshold was the defining characteristic of cannabis under state and federal law.
The bill also adds the defined term “hemp consumable” to RCW 15.140.020, which means:
“a product that is sold or provided to another person that is: (a) made of hemp; (b) not a cannabis product as defined in RCW 69.50.101; and (c) Intended to be consumed or absorbed inside the body by any means, including inhalation, ingestion, or insertion.”
This added definition clarifies that a hemp consumable, be it a smokable hemp joint, CBD tincture, etc. may not have any THC in it whatsoever.
Also important, is that the bill changed the definition of “THC concentration.” The new definition no longer references delta-9 THC. There are several types of THC in cannabis plants, delta-9 being the most commonly known because it is the most prevalent and intoxicating form of THC. The removal of delta-9 from the definition of THC content is important because it broadens the criteria for a product being considered a cannabis product.
The conclusion of the federal regulators and agencies, as evidenced by the Farm Bill, is that products containing less than 0.3% delta-9 THC are incapable of producing intoxicating effects. So, the insistence by Washington lawmakers that hemp-derived CBD products contain 0.0% of any THC isomer doesn’t read like a public health initiative. Rather, it seems like the cannabis lobby successfully using the lawmaking process to recapture a significant part of the CBD industry. This is made pretty clear when we consider that one of the open questions is whether the production of CBD products containing over 0.0% THC will now require a WSLCB cannabis producer license.
Consequences of WSLCB regulating all Washington CBD commerce
For years, large sectors of the U.S. CBD industry have been producing CBD products in line with the 2018 Farm Bill (“Farm Bill”). The Farm Bill made the production and sale of hemp and hemp derived products federally legal, so long as they contain less than 0.3% delta-9 THC. Most states have deferred to the feds (outside of the FDA context) and the U.S. CBD products market has since grown into a multi-billion dollar per year industry doing $5.3 Billion in sales in 2021. That figure is projected to grow to $16 Billion in 2026.
CBD products are sold at many, many retail stores in Washington at the moment, from bodegas on Aurora to Wholefoods in Bellingham, and everywhere in between. The prevalence of CBD products in Washington retail stores raises a serious question for these retailers about how (and whether?) the WCLCB will enforce the law. In any case, Washington is showing itself to a be true outlier with SB 5367, by forcing these sales through its state cannabis regulator’s pipeline.
We should also note that there are processing methods that isolate only CBD from the hemp plant that exclude all THC and other cannabinoids. Producers of these CBD products, the retailers that buy these products for resale, and the consumers of them won’t be negatively affected by this bill. With that said, a lot of Farm Bill legal CBD products do have some detectable amount of THC in them. Those products will now be considered cannabis products in Washington. Subject to rulemaking and absent any further guidance on the matter, it seems like those products will only be available for sale in a WSLCB licensed retail cannabis dispensary.
The economic impacts of this bill are sure to be enormous. To highlight just a few:
WSLCB enforcement is an open question
We don’t yet know how the WSLCB is going to enforce this new law or whether it will wait pending completion of the rulemaking process. As noted above, the WSLCB is having a meeting on June 21 and a vote will be held to initiate a pre-proposal statement of inquiry (a “CR-101”). This is part of the rulemaking process under the state’s administrative procedures act that is necessary where bills signed into law by the governor require interpretation and specific rules on how an agency will be enforcing a new law.
The WSLCB needs to provide clarity on several open questions. If the state’s position is that both the production and sale of all products containing detectable levels of THC now requires a WSLCB cannabis license, SB 5367 will be a massive boon to the state cannabis industry. If a processor must chose between: a) changing its methods so a WSLCB license is not required, or b) partnering with WSLCB licensed producers and processors, many may chose the former.
Relate to this analysis, Washington has placed a moratorium on issuing new cannabis licenses; so it is not as if businesses thrown out of compliance by SB 5367 can merely apply for and obtain a cannabis license. Equally important, many CBD products with detectable levels of THC sit on shelves all over the state right now. The possibility of all of them being removed by July 23 seems remote at best. What are these retailers to do with that product if they cannot sell it before July 23? What will the penalties be for violations? Will there be a grace period of some sort? The state needs to provide guidance on these and other questions so that stakeholders can prepare themselves.
We’ll be following developments from the state on this emerging issue here.
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We invite you to take a moment to reflect and celebrate today, on our newest U.S. federal holiday– Juneteenth National Independence Day.
We will be back tomorrow with our regular programming.
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With Stone Road, Landrace Origins, Peak Extracts, and more.
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Power up with this revolutionary sativa hybrid.
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The news tricked out slowly, then all at once: New York has settled the Variscite litigation, and the injunction prohibiting Conditional Adult-Use Retail Dispensary (CAURD) licenses in the Finger Lakes region has been lifted. The settlement was approved during the Cannabis Control Board (CCB) meeting on May 30, 2023, paving the way for new CAURD licenses to be issued.
For a brief refresher (a more detailed synopsis here), Variscite commenced litigation in September of 2022, seeking a judgment declaring the CAURD program unconstitutional based on the Dormant Commerce Clause. Judge Gary L. Sharpe granted Variscite’s motion for a temporary restraining order, enjoining the OCM from issuing CAURD licenses for the 5 regions listed in Variscite CAURD applications (Brooklyn, Central New York, Finger Lakes, Mid-Hudson and Western New York).
In March 28, 2023, the OCM’s motion to the United States Court of Appeals for the Second Circuit was granted, limiting the injunction to only the Finger Lakes region, Variscite’s first choice.
The settlement agreement between the OCM and Variscite (the Settlement Agreement) is itself really interesting, only because of the “relief” provided by the OCM to Variscite: that is, Variscite is guaranteed a “general (not social equity/CAURD) adult use retail dispensary license in the first group of such licenses to be awarded.” The Settlement Agreement also provides that if the “general” retail dispensary licenses are narrowed to geographic areas, Variscite gets to pick from it CAURD regions.
The other interesting component of Variscite’s advance award is that, even if Variscite’s application does not satisfy the revised adult-use rules and regulations or has a TPI that would otherwise disqualify its application, Variscite has the right to supplement and revise its application (including its TPIs), and still be awarded a license.
Variscite clearly bet that filing this lawsuit would result in the award of a retail dispensary license, and in some way, has “leveled up” by securing the “first” adult-use retail dispensary license. The fact that the licensure is effectively guaranteed is an unequivocal win.
Of course, the end of the Variscite CAURD saga is not the end of the current New York cannabis litigation, with the Coalition for Access to Regulated & Safe Cannabis and landlord lawsuits still pending. We also note that the opening of the adult-use application portal and license review (including the real estate rules and municipal notice regulations) will result in a slew of new regulatory litigation, not to mention the flood of business litigation that will ensue once significant investments are made into cannabis applicants. Stay tuned!
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Ever since Congress passed the Agricultural Improvements Act of 2018 (or 2018 Farm Bill), people have tried to find creative ways to sell intoxicating hemp-derived products. One example of this is THCA products, such as THCA flower, which contain very high levels of THCA. Today, I want to examine the legal status of THCA products and why the “loophole” seems like it’s coming to an end.
For starters, Hemp may only have 0.3% delta-9 tetrahydrocannabinol (THC). According to the DEA, if hemp or its derivatives contain levels of THC in excess of 0.3%, they are considered marijuana. The issue is that hemp also generally delta-9 tetrahydrocannabinol acid (THCA). And THCA, when subjected to heat, converts into THC.
While THCA itself is not referred to in the federal definitions of marijuana or hemp, it nevertheless plays an essential role in the determination of a products status as legal or illegal because of the conversion to THC. The 2018 Farm Bill mandates that all hemp be tested for “total THC” – which is defined to include the actual THC content plus the THCA converted into THC. If the sum of THC using this method exceeds 0.3%, the hemp must be destroyed.
Interestingly, there are different ways that THCA is converted into THC, and the method is referred to as post-decarboxylation. The U.S. Department of Agriculture’s (USDA) 2018 Farm Bill regulations define this process as follows:
In the context of testing methodologies for THC concentration levels in hemp, means a value determined after the process of decarboxylation that determines the potential total delta-9 tetrahydrocannabinol content derived from the sum of the THC and THCA content and reported on a dry weight basis. The post-decarboxylation value of THC can be calculated by using a chromatograph technique using heat, gas chromatography, through which THCA is converted from its acid form to its neutral form, THC. Thus, this test calculates the total potential THC in a given sample. The post-decarboxylation value of THC can also be calculated by using a liquid chromatograph technique, which keeps the THCA intact. This technique requires the use of the following conversion: [Total THC = (0.877 x THCA) + THC] which calculates the potential total THC in a given sample. See the definition for decarboxylation.
In plain English, gas chromatography heats THCA until it converts to THC, whereas liquid chromatography does not convert the THCA but applies a formula that is used to calculate the total THC level. There is a pretty serious debate in the industry about which of these two methods is better, but I’ll leave that for a different day. For the time being, let’s look at how this effects THCA products.
Both the 2018 Farm Bill and USDA mandate total THC testing on pre-harvest hemp batches. They do not mandate testing of post-harvest hemp or on hemp products. The Controlled Substances Act (CSA), which outlaws marijuana, contains no specific mandate to test hemp products since hemp is not controlled.
This all raises a key question: If hemp passes pre-harvest testing (i.e., has levels of THC and THCA below 2018 Farm Bill requirements) and at any point after has excess THCA, is it controlled? In other words, if after testing a super high amount of THCA grows on the plant, so much so that it would become “hot” if tested again, would it be illegal? Some commentators originally believed the answer was “no” – at least under federal law. Folks like Rod Kight argued (see here and here) that because these products would have passed testing, their later excessive THCA content was immaterial under federal law. Rod and others have written plenty on this topic and I don’t want to paraphrase too much, so you should check out their posts if you are interested.
I tend to think that Rod and others who take this position are onto something important. That said, I think their arguments fail to adequately address two practical concerns for THCA products.
First, state law is also important to consider. Even if something is allowed federally, if it is banned in a state, it can’t be sold there. Many states have total THC requirements on hemp products which would categorically outlaw THCA products in my view. So even if THCA products were legal federally, that would be purely academic when applied in a given state. I should mention that Rod does point out that he only discusses federal law, but my point is that we cannot look at federal law in a vacuum. In a state where total THC of products is a required testing element, then these products would be illegal, hands down.
Second, practically speaking, claiming that THCA products are legal is a tough sell to law enforcement or a court that is not familiar with the nuances of federal hemp laws. Imagine a truck driver gets pulled over with a car full of THCA products with 25% THCA. Those products, when tested, will have levels of THC in the double digits. That driver is going to jail, and will have to do their best to persuade a court that a gap in testing requirements under the 2018 Farm Bill makes their product lawful. Even assuming that argument is solid, there are just too many possibilities that law enforcement won’t agree. This is an issue that would likely need to be resolved in the appellate courts, which would be expensive, time consuming, and risky.
The DEA seems to have settled the issue for now. In a partially redacted letter, which Rod analyzed here, the DEA claimed that THCA products are illegal because THCA must be converted into THC under the 2018 Farm Bill. Rod picks this position apart essentially as I noted above. While, again, I think Rod’s argument has legs, it becomes much more difficult to deal with law enforcement and courts when the DEA claims that THCA products are illegal.
In the near future, it’s expected that the DEA is going to take additional regulatory actions with respect to cannabinoid products. Who knows what that will look like now or whether THCA products will officially be on the chopping block. We could also see Congress take action, when the Farm Bill is renewed later this year. For the time being, stay tuned to the Canna Law Blog for additional cannabinoid developments.
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Pain and insomnia reports fell. Quality of life improved.
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The Florida Supreme Court will consider the legality of an initiative to get adult-use cannabis legalization on the 2024 ballot. Per Florida law, the state’s attorney general must request an advisory opinion from the Florida Supreme Court on whether the proposed measure complies with certain legal requirements. One of the issues is whether the initiative satisfied the requirements of Section 101.161(1) of the Florida Statutes, which requires “a ballot summary … in clear and unambiguous language.”
In her petition requesting the advisory opinion, Florida’s Attorney General Ashley Moody indicated that she believes that the proposed amendment does not “fails to meet the requirements of Section 101.161(1).” The AG’s brief in support of her position is due before the Florida Supreme Court by June 26.
The Florida Supreme Court has shot down two earlier legalization initiatives on the grounds that they did not comply with Section 101.161(1). In both instances, AG Moody submitted briefs opposing the initiatives.
In June 2021, when considering a similar amendment to legalize adult-use cannabis, Florida’s top court found that “the language in the ballot summary indicating that the proposed amendment ‘regulates marijuana … for limited use … by persons twenty-one years of age or older’ is affirmatively misleading and fails to comply with section 101.161(1), Florida Statutes.” According to the court, “the ballot summary plainly tells voters that the proposed amendment ‘limit[s]’ the personal use—i.e., consumption—of recreational marijuana by age-eligible persons. But the proposed amendment itself does not do so.” It would, in the court’s view, “be more accurate if the summary stated: ‘Regulates marijuana … for the potentially unlimited use … by persons 21 years of age or older.'”
Just a couple of months earlier, Florida’s top court had nixed another cannabis initiative, again pointing to a failure to meet the requirements of Section 101.161(1). In that case, the court held that “the language in the ballot summary indicating that the proposed amendment unqualifiedly ‘permits’ the use (and distribution) of recreational marijuana is affirmatively misleading.”
For related reading on that ruling and cannabis ballot measures more generally, check out: Cannabis Ballot Measures are a Sucker’s Game: Notes from South Dakota, Mississippi, Nebraska and Florida.
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Get free THC+CBD seltzers from sipz when you subscribe. With three mouthwatering flavors to choose from and only 40 calories per can.
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We’ve recently received a number of inquiries about whether it is legal to import marijuana seeds into the United States. These are seeds derived from marijuana plants that have a THC content less than 0.3%, but when planted will germinate into marijuana plants that have a THC content more than 0.3%. The seeds themselves have little to no THC, regardless of whether they were extracted from or may germinate into a plant that has more than 0.3% THC.
U.S. trade laws place a legal burden on the importer of record to exercise “reasonable care” to make sure that imported products are accurately declared to U.S. Customs and Border Protection (“CBP”). CBP is the federal agency responsible for ensuring that imported goods are allowed to enter only if they are in compliance with all applicable U.S. laws and regulations. CBP coordinates with a wide range of partner government agencies (e.g., FDA, EPA, DOT, ATF, CPSC, etc.) that have expertise in the laws and regulations applicable to particular products. CBP coordinates with the U.S. Drug Enforcement Administration (DEA) to implement and enforce the relevant provisions of the Controlled Substances Import and Export Act which makes it a crime to bring controlled substances into the country without a proper license.
So are marijuana seeds a controlled substance? They probably shouldn’t be.
According to the Controlled Substances Act (CSA) the term “marihuana” means “all parts of the plant Cannabis sativa L.,” and specifically includes “the seeds thereof.” 21 U.S.C. § 802(16)(A). But “marihuana” does not include “hemp” which is defined as cannabis plants, “including the seeds thereof,” with a THC concentration of not more than 0.3% on a dry weight basis. 7 U.S.C. § 1639o.
On January 6, 2022, DEA issued a letter that responded to a specific query on the treatment of cannabis seeds. According to this DEA Letter, “marihuana seed that has a delta-9-tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis meets the definition of ‘hemp’ and thus is not controlled under the CSA” (emphasis added). Based on this DEA Letter’s specific reference to “marihuana seed” it appears that DEA will not consider any seeds from marijuana or hemp to be “marihuana” as long as the THC concentration of those seeds is 0.3% or less—regardless of their plant source. Thus, this DEA Letter indicates that the cannabis seeds would not be “controlled substances” and would be lawful under U.S. federal law.
However, the DEA Letter is just one official response to one specific inquiry, and may not necessarily be generally applicable to everyone. Although it reflects one official’s interpretation of the federal laws relevant to cannabis seeds, this DEA Letter lacks the legal authority of a law or regulation that has gone through a formal rule-making process of being subject to notice and comment. But this DEA Letter may be enough federal guidance to support an importer’s best efforts to exercise reasonable care to determine if importing cannabis seeds is permissible under federal law.
Under U.S. trade laws, an importer is allowed to self-determine how a product should be determined as long as they exercise “reasonable care” when doing so. “Reasonable care” is not precisely defined. But it generally means when an importer conducts due diligence in considering all of the relevant facts related to the product in question, the circumstances of the importation, and the relevant laws, regulations and rulings.
An indicator of an importer exercising reasonable care is when they seek assistance from a qualified expert who can assist this evaluation. The gold standard for exercising reasonable care is when importers submit to CBP a formal ruling request for the product in question. Typically CBP ruling requests usually involve determining the appropriate tariff classification, valuation, or country of origin. CBP has issued plenty of rulings on whether products such as tobacco leaf wraps, water pipes, or grinders are drug paraphernalia. CBP has also issued tariff classification rulings on CBD oil and distillates and hemp biomass. But so far, CBP has not yet issued any rulings on whether cannabis seeds are admissible or should be considered a controlled substance. Given the interest in folks wanting to import cannabis seeds into the United States, it seems likely that CBP already has received requests to rule on the admissibility of cannabis seeds. But CBP may not yet be able or willing to make such a ruling on cannabis seeds; perhaps CBP does not want to get ahead of DEA and is waiting for DEA to provide more definitive guidance on how to treat cannabis seeds.
Anyone already importing cannabis seeds probably has done so without the formal blessing from CBP issuing a ruling that their cannabis seeds are admissible. But are those importations of cannabis seeds necessarily legal? Maybe.
We are still hearing that CBP is looking at entries of imported cannabis seeds and taking various actions against those entries. For example, entries of imported seed have been subject to CBP examination. CBP has broad authority to examine imported merchandise. After an entry is filed, CBP has five days to determine whether to release, seize, or detain the merchandise. Merchandise not released within that five day period is considered detained. CBP is supposed issue a detention notice within five business days after a detention is made. However, in practice CBP is not always so prompt in issuing such detention notices and also sometimes does not provide any meaningful explanation for the detention. Following the issuance of the detention notice, CBP has 30 days from the date of the goods being presented for examination to decide whether to release, seize, or deny entry of the goods.
Even if CBP allows the release of imported seeds, CBP has the authority to demand that the importer redeliver the goods to CBP if CBP believes there are admissibility issues or the need to examine, inspect or appraise the goods. CBP can make a demand for redelivery within thirty days after the goods were released or after the conditional release period, whichever is later. A failure to comply with a CBP request for redelivery can result in CBP issuing a demand for liquidated damages.
So, although there are certainly valid reasons for importers to believe that importing cannabis seeds is legal, because CBP has not yet issued a ruling that officially acknowledges the admissibility of such cannabis seeds, importers still need to be aware that they still face some risk of CBP taking action that may affect their entries of imported seeds. An importer could assert that they have exercised reasonable care and point to consulting with outside experts and reference the CSA definitions for hemp and marijuana and the DEA Letter on seeds. But until CBP decides to make a ruling that acknowledges that cannabis seeds are admissible, any importer will have some degree of uncertainty on whether their import entries will be subject to some CBP request for additional information or be subject to examination or detention.
Ultimately, cannabis seeds probably should be legal to import. But until CBP finally issues a ruling that officially acknowledges that admissibility, importers should be prepared to deal with the real possibility that CBP could take actions against their import entries that will require them to jump through CBP’s administrative hoops.
For related posts, check out the following:
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13 new pipes, shredders, trays, and terp coolers.
The post Hittin’ the road: Summer travel cannabis gear guide 2023 appeared first on Leafly.
The famed Nat Sherman Townhouse is due for a revival. For those unaware of its history, Nat Sherman was a line of cigars that were sold out of the Nat Sherman Townhouse on 42nd Street in Manhattan for almost 90 years. The storefront permanently closed in the midst of the pandemic in September 2020.
Recent conditional adult use retail dispensary (“CAURD”) licensees the Polanco Brothers, have sought to open a dispensary and consumption lounge in the Nat Sherman Townhouse – a prime location for any store, let alone a licensed dispensary and lounge.
However, the brothers have been denied their application by the Office of Cannabis Management (the “OCM”) because of the 1,000-foot rule. A quick refresher, the 1,000-foot rule was part of the OCM’s guidance for adult-use retail dispensaries and states in part:
Unless explicitly approved otherwise by the Office, a dispensary cannot be located anywhere within a certain radius of another premises that is already licensed as an adult-use retail dispensary or is a medical cannabis dispensing facility operated by a registered organization (RO). The size of that radius depends on the population of the city, town, or village that the new dispensary will be located in and is based upon the most recent American Community Survey (ACS) 5-year estimate of that municipality’s population.
In short, in a city the size of Manhattan, no dispensary can operate within 1,000 feet of an existing dispensary (among a multitude of other restrictions, i.e., near schools or places of worship).
Unfortunately, OCM determined that the proposed dispensary is within 1,000 feet of the medical cannabis store MedMen on 5th Avenue. Depending on how you measure distance, the proposed dispensary is approximately 990 feet from MedMen. If you walk the distance, however the stores are easily over 1,000 feet apart.
OCM’s guidance determined that the calculation for distance for the 1,000-foot rule is that the measurement will be taken in a straight line from the center of the nearest entrance of the existing dispensary to the center of the nearest entrance of the premises that the licensee wishes to locate the new dispensary at.
By that logic, the Nat Sherman Townhouse is less than 1,000 feet away, and would violate the OCM’s regulations. However, OCM’s guidance specifically provides that the OCM may grant an exception, which the Polanco Brothers hope the OCM will grant in short order.
As it stands now, the Polancos have put in a request with the OCM for a waiver to allow them to open in this location and are waiting on an answer. A spokesperson said the approval is being held up right now on an unofficial technicality.
Stay tuned to the Canna Law Blog and our New York coverage for updates.
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We are pleased to announce Paul Coble as a panelist moderator for the National Cannabis Industry Association (NCIA) webinar event this coming Tuesday, Jun 13, 2023 at 12:00 PM. The event is titled, From Lab to Label: Safegaurding Consumers in the Cannabinoid Product Landscape. This is the third webinar in the NCIA’s 5-part series on minor, novel, and synthetic cannabinoids like CBG, CBN, THCv, and many others.
Paul is an intellectual property attorney and software startup founder with a deep background in cannabis science and technology. He studied molecular biology and chemistry as an undergraduate before turning to the study of law. Paul is the former chair and current chair emeritus of the NCIA’s Cannabis Manufacturing Committee.
In this event, Paul will moderate a conversation on a popular new consumer product category: products containing the various cannabinoids other than THC and CBD. With so many different label content requirements from state to state for consumer products containing cannabinoids, the lack of consistency can lead to potential risks to the end consumer. This is especially true when the majority of cannabinoid product manufacturers are dependent on third-party data during product manufacturing and compliance testing. This interdependence between testing laboratories and product manufacturers makes it all the more important that label content requirements are: 1) achievable from a manufacturing standpoint, 2) consistent with public health and safety goals and 3) not overly burdensome for regulators.
This webinar features a panel of experts who will speak about the current state of America’s somewhat-monitored cannabinoid-product marketplace, and touch on several of the issues related to cannabinoid quantification, cannabinoid content declarations, and label claim verification and how these relate to consumer safety.
Learning Objectives:
You can register for this event HERE.
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Inside the new Castro District cannabis boutique—Flore.
The post We visited America’s cutest gay pot shop—Flore appeared first on Leafly.
40mg high-dose edibles of all your favorite flavors from Betty's Eddies, Bubby's Baked, and inHouse are now available in Maryland.
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Cannabis users cannot own or possess firearms under federal law. This is true even in states where cannabis is legal, and even for medical patients. These gun rights are very likely going to be held unconstitutional. But the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is clinging to them nevertheless.
I’ve written pretty extensively on the federal laws that strip cannabis users of gun rights, and link to my older posts below. But the basis is that current federal law prohibits cannabis users from owning firearms. Even in states that legalize cannabis, gun buyers must fill out an ATF 4473 form which asks for a “Yes” or “No” to the following:
Are you an unlawful user of, or addicted to, marijuana or any depressant, stimulant, narcotic drug, or any other controlled substance?
Warning: The use or possession of marijuana remains unlawful under Federal law regardless of whether it has been legalized or decriminalized for medicinal or recreational purposes in the state where you reside.
Persons who answer “no” when they should have answered “yes” may face felony charges (more on that below). Persons who answer “yes” must be denied a firearm– again, even in states that allow cannabis use. A federal firearm license (FFL) holder that sells a firearm to such a person risks loss of license and even potential prosecution – as the ATF reminded FFL holders in Michigan when Michigan legalized recreational cannabis in 2020.
In the years since 2020, however, a lot of things have changed. For one, in 2022, the U.S. Supreme Court decided New York State Rifle & Pistol Association, Inc. v. Bruen, dramatically changing the test that courts must use to evaluate gun rights restrictions. In the wake of Bruen, a federal court circuit split is brewing. Since I’ve written about that at length, I won’t re-analyze it here. I will say, however, that I believe that federal gun rights for cannabis users will be held unconstitutional.
Nevertheless, ATF is apparently digging its heels in. Right after Minnesota legalized recreational cannabis, the ATF’s St. Paul field office dropped a news release that gently reminds Minnesotans that they can’t have both cannabis rights and gun rights. For the time being, that will remain the law. Until enough courts declare these restrictions unconstitutional, the ATF will not allow FFL holders to sell cannabis users guns. And federal authorities will prosecute cannabis users who own guns.
One other interesting development that could have an influence on this issue bears mention. As noted, misrepresentations on the ATF 4473 can lead to felony charges. The federal government is reportedly investigating President Biden’s son, Hunter Biden, for allegedly answering “no” to the above question when he was using controlled substances. Attorneys for Hunter Biden have noted that if charged, Hunter would challenge the constitutionality of these restrictions under the Second Amendment. So while there are ample pending challenges already working themselves through the federal judiciary, we may see yet another, highly publicized case in the coming months or years.
If you are interested in additional posts on cannabis and gun rights, please check out some of my older posts below. And of course, stay tuned to the Canna Law Blog for more details.
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As a corporate attorney, one of the most common errors I see is failure to implement even basic corporate governance practices. This can lead to astoundingly bad places in certain circumstances. But even when it doesn’t, it is often costly to reconstruct past corporate actions. And that cost can be defrayed relatively easily. One way to do that is by having – and using – a corporate secretary.
Startups and entrepreneurs may not be familiar with corporate secretaries or what they do. So let’s take a closer look.
A corporate secretary is different from an administrative assistant, receptionist, or similar positions. They are corporate officers like CEOs or treasurers. In California, corporations must have a secretary and LLCs or other entity types generally can have one. Here’s what a corporate secretary does:
What about small businesses that don’t have enough operations to justify a corporate secretary? Corporate bylaws will often allow one person to hold multiple officer positions, so the problem can be avoided. If a person is appointed secretary and can’t make a meeting, the board, officers, or in same cases even the secretary can appoint an acting or assistant secretary to perform normal functions during the meeting. There may even be third parties who can provide corporate secretary services on an hourly or temporary basis.
What about LLCs or other non-corporation business entities? Even though they aren’t corporations, they can still generally appoint officers to serve at the whims of their managers or managing members (in the case of an LLC), partners (in the case of a partnership), or other managing persons. Non-corporation entities need not adhere to the many of the same formalities you’d see in a corporation, but that doesn’t mean they shouldn’t crib from corporations when helpful. And having a corporate secretary really does help.
So in sum, a corporate secretary is absolutely necessary for good corporate governance. Stay tuned to the Canna Law Blog for more information on cannabis corporate governance topics.
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We got a lot of good follow-up questions last week after our webinar covering cannabis litigation in the current down market. One of them related to the recovery of attorneys’ fees and how likely that is to happen. Potential recovery of attorneys’ fees is an important consideration at the outset of any case, but can especially make an impact on whether to pursue a lawsuit or not when businesses are hurting. It not only impacts a party’s overall ability to litigate (on the hope of recovering the costs later on), but also impacts the entire dynamic of the case because the stakes are higher.
Under the American Rule, which is followed in most states, the default is that each party is responsible for its own fees, regardless of the outcome of the case. The theory behind this default rule is that it would promote access to the courts and avoid situations where a party may essentially financially bully another party by driving up litigation costs and creating the threat that one will foot the entire bill.
Of course, there are situations where recovery of attorneys’ fees is granted:
Most situations call for an award of attorneys’ fees to the “prevailing party.” Unfortunately, what constitutes a prevailing party often isn’t clear, and some of it can change depending on your decisionmaker. The prevailing party is generally the party who succeeds on a significant portion of its claims or defenses. But where there are multiple claims and multiple damages amounts, this gets amorphous.
And, even where fees are deemed recoverable, the judge or arbitrator will often exercise their discretion to determine whether the fees requested are reasonable. Factors we know to be considered include: the complexity of the case, the experience of the attorneys, and whether the amount of time spent was reasonable. It’s not uncommon for decisionmakers to decide to cut some amount of time billed, or reduce the hourly rate of an attorney to decrease the fee award. So, while some recovery is of course better than no recovery, it’s important to be prepared for that.
Understanding the rules and exceptions governing the recovery of attorneys’ fees is important for any lawsuit. Parties entering into cannabis litigation or arbitration should consult with experienced legal counsel to ensure they’re clear on whether recovery of their attorneys’ fees is possible, in order to make informed decisions down the road.
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