America’s Missed Opportunity in the Global Marijuana Market

After attending the International Cannabis Business Conference (ICBC) in Berlin at the end of April, I was reminded, yet again, of how draconian U.S. marijuana laws truly are. The excitement throughout the event was palpable. Much of it was driven by Germany’s newly formed government keeping its quasi-legalization policy intact, even if adult-use trials remain uncertain. Optimism surrounding the European cannabis market was everywhere. Unfortunately, state-legal U.S. marijuana operators can’t share in this enthusiasm.

Of note, in this blog post I use the word “cannabis” when referring to the entire plant; it is also the word used in the 1961 Single Convention. I use the word “marijuana” to refer to cannabis exceeding 0.3% THC and “hemp” when referring to cannabis at, or below, 0.3% THC.

U.S. marijuana policy: stuck in the past

Despite growing state-level legalization, federal marijuana policy in the United States still tracks closer to authoritarian regimes like Russia and China than to progressive jurisdictions like Europe and Canada. Most countries with any type of marijuana program now acknowledge both medical and scientific marijuana. In contrast, the U.S. only acknowledges marijuana for scientific research – and even that is highly restricted.

As I discussed in The Hidden Potential Winners of Marijuana Rescheduling: DEA-Registered Bulk Manufacturers, U.S. marijuana policy permits only marijuana for research purposes. And even within that narrow scope, access is tightly limited: only eight DEA-registered bulk manufacturers are allowed to participate. While this sounds like a valuable niche, the reality is that global demand for marijuana, solely for research, is extremely limited. U.S. policy effectively shuts the door to broader international market participation.

Hemp faces its own barriers

The global picture for hemp isn’t much better for U.S. hemp operators. Due to a patchwork international regulation, U.S. hemp operators also face limited access to foreign markets. If a hemp consumable or cosmetic product contains no THC, some opportunities exist. But if there are even trace amounts of THC, most, if not all, markets remain closed. On the bright side, consumable and cosmetic hemp operators have far fewer regulatory burdens domestically compared to marijuana businesses; giving them broader U.S. market access, lower regulatory costs, and better tax and banking treatment.

The Schedule III mirage

While there’s hope that marijuana might still be rescheduled to Schedule III, that shift won’t open up the global market to state legal U.S. operators. With the global cannabis market expected to reach $82.3 billion by 2027 – driven by both expanded medical and recreational use – American businesses risk being sidelined. Beyond lost market access, the U.S. is also forfeiting the opportunity to shape and lead the global marijuana supply chain for decades to come.

How the U.S. could still join the global market

Despite the current federal ban, there are several pathways the U.S. could take to enter the global marijuana economy:

1. Through DEA/DOJ agency action: cultivation and export-only model

Many countries, particularly in Africa, have embraced this strategy – legalizing marijuana cultivation, manufacturing, and export for medical and scientific use, without allowing domestic consumption. If the U.S. moved marijuana to at least Schedule II, the DEA could authorize exports without obtaining Congressional approval. A DEA registrant could contract with a foreign medical marijuana operator, and if the DEA approved the export, the U.S. could begin exporting marijuana into legal foreign medical markets (subject to meeting GMP, GACP, and other foreign requirements of course). This limited but effective approach could quickly integrate U.S. marijuana producers into the global supply chain. The best part about it is that it would not require any Congressional action. Either DEA could move marijuana to schedule II or III under HHS’ current scheduling recommendation, or Attorney General Bondi could unilaterally move it to any schedule under 21 U.S.C. 811(d)(1) authority.

2. Through legislation: STATES 2.0 Act—with a strategic amendment

I have been saying for years that legalization in the U.S. will occur only under a Republican-led government, and the STATES 2.0 Act offers the most realistic vehicle. At just 15 pages, it avoids the political pitfalls of Democratic proposals like the 296-page Cannabis Administration and Opportunity Act (CAOA), which was ultimately unworkable due to burdensome tax policies and robust social equity provisions. While social equity is important, Democrats need to realize the legalization itself provides for social equity. Also, the unfortunate reality is that any bill containing robust social equity provisions will be dead on arrival in the Senate and won’t achieve the 60 votes necessary for passage.

The STATES 2.0 bill is clean, simple, and avoids controversial social equity and tax provisions. That said, one small amendment could make a big difference: allowing state-legal operators to apply to the DEA for export quotas. Operators willing to meet global GMP or GACP standards could then access international medical markets – assuming, of course, the DEA cooperates.

3. Through international engagement: Inter Se modification of international drug treaties

This is where it gets a bit nerdy, but also exciting.

During ICBC there was much talk about amending the treaties to align with modern realities. Unfortunately, removing “cannabis” from the Single Convention is unlikely due to voting requirements (although see this article from IDPC for an interesting discussion on recent voting changes at the Commission on Narcotic Drugs). There is, however, another option.

Under international law, countries that are party to a treaty may form a sub-agreement – known as an Inter Se modification – among themselves. While this reform measure has been used in other contexts, it has not been legally tested as applied to the three international drug treaties. Inter Se modification would allow a group of like-minded countries to legally regulate the production, trade, and consumption of marijuana for adult-use, without violating their broader treaty obligations under international law.

The agreement would still require a commitment to promoting global health and welfare and maintain compliance with other treaty obligations for non-participant countries. Early signs from countries like Canada and Switzerland—where adult-use programs have shown health benefits to society like reduced youth access, declining beer sales, and shrinking black markets – offer a compelling case for an Inter Se approach based on public health. And such evidence would provide some legal and political cover for countries to attempt this approach.

If the U.S. partnered with, say, Canada in such an agreement (putting aside the current political climate between Canada and the U.S.), the U.S. could begin engaging in global marijuana trade, even for non-medical and non-scientific use, without waiting for full international treaty reform.

The Schrödinger’s cat of the cannabis industry

One of the stranger paradoxes in both U.S. and global cannabis policy lies in how marijuana genetics are treated – what I call the Schrödinger’s cat of the cannabis world. Under current U.S. law (and in many international jurisdictions), marijuana genetics, such as seeds or clones, are generally classified as hemp until they grow into plants that exceed a THC threshold, typically between 0.2% and 1%, depending on the country.

This legal quirk creates a strange scenario: U.S. marijuana operators are barred from participating in the international marijuana market when it comes to finished products and flower, yet they are allowed to participate in the global trade of marijuana genetics (subject to state law permitting the export). Seeds and other genetic material (i.e. clones and tissue cultures, although they are more restricted) can cross many global borders under legal exceptions, even if the plants they’ll eventually produce are illegal under a country’s federal law.

This disconnect highlights the inconsistency and inefficiency of current global marijuana policy. If the genetics themselves are permitted for international trade, prohibiting trade in the products those genetics produce makes little practical or policy sense. It’s another example of how outdated frameworks continue to constrain rational U.S. marijuana policy, and why comprehensive reform is long overdue.

Conclusion: global marijuana is moving on—without the U.S.

The rest of the world is moving forward on marijuana policy, while the U.S. continues to trip over its own outdated federal laws. Despite robust domestic regulated markets, U.S. marijuana operators are locked out of a booming international industry that’s forecasted to explode in value over the next few years.

Federal rescheduling won’t fix this – state operators will still be prohibited from entering the international market. Real progress requires strategic policy shifts – whether through export-only programs, legislative fixes like STATES 2.0, or bold international agreements like Inter Se modification.

Until U.S. policymakers confront the disconnect between domestic success and international irrelevance, American marijuana businesses will remain bystanders in a race they helped start.

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Due Diligence in Cannabis Transactions: Mechanics and Red Flags

I don’t know how it came to be, exactly, but I’ve spent countless hours of my adult working life assisting with due diligence on cannabis transactions. These transactions involve all kinds of companies, from sole proprietorships to public companies, and a variety of deals–from leasing, to financing, to good old M&A. Today, I’ll cover how diligence works in the regulated cannabis world, and some common red flags we see during the process.

What is due diligence in a cannabis transaction?

Due diligence in a cannabis deal is like diligence in a non-cannabis deal, with some nuance and regulatory overlay. Simply put, due diligence is a voluntary process where one party vets and investigates another, or some asset or obligation of the other. This is principally done by requesting information and documents, which may be housed in a data room or exchanged in some other way. A purchaser or investor, or their agents, may also conduct public records searches, including FOIA requests to government bodies. In-person visits and inspections are also typical.

Who does what, and when?

In some deals, diligence goes one way. In others, each side perform diligence on the other. Some common examples of transactions requiring diligence include:

• Investment deals where investors perform diligence on a cannabis company they may fund
• Mergers, acquisitions, or equity plays in a cannabis company where the acquirer performs diligence on the target
• Asset purchases where the buyer performs diligence on the assets being purchased, and in some cases, the owners of those assets
• Real estate transactions where the buyer performs diligence on various aspects of real property, or where a landlord vets a tenant

This isn’t an exhaustive list, but it hits some of the high notes. Note that even in smaller deals, there is usually some kind of diligence.

For larger deals with a pronounced diligence process, the process is usually spelled out in a letter of intent (you can read about those here) or in the main purchase agreement as a condition to closing. (For this post, I’m looking at diligence in the context of a business purchase, for ease of reference.)

Usually, a small amount of diligence and negotiation occurs before a LOI or term sheet is signed, and the real legwork comes:

1. After executing the LOI but before signing the definitive purchase agreement; or
2. Between signing the purchase agreement and closing; or
3. During both periods, to some extent.

There are many reasons why diligence proceeds on different trajectories– each deal is a snowflake.

Some parties want to execute definitive purchase agreements quickly and conduct diligence before closing (in almost any purchase agreement, the buyer won’t be required to close if it’s not satisfied with diligence). The benefit here is that buyer can get the deal signed quickly and lock the seller into a lot of terms.

In other deals, significant diligence is done pre-signing. This allows a buyer to figure out whether or not to waste time and money negotiating a purchase price based on limited information before “getting married.” Consider the classic example where, during diligence, a buyer discovers something that causes it to want to lower the purchase price. Before a purchase agreement is signed, a discount will be easier to negotiate; afterward, not so much.

What happens in many cases is set forth in number 3 above–the buyer will do some degree of diligence pre-signing, and some post-signing. In these cases, buyers will get some of the big picture stuff up front, sign, and do nitty gritty diligence while “in contract.” This approach can be good because it’s a balance of both of the above.

How is diligence conducted?

Now that we’ve talked about when diligence occurs, let’s talk about how it occurs. Generally, it’s started when the inquiring party makes written requests for information to the other side. Sometimes, the requests are relatively informal; in other cases, they involve sending detailed questionnaires that can be dozens of pages long–it all depends on the size and complexity of the deal. Due diligence requests can ask for information about every aspect of the business–employment matters, litigation matters, tax matters, data security, contracts, etc.

After receiving a diligence checklist or questionnaire, the seller will usually respond to certain requests in writing, and provide documents and other data. The bigger the company is, the bigger the pile of documents. For this reason ,it’s common for parties to use “diligence rooms” or “data rooms” which are virtual solutions that allow the parties to upload documents and sort them by category (e.g., “Real Estate”, “Intellectual Property”, “Litigation”) and sub-category (e.g., within Litigation, “Demand Letters”, “Settlement Agreements”, etc.).

After receipt of documents comes the sometimes long, sometimes challenging task of reviewing them. Diligence files are usually reviewed by some combination of the principals of the buyer, attorneys for the buyer, and accountants for the buyer (for the financial information). In more complicated and larger deals, you may see a cannabis regulatory attorney hired to analyze just the responses and documents in the regulatory section, for example.

In almost any case, there are several rounds of this. The buyer will find places where it believes it hasn’t been provided sufficient information or documents. Or it may have other questions. For example, it may see a seller lease that is near the end of its term, and may want to ask what efforts have been made to renew the lease; or whether the landlord will consent to an assignment, as is typically required. This process can take a while.

Keep in mind too that many purchase agreements will set specific times for due diligence. This necessitates the buyer to act quickly, review documents quickly, and ask follow-up questions quickly. At the end of these periods, the buyer may lose their ability to walk away from closing on the grounds that it was not satisfied with the results of diligence. Not surprisingly, these time caps are usually negotiated by the seller.

Okay, that was a lot of information. Now let’s get to the fun part.

Red flags in cannabis due diligence

Sellers who won’t provide information, or at least concrete information.

It’s never a good sign when a buyer wants to buy a business, but the seller isn’t telling them anything about it. I’ve even seen multiple deals where the seller threatened to walk if the buyer kept asking for info. Would you want to buy a car if the dealer refused to answer when you asked if it was functioning properly? What about if they said the deal was off if you kept asking? I don’t think so. Run!

Sellers unreasonably cutting back representations and warranties.

This is not squarely a diligence issue but its certainly related, and often ties into disclosure schedules in definitive agreements. In any purchase agreement, the seller is the one making the most representations and warranties, and of the most consequential variety. If and when sellers push back on certain reps and warranties during negotiations, it should give the buyer pause. For example, imagine buying a business and asking for the sellers to represent that it was current with its taxes, but it didn’t want to make that promise.

Sellers rushing closing.

Sometimes there are legitimate reasons why closing needs to occur quickly, such as government mandated timelines or (in the case of investments) when money is needed quickly to fund a specific aspect of the seller’s business. But in the majority of transactions, dates are flexible. Undue pressure to close can be a big warning sign.

Lack of seller organization or records.

Sloppily maintained or missing documents is yet another big red flag. Businesses need to adhere to numerous corporate governance standards while operating, and if a seller can’t produce documents in an easy, legible format, that’s a bad sign. How confident can a buyer be that the seller complied with, say, IRC 280E, when it doesn’t have a signed copy of its material corporate resolutions?

Outright lies.

Yes, this happens–a lot! Sellers either are people, or they’re controlled by people; and, in the immortal words of Nick Cave, people they ain’t no good. Unfortunately, sellers lie to and defraud buyers all the time in cannabis land. As an unfortunate corollary, a LOT of litigation happens in M&A deals, big and small. It’s important for buyers to not take seller representations or information at face value. While fraud in the execution of a contract can be grounds for unwinding it, it’s better to avoid inking a bad deal in the first place.

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Diligence is a hugely important part of any cannabis business transaction. Buyers need to be aware of how it works and take it seriously. Please make sure to follow us for more updates on cannabis dealmaking.

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Leafly’s top 12 THC seltzers of 2025

Find the best THC seltzers of 2025. Leafly reviewed popular seltzers & chose what we think are the top picks for different needs & budgets.

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WATCH: How landrace strains are changing weed tourism

Deep in the tangled forests and sprawling vineyards of Anderson Valley’s wine country in Mendocino, California, is a new kind of cannabis tourism experience centered on rare landrace cannabis strains. It’s called The Madrones. In the southern-most point of the Emerald Triangle, founders Jim Roberts and Brian Adkinson combined their love of wine and rare […]

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How Strong Is Your Cannabis Trademark?

Understanding Trademark Strength

We frequently discuss the cannabis-specific challenges that brands face when seeking trademark protection. But it’s just as important not to lose sight of the core trademark principles that apply to all businesses—especially the need for a strong, distinctive mark.

Clients often approach us with catchy, creative names that, unfortunately, are (or are likely to be) ineligible for trademark protection. That’s because not all trademarks are created equal. There is a spectrum of distinctiveness, and where a mark falls on that spectrum determines both its legal protectability and its effectiveness as a brand.

In general, the more distinctive the mark, the stronger it is in identifying the source of goods or services—and the broader the legal protection it can receive. Conversely, a mark that lacks distinctiveness or is similar to others in the market will be considered weak.

Below is a breakdown of the main categories of marks, ranked from strongest to weakest:

Fanciful Marks

These are invented words with no prior meaning. Examples include MYLANTA and SYNOVUS. Fanciful marks are the most inherently distinctive, offering robust legal protection. However, they may require greater marketing effort at the outset to educate consumers about what the brand represents.

Arbitrary Marks

These are real words used in an unrelated context. Well-known examples include APPLE for computers and CAMEL for cigarettes. Arbitrary marks are also highly distinctive and legally strong—but note that distinctiveness depends on the context. “Apple” would be almost completely generic if used to sell apples (see Generic Marks below).

Suggestive Marks

Suggestive marks hint at a product’s qualities without directly describing them. Examples include AIRBUS for aircraft and PEPTO-BISMOL for digestive relief. These marks are easier for consumers to grasp than fanciful or arbitrary marks but typically receive somewhat narrower protection.

Descriptive Marks

Descriptive marks directly describe the goods or services (e.g., “Delicious Brownies”). These marks are too weak to function as trademarks unless they acquire secondary meaning—usually through long-term, exclusive use in commerce (typically five years or more).

One of the most common reasons the USPTO refuses a trademark application—whether cannabis-related or not—is because the mark is “merely descriptive.” For example, “Bob’s Beer” is likely to be refused because it combines a personal name with the product. Similarly, geographically descriptive marks like “East Seattle Cannabis Company” are typically rejected for lacking distinctiveness.

Deceptively or Geographically Misdescriptive Marks

On the other end of the spectrum, some marks are refused because they are deceptively misdescriptive—meaning they suggest something false about the product. For example, the USPTO rejected a 2012 application for THCTEA because the tea did not contain THC.

Marks can also be geographically misdescriptive—falsely suggesting a geographic origin. A name like “Jamaican Cannabis Co.” for products not from Jamaica would likely be refused on this basis.

❌ Generic Marks

Generic terms are the common names of products or services and can never be protected as trademarks. For instance, you can’t register “Soda” for soft drinks. No amount of use or recognition will make a generic term protectable.

✅ Best Practices for Brand Building

If you’re in the early stages of branding your cannabis company or products, consulting a trademark attorney early on is a smart move. An experienced attorney can help you avoid issues like descriptive or misdescriptive marks, and instead guide you toward something distinctive, protectable, and valuable.

Even if you’re not currently pursuing federal registration, that’s no reason to settle for a weak or overused mark. In a fast-moving industry like cannabis, the right trademark is more than a legal asset—it’s a strategic differentiator. Taking the time to build a strong brand from the beginning can save you from costly rebranding and enforcement issues down the road.

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Star signs and cannabis strains: May 2025 horoscopes

Welcome to May, Stargazers! Read this month's horoscope and discover the strain that best matches this month's movements.

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Oregon’s Ballot Measure 119: Time’s Almost Up?

Hopefully this is the penultimate time I’ll write about Ballot Measure 119. Hopefully, some three weeks from now, I’ll publish one last post explaining that this landgrab initiative was annihilated, judicially speaking.

The recent Federal Court hearing

On April 29^th, Judge Michael H. Simon heard arguments from the UFCW 555 and the Oregon Department of Justice, on the one hand, and two OLCC licensees, on the other, as to why BM 119 must or mustn’t stand. I didn’t attend the hearing, but trusted sources on both sides advise me that Judge Simon was skeptical of arguments that BM 119 is not preempted by the National Labor Relations Act. In other words, this thing is teetering.

If you’re a supporter of local journalism, you can read a pretty good synopsis of Tuesday’s showdown here at Oregon Live. If you’re a cannabis business that cannot hurdle the paywall, the most important takeaway is that Judge Simon promised a ruling before May 22, when the OLCC license for one of the challengers expires.

Something the Oregon Live article doesn’t explain is that Tuesday hearing was a consolidated affair. Originally, the challengers had sought a preliminary injunction (freezing the requirements of BM 119) prior to any ruling on the merits. That plea was later bundled with Tuesday’s “merits” hearing, such that Judge Simon’s ruling will be the final word in this case– absent any appeal.

I’ve explained enough about the merits of this case in prior posts (linked below)—and probably more than I should’ve endeavored, given that I’m no Constitutional or labor lawyer. So I’ll dispense with further legal analysis here. I do think it’s worth surveying the lay of the land for OLCC licensees, until we get a ruling.

What this means for license renewals

I explained on March 13 that OLCC isn’t processing renewals for licensees that don’t produce a signed labor peace agreement (LPA). But they aren’t taking action against those licensees, either. OLCC has been slow-playing this thing, in essence, allowing the judicial process to play out such that non-compliant businesses may come back into compliance without ever having to sign an LPA, once Judge Simon rules, as a matter of law.

The notices OLCC gives in the case of non-renewal are putting a scare into some operators, because they read, in part, “we cannot process your license renewal until you have uploaded a signed [LPA] or attestation….”.  That’s just OLCC walking the line on what BM 119 requires the Commission to do. Again, no one is being run down for continuing to operate in the context of non-renewal for want of LPA.

What this means for license sale transactions

On March 13, I also explained that OLCC hadn’t yet determined what it would do with OLCC licensees in the buy-sell context. At that time, the Commission was still getting advice from DOJ on the issue.

I spoke with the Compliance Director a few weeks back, and she confirmed that OLCC has been advised not to process these transactions if the buyer does not have an LPA or attestation. So, they are not. This means that any buyer halfway down the pike on deal needs to either: a) hold their nose and provide an LPA/attestation; or b) slow walk the deal, if possible, for the next three weeks or so.

Conclusion

I liked when the BM 119 proponents snuck a Rickroll in the measure. But that’s about it. I expect that we’ll get a ruling pretty soon that BM 119 is a goner. Judge Simon’s findings are likely to mirror the analysis that Legislative Counsel put together in 2023 (see here and here), when UCFW 555 failed to push this thing through as a bill.

If Judge Simon does rule as expected, this whole thing will have been a waste of taxpayer money. That would be quite curious, in the sense that taxpayers voted for BM 119 in the first place. I just hope that our cannabis industry clients aren’t stuck with it.

For past coverage on the BM 119 morass, check out the following:

• Oregon Cannabis Roundup: Fall 2024
• New Rule, December 5: Oregon Cannabis Retailers, Processors, and Labor Peace Agreements
• Oregon Cannabis: Get Your OLCC Renewal or New Application in Before December 5^th
• Oregon Cannabis: State of the State (2024)
• Oregon Cannabis: Are Forced Labor Peace Agreements Unconstitutional? We’re About to Find Out.
• Oregon Labor Peace Agreements: Litigation Status, Your Options

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