Girl holding marijuana leaf
Copyright: atomazul / 123RF Stock Photo

Despite uncertainty concerning the Trump Administration’s stance on recreational cannabis and its willingness to adhere to the Cole Memorandum, legislation was recently introduced in Illinois to legalize cannabis for recreational purposes (medical cannabis is already legal in Illinois). Senate Bill 316 and House Bill 2353 would make it legal for adults 21 and older to possess, cultivate, sell, purchase, and consume limited amounts of cannabis.[1] The bills were sponsored by Senator Heather Steans (D-Chicago) and State Representative Kelly Cassidy (D-Chicago).

Based on usage rates and retail sales of recreational cannabis in Colorado, the Marijuana Policy Project, a national advocacy group, estimates that regulated cannabis sales in Illinois could generate $350 million to $700 million in new revenue per year.[2]

Senator Steans and Representative Cassidy indicated they do not plan to call the bill for a vote this session, but will hold hearings to determine if enough support can be generated for a legalization bill next year.[3] The bills propose to allow current medical cannabis dispensaries to be able to sell cannabis for recreational purposes for up to one year before any new establishments receive licenses to sell cannabis for recreational use.[4]

If passed, Illinois would join 8 other states (Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington) and the District of Columbia that have passed laws allowing the recreational use of cannabis.

[1] 720 ILCS 550/3.5.

[2] https://www.mpp.org/news/press/illinois-general-assembly-consider-ending-marijuana-prohibition-regulating-taxing-marijuana-adult-use/

[3] http://www.chicagotribune.com/news/local/breaking/ct-illinois-marijuana-legalization-proposal-met-20170322-story.html

[4] 410 ILCS 130/115(g).

The recent arrest of a Colorado grower received a fair amount of attention because some believed that it was a true a reflection of how Jeff Sessions and the Trump Administration feel about the otherwise legal sale of cannabis. Some undoubtedly saw this as a sign that the Cole Memorandum may be going by the way of the dinosaur. In my view, not so fast.

Cannabis and the law
Copyright: jirkaejc / 123RF Stock Photo

First, in all likelihood, the criminal investigation into this operation was ongoing before the inauguration. As many criminal investigations go, it likely took a fair amount of time. The government only moved on the grower when it knew it could make its case.

Second, and most importantly, the government contends that the grower in question was selling cannabis over state borders. Assuming that is the case, this grower conflicted with the Cole Memorandum in the first instance. As such, even the “more friendly to cannabis” Obama Administration would have likely pursued this matter.

Nevertheless, there is a valuable takeaway from this recent event. If you are engaged in the legal cannabis business, you had better take all steps to ensure that you are complying with your applicable state law and not running afoul of the Cole Memorandum. Push it too far and you too may go by the way of the dinosaur.

In November 2016, Florida voters overwhelmingly approved, with more than 70% voting yes, expanded medical marijuana by passing Amendment 2.

Now comes the tough work of implementing Amendment 2.  One bill, Florida Senate Bill 614, proposes to throw out the current medical marijuana system (created in 2015 to grow, process and distribute low-THC cannabis oil) which strictly capped the number of businesses allowed to participate in the medical marijuana business in Florida.

37140040 - florida state flag on cannabis background. drug policy. legalization of marijuana

St. Petersburg Republican Jeff Brandes, the proponent of SB 614, calls the current system “state sanctioned cartel” that limits competition and results in higher prices.  At present, the Florida medical marijuana system is limited to only seven vertical license holders.  A “vertical license” means that the license holder must do it all and grow, process and distribute the product.  And, by maintaining the current system it will obviously severely restrict businesses who want to be involved in what will be big business under Amendment 2.

Senator Brandes’ plan would get rid of the vertical license system and instead create four types of licenses:  one to grow marijuana, one to process marijuana, one to transport marijuana, and one for retail centers.  Each county, and Florida is a large state with 67 counties, could have one retail center per 25,000 residents, or nearly 800 statewide.  But, the bill still permits local governments to outright ban retail dispensaries.

———————-

Dori K. Stibolt is a West Palm Beach, Florida based partner with the law firm of Fox Rothschild LLP.  She focuses her practice on litigation and labor and employment issues.  You can contact Dori at 561-804-4417 or dstibolt@foxrothschild.com.

The beautiful casinos, lavish nightclubs, and lax alcohol laws provide the 40 million annual tourists with plenty of reasons to visit Las Vegas. In some polls conducted of both tourists and locals who were asked to describe Las Vegas in one word, the words “paradise” and “sin” came up frequently.  The introduction of Senate Bill (“SB”) 236 possibly provides one more reason to describe Sin City as “paradise” or “sin.” If passed, this legislation would allow public consumption of marijuana.

Although adult marijuana use became legal in Nevada on January 1, 2017, it is a misdemeanor to consume it anywhere but private residences. SB 236 would allow local governments to issue licenses for the use of marijuana at, among other places, restaurants or bars, and at public events. As with all laws, SB 236 would place restrictions on the public places at which marijuana could be consumed. Specifically, licenses would not be issued for businesses within 1,000 feet of any school, church, park, public pool, or substance abuse center.

Assuming SB 236’s passage, one type of business that will not be seeking a license is the casinos. Since it is still a Schedule I substance, gaming authorities in Nevada have specifically stated that marijuana consumption will not be permitted in casinos.

Notwithstanding the prohibition in casinos, SB 236 is still pretty exciting for Nevada. If it becomes law, it will give tourists one more reason to visit Sin City.

Skyline of Las Vegas, Nevada
Copyright: rabbit75123 / 123RF Stock Photo

On our Physician Law blog, Fox associate Ed Cyran discussed physician investment in medical marijuana businesses in Pennsylvania, in light of the January announcement that the PA Department of Health would accept permit applications for growers/processors and dispensers of medical marijuana in the commonwealth. The applications, which are being accepted until March 20, require that the applicant raise substantial funding. Ed notes the legal and regulatory restrictions on such investment.

Medical cannabis
Copyright: alexmillos / 123RF Stock Photo

Many people see the green of cannabis as a way to the pot of gold at the end of the rainbow. If you are going to invest in a legal (at a state level) cannabis business, you need to make sure that you know what you purchase.

The SEC recently charged a company and its founder with promoting “record” revenue numbers to investors and touting itself as a leader in the cannabis industry, all the while it generated certain of its earnings from sham transactions through a secret corporate affiliate. The company and its principal agreed to settle the charges, with the principal agreeing to pay $12 million in disgorgement and penalties and accepting a bar from serving as an officer or director of a public company or participating in any penny stocks.

So what do these events tell us? First, there are potential big rewards through investing in this burgeoning industry. Second, there are people looking to take advantage of your desire for large profits.

Investing in these businesses is fine, but make sure your eyes are wide open. Ask question, perform due diligence, and ask more questions. You don’t want to see your investment go up in smoke.

In attempting to convince legislators and other high-ranking state officials to legalize cannabis, proponents often tout an increase in tax revenue as one of the benefits of such a program. And states that legalized marijuana in the last several years have seen tax revenues exceed initial estimates. In Pennsylvania, this refrain is one of the Commonwealth’s “row officers.”

At a press conference on March 6, Pennsylvania Auditor General Eugene DePasquale suggested that the state should, “strongly consider regulating and taxing marijuana to benefit from a booming industry expected to be worth $20 billion and employ more than 280,000 in the next decade.” In support of this statement, DePasquale suggested that Pennsylvania would experience job creation, a reduction law enforcement resources and arrests related to drugs, and an increase in state tax revenue.

While Pennsylvania is in the early stages of implementing its Medical Marijuana Program, DePasquale’s statement asked legislators and other state officials to examine the possibility of legalizing marijuana for recreational purposes (without explicitly using the word “recreational”). As Auditor General, DePasquale is not part of the legislative branch, but the state’s chief fiscal officer, responsible for auditing state agencies and ensuring they responsibly use state funds.

It will be interesting to follow whether members of the Pennsylvania legislature heed his call and examine this policy. However, it is more likely that legislators will adopt a position like that suggested by PA House Republican spokesman Stephen A. Miskin and reserve judgment until the state fully implements its Medical Marijuana Program. (“We don’t even have the medical cannabis program up and running yet, so it’s clearly a little premature to jump to the next step.”). Regardless, stakeholders in the industry will continue to watch for signs of increased support for recreational marijuana, whether from outside groups or from “inside the house.”

The Maryland House of Delegates this past week censured one of its members for using his legislative position to influence the medical cannabis regulators in favor of his client for who he was a paid consultant. The 138-0 resolution was the result of Joint Committee on Legislative Ethics finding that the actions violated the spirit if not the letter of state ethics laws.

The issue surrounded the failure of the legislator to tell the General Assembly’s ethics advisor that he was appearing before the medical cannabis commission to advocate policy while, at the same time, advocate for his would-be dispensary client.

Maryland’s licensing process and procedures has already come under some scrutiny for its selection process. This may put a dark mark on this process even further. So why do potential licensees in other should states care about Maryland?

There is a valuable lesson to be learned here, especially in those states where using political consultants is the norm. If you use such a consultant, you want to be certain that you know the state laws regarding disclosure of such use.

At the same time, you need to know who employs the consultant. Using Maryland as the example, there would likely have been no censure if the legislator disclosed as the state ethics laws required. His failure to do so not only hurt him but potentially his client as well.

Using a political consultant is fine. Just look before you leap.

In a bi-partisan bill, HR 1227 (the Ending of Federal Marijuana Prohibition Act of 2017) would result in the de-scheduling of cannabis from the Controlled Substances Act and vest the regulation of cannabis to the states. Does HR 1227 have a chance?

It is unlikely that HR 1227 will become law, but it is significant in its own right. The DEA, in 2015, talked about rescheduling cannabis, but HR 1227 would go a step further. De-scheduling of cannabis altogether would vest the regulation of cannabis in the states.

So why is this a big deal? There is limited bi-partisan anything in Washington D.C. these days. The fact that cannabis is one subject that continues to receive bi-partisan interest can be seen as the real hope that the federal government will be hands-off when it comes to medical cannabis, and possibly even full adult use.

Time will tell, but bi-partisan support for meaningful cannabis-related legislation is something that may become reality sooner the later. Until then, you must use all diligence to ensure that your business fully complies with applicable law. The more “legitimate” the business becomes, the more likely that there could be greater cannabis reform.