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Florida Governor Ron De Santis signed SB182 into law yesterday.  SB182 redefines medical use of marijuana to include possession, use or administration of marijuana in the form of smoking.

The new law also triggered the dismissal of an appellate court action regarding the constitutionality of Florida’s medical marijuana law which previously banned the smoking of medical marijuana.

Notwithstanding the new law legalizing smokable medical marijuana it will take time for dispensaries to start selling it, since the Florida Department of Health will have to institute regulations and procedures for the new product.  If the past is predictive of the present, it could take a year for new regulations to be issued by the Florida Department of Health.  The new law also legalized the purchase and possession of smoking paraphernalia.

Medical marijuana patients will still need a prescription from a doctor and a Florida medical marijuana patient i.d. card to purchase smokable medical marijuana.  Additionally, nothing in the new law permits or authorizes smoking medical marijuana in public, in an enclosed work area, or on public transportation.  Further, the owners of private property can ban smokable medical marijuana on their property.

Children will also be able to use smokable medical marijuana if they suffer from a terminal illness and they have received two opinions from two doctors that they should utilize smokable medical marijuana.

 

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

Recently Congress passed the Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), which legalized activities pertaining to industrial hemp on the federal level. So now we can begin cultivating, processing, and selling industrial hemp, right? The short answer: No.

The 2018 Farm Bill legalized the cultivation and processing of industrial hemp, provided that the hemp used meets the following definition:

“[T]he plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”

Essentially, the United States Department of Agriculture (“USDA”) categorized industrial hemp as an agricultural commodity and removed it as Scheduled I controlled substance. (Note: Any product derived from “hemp” that falls outside of the above definition as set forth by the USDA, is considered a Schedule I drug and therefore still illegal under Federal Law.)

Field of Hemp

Great news, right? No so fast.  What most people do not understand is that following this legalization, it becomes the responsibility of each State to regulate such industrial hemp activities. The states must now codify its own legislation, and the respective state department of food and agriculture must create regulations to support commercial activities concerning industrial hemp.

For example, California has codified general statutes pertaining to industrial hemp. See FAC Sec. 81000 et al. Specifically, Sec. 81003 provides that for one to engage in the commercial cultivation of industrial hemp, it must be registered with the County Agricultural Commissioner in which the commercial hemp cultivation will take place. This means that the individual counties in the state of California must implement rules and regulations regarding the industrial hemp activities.

However, it is up to the California Department of Food and Agricultural (the “CDFA”) to first draft and approve general regulations concerning industrial hemp, such as registration fees and sampling procedures. Thus, most County Agricultural Commissioners in California have not opened county registration, as they are awaiting the CDFA to adopt final regulations before they create their own, at least at the local level. While the CDFA is currently in the active rule making process, industrial hemp regulations have yet to be drafted and approved.

As another example, the state of Florida recently hired a new Cannabis Director who has stated that her initiatives include creating regulations pertaining to industrial hemp activities. However, because those regulations are not currently in place, commercial activities relating to industrial hemp remains illegal under Florida law.

Thus, despite industrial hemp being legal on the federal level, most states still have not adopted regulations addressing industrial hemp activities, and therefore, engaging in these activities are still prohibited at the state level. The regulatory drafting and approval process at the state and county levels will require time.

Some states are using either their cannabis regulatory division or their Department of Food and Agriculture to regulate the industrial hemp state programs. If you want to know more about industrial hemp in your state, make sure you check both regulatory agencies…especially before engaging in such activities.

 

 

Despite the fact that oral arguments were just held in the appellate case involving the State of Florida’s appeal of a court decision legalizing smoking medical marijuana, new Florida Governor has announced and hinted at big changes to Florida’s regulatory and legal structure for medical marijuana.

First, Gov. De Santis recently stated that he wants Florida’s legislature to strip the ban on smoking from the medical marijuana law, but if that doesn’t happen he will drop the State’s appeal of a lower court ruling which permitted smoking medical marijuana.  If the State of Florida abandons the appeal that would effectively legalize smoking in Florida.

Second, and more importantly for those in the industry, Gov. De Santis heavily criticized the current licensing structure in Florida which is limited to 14 vertical licenses which require seed to sale for those companies that own a license.  Gov. De Santis called the current license structure a cartel.

They created a cartel essentially, I don’t know that the amendment necessarily prohibits that, but that is not good policy.

A change in licensing structure would open up competition and reduce prices for consumers and permit smaller companies to get involved in the industry.  On the other hand, a change in licensing structure would negatively impact the value of the current licenses.

 

 

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

Despite the rumor that Florida’s new governor (Ron De Santis) will be friendlier to medical marijuana than Rick Scott, oral arguments were held earlier this week and the attorneys representing the State of Florida vigorously argued to uphold the current smoking ban.  Leon County Circuit Judge Karen Gievers had previously agreed with the plaintiffs and struck down the smoking ban, but her decision had been stayed after the State of Florida appealed.

During oral argument, the appellate panel of judges raised the question of whether the Florida legislature has the political power to veto what the people have passed.

The Florida Department of Health attorneys argued that the immunity set forth in Florida’s Amendment Two was for medical use only.  Since smoking causes cardiovascular and respiratory health problems, the Florida legislature was well within its rights to limit delivery methods that would negatively impact health.

Regarding the section set forth in Amendment Two which provides for restriction on where medical marijuana patients can smoke marijuana, which restricts smoking in public, the DOH attorneys argued that section did not create a conflict because the section was set forth in the limitation section.

Attorneys for People United for Medical Marijuana (“People United”) and Catherine Jordan argued that since the definition of medical marijuana included smokable medical marijuana, the legislature could not restrict that method of delivery in its regulation without creating a constitutional conflict.

Additionally, attorneys for People United argued that the language permitting the Florida legislature to regulate for safety meant that issues like pesticides and the like could be regulated, but that safety regulations could not conflict with the constitutional amendment language which did not restrict delivery methods.

Counsel for People United made an emotional argument regarding patient Cathy Jordan who has suffered from ALS since 1986 and was given 3-5 years to live back in 1986.  Ms. Jordan claims that smoking medical marijuana has kept her alive.

Cathy Jordan is not trying to have a good time, she is trying to live.

A video of the oral arguments can be viewed here.

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

J.B. Pritzker (Democrat) won the election for Governor of Illinois and will be sworn into office in January 2019. Based on Governor-elect Pritzker’s statements on the campaign trail and the current acquisition market in Illinois, the cannabis industry appears to believe that legalized adult use recreational marijuana is a foregone conclusion and that Pritzker will sign a marijuana legalization bill shortly after taking office, which will legalize recreational marijuana in Illinois.

Pritzker has stated that adult use recreational cannabis could generate as much as $700 million per year in annual taxes. Because Illinois has one of the strictest medical marijuana programs in the country, it is uniquely situated to have an explosive recreational market while also avoiding the perceived negative costs of legalization. Illinois has a real opportunity to become a leader in the industry and to also positively address the unfortunate reality that minorities are disproportionately arrested and incarcerated for marijuana possession.

Assuming Pritzker keeps his campaign promises, Illinois’ cannabis industry is set to take off and become one of the largest markets in the country.

This post is authored by Fox Rothschild associate Henry Whitehead:

For marijuana businesses operating in California the rules are still very much in flux, as shown by a new set of regulations proposed by state regulators.  The state Department of Food and Agriculture, Department of Public Health, and Bureau of Cannabis Control (BCC) first proposed a set of marijuana-industry regulations in July 2018 and, after a public comment period, submitted revised proposed regulations on October 19th.  The changes are substantial, and impact topics fundamental to operation of a marijuana business, including the following:

  1. Labeling and Packaging – There are substantial changes to the labelling and packaging requirements for both distributors and retailers. As to retailers, the proposed new regulations state that until January 1, 2020 all packaging containing cannabis goods must be tamper-evident, but does not have to be child resistant.  However, all products must be placed in a resealable, child resistant, and opaque “exit package.”   After January 1, 2020, all product packaging must be child-resistant, and the exit package will no longer need to be child resistant or resealable.
  2. Marijuana Deliveries – The new regulations prohibit marijuana deliveries by companies that do not have state-issued licenses. The regulations do allow for “technology platforms,” like the apps Eaze and Weedmaps, to facilitate sales between licensed dealers and customers, but prohibits profit-sharing based on sales.  This prohibition on profit-sharing could impact Eaze and Weedmaps’ business model going-forward.  The new proposed regulations also make changes to the prior set of proposed regulations relating to marijuana delivery drivers, vehicles, and limit to $5,000 the value of cannabis goods that can be carried by a delivery vehicle at any one time.
  3. Ownership Disclosures – Marijuana businesses operating in compliance with California’s regulatory scheme would be required to disclose substantial information about all parties who have an ownership stake in the business. Under the proposed regulations “all entities and individuals with a financial interest” in the marijuana business shall be disclosed to the BCC, and the proposed regulations include specific definitions of what it means to have a financial interest in a cannabis business.
  4. Licensed Events – The original set of proposed regulations limited temporary cannabis events (where cannabis can be sold and consumed on-site) to county fairgrounds. The new proposed regulations allow such events at other venues that are approved by the local jurisdiction.  This means that, if the regulations are adopted, local authorities will have discretion to determine where cannabis events can be held, which could lead to a higher number of such events.

These are only some of the changes to the original draft set of proposed regulations, which have been sent out for a 15-day comment period that runs through November 5th.  The proposed regulations can be found here.  Fox Rothschild will continue to follow California’s marijuana industry rule-making process, as the state’s regulatory scheme may well become a model for other states considering legalizing adult use of marijuana.

Fox’s own Jennifer Benda, William Bogot and Joshua Horn are paving the way in this new and rapidly developing sector.

The National Law Journal has recognized Fox’s own Jennifer Benda, William Bogot and Joshua Horn as Trailblazers in Cannabis Law. This national distinction identifies attorneys who are paving the way in this new and rapidly developing sector.

 Josh and Bill are co-chairs of Fox’s nationwide Cannabis Law Practice – one of the largest in the nation with more than 50 attorneys experienced in a range of regulatory issues. They counsel growers, distributors, processors, investors and others, including suppliers of ancillary products and services, in corporate, regulatory, mergers and acquisitions, litigation and tax matters.

 Jennifer is a seasoned tax attorney, skilled litigator and former Certified Public Accountant who forged a niche practice handling complex tax and business problems for a diverse roster of clients in the cannabis industry. By combining a decade of working experience in accounting with years of tax planning advice and tax litigation, she delivers a rare depth of business strategy, pragmatism and efficiency to emerging, regulated markets.

 The three trailblazers have also been on the forefront of thought leadership in the legalized cannabis industry. In addition to speaking at a range of events, the group has published several valuable resources including a National Survey on Marijuana Laws and Regulations – a state-by-state survey of marijuana laws; a Cannabis Industry State Tax Guide; and Employment Compliance in the Age of Legalized Marijuana, which provides information and guidance on employment relationships affected by the legalization of marijuana in certain states.

Construction siteAll employers face challenges in navigating issues surrounding legalized marijuana. For construction industry employers, the challenges are particularly difficult given the necessary emphasis on safety.

Last week, my colleague Jeff Polsky, co-chair of Fox’s Labor and Employment Department, recorded a 90-minute webinar for Lorman addressing the issues construction employers face in jurisdictions that have legalized medical or recreational marijuana. Jeff discussed developments in state law, conflicts between state and federal laws, drug testing, maintaining a drug-free workplace, and responding to employees’ requests for accommodation of marijuana-related disabilities. You can purchase the webinar here.

Florida’s medical marijuana regulations and laws have been the subject of repeated litigation ever since Amendment Two was passed by voters in 2016.  A recent Florida Court Opinion has ruled in favor of Plaintiffs seeking to expand Florida’s restrictive vertical license law (which requires the license holder to grow, distribute and sell medical marijuana).

Leon County Circuit Judge Charles Dodson ruled that the cap on the number of “medical marijuana treatment centers, (MMTC)” ran afoul of Amendment Two which had no limitation on MMTCs in the Amendment text.

Judge Dodson ruled that the restrictions set forth in the regulations and laws implementing Amendment Two

Directly undermine the clear intent of the amendment, which by its language seeks to prevent arbitrary restriction on the number of MMTCs authorized to conduct business in the state. The amendment mandates the availability and safe use of medical marijuana by qualifying patients.

Additionally, Judge Dodson found that the vertical license model implemented by Florida is unconstitutional because it requires license holders to cultivate, process, and dispense medical marijuana as opposed to providing licenses to those that just want to engage in one part of the medical marijuana process.  Specifically, Judge Dodson found that the language of Amendment Two utilized an “or” when defining MMTCs and Florida’s legislature used an “and” when writing the law defining MMTCs.

Finally, Judge Dodson ruled that limited number of licenses provided by Florida law improperly restricted who could get licenses.  The law ordered health officials to grant licenses to operators who were already up and running in Florida or who were involved in litigation as of January 1, 2017.  Florida’s medical marijuana law also required that a black farmer receive a license and set aside license preferences for the citrus industry (both of these carve outs have been subject to other litigation as well).  Judge Dodson found these restriction amounted to an impermissible “special law”.

Notwithstanding, the dramatic Court Opinion, Judge Dodson declined the Plaintiffs’ request for a temporary injunction.

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