E-Book Cover: Employment Compliance in the Age of Legalized MarijuanaThough cannabis is illegal under federal law, at least 30 states and the District of Columbia have legalized cannabis for medical use and nine states, as well as D.C., have legalized it for recreational use—a dichotomy that presents a unique and complex challenge for employers. In a new e-book, Fox attorneys Joseph A. McNelis III, Lee Szor, William Bogot and Joshua Horn provide an overview of federal and state marijuana laws, discuss specific aspects of the employment relationship affected by the legalization of marijuana in certain states, and offer practical guidance for employers on how to navigate this new and developing area of the law.

We invite you to download a PDF of the e-book.

Jack Praetzellis writes:

Green California Vector IllustrationOn July 1, 2018, California’s Cannabis “transition period” ended for manufactured cannabis products (i.e., edibles).  All manufactured cannabis products must now meet California’s (very) specific labeling and packaging regulations.

California Cannabis Label SymbolAmong other things, the packaging must include THC and CBD content in milligrams along with the Cannabis “universal symbol” (and no, you can’t change the color).

The “don’ts” are more interesting than the “dos”.  Among other things, packaging cannot:

  • Include the name of a county in California unless all of the cannabis in the product was grown there.
  • Imitate candy packaging or labeling and cannot use the terms candy or candies, or otherwise appeal to those under 21.
  • And, in a typically California move, packaging must identify all potential allergens (shellfish, peanuts, etc.).

Manufacturers should take (or, well, should have already taken) a close look at these detailed labeling and packaging requirements.  Although some of these regulations may seem excessive, there are high stakes here.  Failure to comply with any of the host of California’s Cannabis regulations subjects a licensee to discipline (which may include suspension or revocation of the license).  See Cal. Bus & Prof Code §§ 26030-26031.


Jack Praetzellis is an associate in the Litigation Department, resident in the San Francisco office.

As Florida’s 2018 legislative session comes to a close, its time to review legislative changes to Florida’s medical marijuana laws.

First, Florida’s Senate passed HB 6049,  This bill removes the requirement that the Florida medical marijuana license (Florida has a vertical licensing system) reserved for a Black farmer must go to a Black farmer who is a member of the Black Farmers and Agriculturalists Association.

As I explained in my earlier posts (here and here), Columbus Smith, a Black farmer from Panama City, filed a lawsuit challenging the law implementing Amendment Two (medical marijuana) alleging that the law was unconstitutional.

Second, the Florida legislature has withheld funds for the Florida Department of Health (putting the funds in reserve) in an effort to spur the Department of Health to move more quickly on regulations implementing Amendment Two (medical marijuana) which passed in 2016.


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.

Richard L. Holzworth writes:

Medical cannabis research
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Despite Pennsylvania’s medical marijuana industry being in its infancy, more than 17,000 patients have registered for the program, and more than 4,000 already have received their medical marijuana card from the Department of Health. Now that cannabis products have burst onto the scene, hospitals and other residential healthcare facilities are struggling with what to do when patients present medical marijuana cards and attempt to use marijuana in the facilities. Indeed, it is high time for the healthcare providers to update their policies and procedures to address these growing concerns.

Policy Considerations

In developing a medical marijuana policy, it is important for healthcare administrators to remember that medical marijuana, although legal in most states, is still classified by the federal government as a Schedule I Controlled Substance. With medical marijuana laws varying from state to state, hospitals, healthcare associations, and other stakeholders have developed and implemented a wide range of policies addressing the use and possession of medical marijuana products. These policies range from strict, categorical prohibitions to sanctioned self-therapy during hospital admission. Regardless of a healthcare facility’s philosophy (either from a political or medicinal perspective) on medical marijuana, it is important for each institution to develop and implement a comprehensive set of policies and procedures to address the inevitable circumstance of a patient presenting with a medical marijuana ID card or cannabis products in hand.

Each healthcare facility should consider a number of factors to ensure that policies and procedures align with the facility’s individualized needs:

  • Does the facility treat a population or particular demographic with a higher rate of medical marijuana use?
  • Does the facility specialize in treating one or more of the 17 “serious medical conditions” that qualify a patient for medical marijuana use?
  • Does the institution receive federal funding that could be impacted by permitting the use of medical marijuana?
  • What is the facility’s existing human resources policy on a drug free workplace, and does this policy address use of medical marijuana by employees?
  • What is the facility’s controlled substance diversion prevention protocol?
  • What is the facility’s current policy for medications brought into the facility by the patient?
  • What is the facility’s intake procedure, and how does it address medical marijuana use?

In Pennsylvania, neither the Medical Marijuana Act nor the applicable regulations specifically address these issues. However, guidance can be found in the regulations regarding employer-employee relations, the Department of Health suggestions for schools, and the policies in place at facilities in states with more mature medical marijuana programs.

Employer Regulations

Under the Pennsylvania Medical Marijuana Act, it is unlawful for an employer to “discharge, threaten, refuse to hire, or otherwise discriminate or retaliate against an employee […] solely on the basis of such employee’s status as an individual who is certified to use medical marijuana.” § 10231.2103(b)(1). However, nothing the law prevents an employer from disciplining an employee who is under the influence of marijuana (regardless of the source of the marijuana) or for working while under the influence of marijuana when the employee’s conduct falls below the standard normally accepted for that position. § 10231.2103(b)(2). In other words, employers cannot take an “adverse employment action” simply because an employee has been certified by a physician to use marijuana products, but employers are not obligated to tolerate use of marijuana or substandard performance because of marijuana. Moreover, employers are not required to accommodate the use of marijuana products in the workplace.

For hospitals and other residential healthcare facilities, these employer-employee provisions in the Medical Marijuana Act suggest that the Pennsylvania lawmakers did not intend to require healthcare providers to tolerate or accommodate the use of medical marijuana by patients (or anyone else) on the premises. Importantly, Pennsylvania’s Medical Marijuana Act does not “require an employer to commit any act that would put the employer or any person acting on its behalf in violation of federal law.” § 10231.2103(b)(3). Accordingly, it is unlikely that healthcare facilities or their employees will be required to take any action that is prohibited under federal law, e.g. possession of marijuana products or facilitation of marijuana use.

School Guidelines

The Pennsylvania Medical Marijuana Act directs the Department of Education to promulgate regulations for the use of medical marijuana on school district property. Although those regulations have not been issued, the Department of Health has provided temporary guidelines for schools. According to Department of Health, students should be prohibited from bringing medical marijuana products on school property or storing products at the school. Neither the students nor school personnel should be permitted to administer medical marijuana.

In order for a student to use medical marijuana during the school day, the Department of Health recommends that a parent, legal guardian, or registered caregiver bring the medical marijuana product to school, administer the product, and then remove the unused product from the premises. These arrangements should be made with school administration in advance and in accordance with all visitor protocols.

Even though these temporary guidelines are not mandatory and are not specifically designed for hospitals and other residential healthcare facilities, the concept could be implemented in a healthcare setting. The Medical Marijuana Act enables qualified patients to designate a “caregiver” who is registered with the Department of Health and permitted to purchase, transport, and administer medical marijuana products. With this in mind, hospitals and other residential facilities could permit a caregiver to possess and administer medical marijuana products to a patient, and then remove the unused product from the premises.

Examples from Other States

The Washington Health Care Association has published a sample medical marijuana policy for use by long-term care facilities. This policy outlines a protocol that is very similar to the Pennsylvania Department of Health’s guidance for school districts. The Washington policy requires each patient to designate a “provider” who will bring medical marijuana product into the facility, administer the medication, and then remove the unused product. The policy also states that staff will not assist patients in obtaining or using medical marijuana, store medical marijuana, or ensure that medical marijuana is being used appropriately. Staff involvement is to be limited to confirming a patient’s status as a qualified medical marijuana user and ensuring that the use of medical marijuana does not impact any other patients. Should a designated provider or patient fail to follow the policy, the facility reserves the right to enforce appropriate consequences, including discharge from the facility.

The Minnesota Hospital Association has published three different policy templates for medical marijuana use, which offer healthcare providers a range of options for handling medical marijuana issues. The first template completely bans medical marijuana from hospital property. If a patient is found to be using or in possession of marijuana products, this policy directs hospital personnel to first determine whether the patient is a qualified and certified to use medical marijuana under state law. Qualified patients will be asked to remove medical marijuana products from the facility, or the products will be secured with the patient’s other personal belongings. For patients who are not qualified users, the hospital will dispose of the marijuana in accordance with hospital policy for handling other illicit drugs.

Generally, the second and third policy templates offered by the Minnesota Hospital Association suggest that qualified patients should be permitted to continue use of medical marijuana in accordance with state regulations. These policy options include suggested protocols for incorporating medical marijuana as either a “self-directed therapy” or as part of the hospital’s medication process. Importantly, these policy templates include provisions that require patients to verify that they are enrolled in the state’s medical marijuana program, and state that the hospitals are not required to certify a patient as eligible for medical marijuana or to permit the continued use of medical marijuana during an in-patient stay.

Takeaways

Drafting comprehensive medical marijuana policies and procedures is an imperative for Pennsylvania healthcare facilities, including hospitals, long-term care facilities, nursing homes, and others. However, the specifics of these policies and procedures must be tailored to each facility’s individualized interests and needs. These policies also must balance patient rights and interests, compliance with divergent state and federal law, and the facilities’ own financial, operational, and political circumstances. This can be accomplished with the careful evaluation of existing facility policies, practices, and operations, and with the assistance of experienced counsel.


Richard L. Holzworth is an associate in the firm’s Litigation Department, based in its Pittsburgh office.

New Jersey map outline
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Peter Kelly writes:

New Jersey Governor Phil Murphy signed an executive order directing the New Jersey Department of Health and the Board of Medical Examiners to review the state’s existing medical marijuana program with a focus on ways to expand access to marijuana for medical purposes. The review will include:

  1. An evaluation of the current rules regulating operating and siting of dispensaries and cultivation facilities with particular focus on whether relaxation of rules should be revised to remove obstructions to expansion;
  2. A review of the current process for obtaining a license to operate, including recommendations to expedite the process;
  3. An examination of conditions for participating physicians to ensure such requirements are not onerous;
  4. An analysis of the current list of debilitating conditions for which use my be authorized and a recommendation as to whether doctors should be given flexibility to make such determination on their own;
  5. An assessment of the methods through which patients obtain medical marijuana and whether rules should be amended to approve additional methods to facilitate patient access;
  6. A review of regulations governing the forms in which medical marijuana can be ingested; and
  7. Any other aspect of the program that hinders or fails to effectively achieve the statutory objective of ensuring safe access to medical marijuana for patients in need.

The Executive Order mandates that the DOH and BME complete the review within 60 days and requires that the review’s findings be submitted along with recommendations for new rules and regulations or for the elimination of existing ones.

According to Governor Murphy, the goal of the review is to eliminate barriers to access for patients who suffer from illnesses that could be treated with medical marijuana. The state’s current program limits prescriptions to only those who have certain state-approved conditions and the more than 15,000 enrollees have access to only five dispensaries in the state.

You can find Executive Order #6 at the New Jersey state government website.


Peter F. Kelly is a partner in the firm’s Corporate Department and Cannabis Law Practice, resident in its Princeton, NJ, office.

As a follow-up to yesterday’s post regarding the status of FinCEN’s 2014 marijuana banking guidance in light of the Attorney General’s policy reversal on marijuana enforcement at the federal level, we have received written confirmation from FinCEN that its 2014 guidance remains in place.  In response to our inquiries, FinCEN provided us with the following statement:

“The SAR reporting structure laid out in the February 14, 2014 guidance remains in place.  FinCEN will continue to work closely with law enforcement and the financial sector to combat illicit finance, and we will notify the financial sector of any changes to FinCEN’s SAR reporting expectations.”

In addition, the two U.S. Senators from Colorado, Michael Bennet (D) and Cory Gardner (R), announced that they have sent a letter to FinCEN urging the agency to retain its 2014 marijuana banking guidance.  In their press release, the senators warned that “repealing the guidance could increase the amount of cash used by marijuana businesses, raising public safety issues and reducing the oversight and transparency of marijuana transactions.”  A copy of their letter is available here.

We are closely monitoring this area and will provide timely updates as to any developments.

Reuters is reporting today that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) was caught off guard by Attorney General Jeff Sessions’ announcement last week that the Justice Department was reversing its policy regarding enforcement of federal marijuana laws.  A FinCEN spokesman said in a statement that his agency’s prior pronouncement regarding marijuana banking nevertheless “remains in place,”  referring to guidance issued in February 2014 to clarify Bank Secrecy Act expectations for financial institutions seeking to provide services to marijuana-related businesses.  That guidance described how financial institutions could provide banking services to marijuana businesses consistent with their BSA obligations despite the fact that the manufacture, distribution, and dispensing of marijuana is illegal under federal law.  And as we recently reported, 400 banks and credit unions were actively serving the marijuana industry prior to the Attorney General’s announcement.

Reuters reports that FinCEN received no advance warning of the Attorney General’s announcement, according to sources, and a Justice Department spokesman declined to comment about whether his agency had coordinated with FinCEN prior to the announcement.  The Justice Department’s policy reversal has understandably sowed confusion among financial institutions as to whether they can continue to do business with marijuana businesses, and FinCEN’s confirmation that its 2014 guidance remains in place should provide some measure of comfort to affected banks and credit unions.

It is worth noting that FinCEN’s current director – Kenneth A. Blanco, who assumed the role just last month — spent the last 28 years of his career as a Justice Department prosecutor, most recently serving as Acting Assistant Attorney General of the Criminal Division.  During his tenure at the Justice Department, he was the chief of numerous sections, including the Money Laundering and Asset Recovery Section, the Narcotic and Dangerous Drug Section, and the Organized Crime and Gang Section, among others.  We have yet to see whether Mr. Blanco will implement major policy changes at FinCEN, and whether his agency maintains its marijuana banking stance, or aligns with his former agency’s policy shift, may well be one of the first major policy decisions he has to confront.

Venture capital is playing a growing role in the country’s emerging legal cannabis industry. Attorneys Emily J. Yukich and Matthew R. Kittay of Fox Rothschild’s Emerging Companies & Venture Capital Practice will conduct a panel discussion with industry insiders during the American Bar Association Business Law Section’s annual meeting in Chicago.

Cannabis leafThe Angel Venture Capital Subcommittee, which Yukich and Kittay co-chair, will present an in-depth 360-degree examination of venture capital investing in cannabis companies, featuring:

Panelists:

  • Jeremy Unruh, general counsel and director of external communications at PharmaCann, a medical cannabis provider based in Oak Park, Illinois.
  • Charlie Bachtell, founder and CEO of Cresco Labs, LLC, a Chicago-based medical cannabis cultivating and manufacturing company.
  • William Bogot, co-chair of the Cannabis Practice Group at Fox Rothschild LLP.

Date: Thursday, Sept. 14

Time: 10 a.m. to 11 a.m.

Venue: Chicago Ballroom VIII, Ballroom Level, Sheraton Grand, Chicago, Illinois.

As a follow up to my post on the City of Boynton Beach having its regulations overturned by Florida state law, other Florida municipalities are debating medical marijuana dispensaries.

Those adopting or extending moratoriums on dispensaries:

  • Marathon City, located in the Keys, has extended its moratorium for another 180 days.
  • Winter Garden, located near Orlando, recently voted in favor of a moratorium.
  • Collier County has also imposed a county-wide moratorium through the end of 2017.
  • Coral Gables, located near Miami, has also voted to impose a ban on dispensaries.
  • City of Sarasota, located south of Tampa, imposed a 60 day moratorium.

Miami Beach is investigating a creative workaround to impose some local control on dispensaries.  Miami Beach is looking into changing the zoning rules for pharmacies within their borders since municipalities are required to regulate dispensaries as they do pharmacies.

Meanwhile, the first dispensary in the City of Jacksonville, Florida recently opened its doors.  Tallahassee, the capital of Florida, also recently had its first dispensary open.

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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 Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN) recently issued a Marijuana Banking Update, with data through March 31, 2017.   The number of banking institutions offering services to Marijuana Related Businesses continues to increase, but the overall number of banks providing such services remains low.  As of March 31, 2017, only 368 banks and other depository institutions in the U.S. offered services to Marijuana Related Businesses.

Copyright: jeremynathan / 123RF Stock Photo

During the period covered by the Update, banking institutions filed approximately 30,000 Suspicious Activity Reports (SARS) across the 3 required filing categories:  Marijuana Limited, Marijuana Priority, and Marijuana Termination.  The majority of the SARs filings – over 20,000 – fell into the Marijuana Limited category, while 2,007 SARS were filed in the Marijuana Priority category and 7,326 SARs were filed in the Marijuana Termination category.

FinCEN defines the three filing categories as follows:

Marijuana Limited: the financial institution’s due diligence indicates that the MRB does not raise any of the red flags as defined in the Cole Memo and is compliant with the appropriate state’s regulations regarding marijuana businesses. The financial institution is providing banking services to the MRB.

Marijuana Priority: the financial institution’s due diligence indicates that the MRB may raise one or more of the red flags as defined in the Cole Memo or may not be fully compliant with the appropriate state’s regulations regarding MRBs. The financial institution is providing banking services to the MRB while further investigation is being conducted.

Marijuana Termination: the financial institution decided to terminate its relationship with the MRB for one or more of the following reasons:

    • The financial institution’s due diligence indicates that the MRB raises one or more of the red flags as defined in the Cole Memo.
    • The MRB is not fully compliant with the appropriate state’s regulations.
    • The financial institution has decided not to have marijuana related customers for business reasons.