State & Local Laws

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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.

Nevada legalized the recreational adult-use of marijuana on July 1, 2017 and the state has generated millions in tax revenue as a result. Nonetheless, the Nevada Regulation and Taxation of Marijuana Act (the “Act”) provides that until November 2018, only registered marijuana certificate holders may apply for recreational retail marijuana establishment licenses. The Nevada Department of Taxation (the “Department”) ceased accepting applications at 2017 year’s end.

Nevada state flag on cannabis backgroundThe Act further provides that at least once a year, the Department will determine whether additional marijuana establishments are necessary to support the demand in the state. It was anticipated the Department would begin accepting recreational retail marijuana establishment licenses again in November 2018.

On July 6, 2018, the Department issued a notice of its intent to begin accepting applications for recreational retail marijuana establishment licenses. The notice came sooner than expected, but there’s a catch! The Department is accepting applications under two (2) conditions: (1) the applicant must be a registered medical marijuana establishment certificate holder; and (2) the applicant must be in “good standing” with the Department. The plus side is that such applicants may apply for one (1) or more recreational retail marijuana establishment licenses.

For those prospective applicants meeting the two (2) foregoing conditions, they must act fast. The application acceptance period lasts only ten (10) days – from September 7-20, 2018 (excluding weekend days).

In addition, prospective applicants should not expect to be open for business anytime soon. The application review period begins September 7, 2018 and extends to December 5, 2018. The Department will award conditional licenses no later than December 5, 2018.

There’s another catch! Conditional license holders must be fully operational no later than twelve (12) months following the issuance of a conditional license. If the establishment is not fully operational after twelve (12) months following the issuance of a conditional license, the establishment must surrender the license to the Department, unless an extenuating circumstance applies.

The application can be found on the Nevada Department of Taxation website.

In November 2018, the Department may open up the applicant pool to all persons interested in submitting an application to operate a recreational marijuana establishment – emphasis on may.

Florida’s citrus industry has been ailing and declining for years.  Florida’s recent medical marijuana regulations were designed to help, in part, by providing two medical marijuana licenses for the citrus industry to switch from growing oranges to marijuana.

As I’ve posted before, Florida medical marijuana licensing regulations have been the subject of repeated litigation challenges.  See posts here, here and here.  Now, the most recent challenge involves this citrus preference rule.

Louis Del Favero Orchids (“Orchids”) is challenging the rule.  The orchid company argues that the rule fails to carry out the law, which gives preference for up to two medical marijuana licenses to applicants who own “facilities” that were used to process citrus.

Orchids claims that the rule actually gives preference to applicants who simply own “property” that was once used for citrus-processing which is different than the requirement set forth in the law that preference be given to applicants who own “facilities” that were once used for citrus processing.

Orchids bought Florida property that included a facility once used to process orange juice in an effort to increase their chances to obtain a Florida medical marijuana license.

However, Florida’s Department of Health’s position is that there’s nothing in the law that requires a “facility” to be a structure.

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.

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.

Few things are as bi-partisan as constructing a snazzy acronym for federal legislation, and Senators Elizabeth Warren (D-MA) and Cory Gardner (R-CO) did not disappoint with the “Strengthening the Tenth Amendment Through Entrusting States Act”  (“STATES Act”). As its name suggest, the goal of the STATES Act is to protect regulated cannabis businesses and users in states where cannabis has been legalized by amending the Controlled Substances Act.

U.S. Capitol Building
Copyright: mesutdogan / 123RF

The Controlled Substances Act, 21 U.S.C. §§ 801, et seq. (“CSA”) is the federal law that makes the manufacture, distribution, and use of marijuana illegal, and is the main source for the dichotomy between state and federal law concerning cannabis. The proposed legislation seeks to amend the CSA by adding several sections which would essentially exempt state-sanctioned marijuana from the CSA. While the STATES Act would not legalize cannabis on a nationwide level, it would and give states the freedom to legalize cannabis or keep it illegal.

The STATES Act has received so much attention not only because of the sweeping changes it proposes, but also because it has received tacit approval from President Trump, who was previously seen as a roadblock to cannabis legislation. That is due in part to a deal struck between Senator Gardner and the President, which ended with the following pronouncement from Gardner: “President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.”

The folks at Leafly have a great breakdown and explanation of the STATES Act, including the following bullet points on what the legislation proposes:

  • The act amends the Controlled Substances Act (CSA) so that as long as states and tribes comply with a few basic protections, its provisions no longer apply to any person acting in compliance with state or tribal laws relating to marijuana activities.
  • The act states that compliant transactions are not trafficking and do not result in proceeds of an unlawful transaction. This would go a long way towards ending the difficulties cannabis companies have in obtaining banking services.
  • The measure removes industrial hemp from the list of controlled substances under the CSA.
  • The following federal criminal provisions under the CSA continue to apply:
    • Prohibits endangering human life while manufacturing marijuana
    • Prohibits employment of persons under age 18 in drug operations
  • The act prohibits the distribution of marijuana at transportation safety facilities such as rest areas and truck stops.
  • The measure prohibits the distribution or sale of marijuana to persons under the age of 21 other than for medical purposes.

We will continue to monitor and provide updates on this important legislation, which has great implications for cannabis businesses throughout the country.

Joseph McNelis works in Fox Rothschild’s Blue Bell, PA office and focuses his practice on labor and employment matters. Joe also tracks legal developments in the cannabis industry in Pennsylvania and nationwide. Joe can be contacted at 610-397-2332 or jmcnelis@foxrothschild.com.

After a closely watched one day trial last week, Judge Karen Gievers issued a 22 page Order and Final Judgment.  Judge Gievers found that the legislation which implemented Amendment 2 (medical marijuana) is unconstitutional because it conflicts with the language of the constitutional amendment itself.

Section 381.986, Florida Statutes (2017) unconstitutionally restricts rights that are protected in the [Florida] Constitution, and so the statutory prohibition against the use of smokeable marijuana permitted by [a] qualifying patient is declared invalid and unenforceable.

Qualifying patients have the right to use the form of medical marijuana for [the] treatment of their debilitating medical condition as recommended by their certified physicians, including the use of smokable marijuana in private places.

The Judge largely adopted the arguments put forth by Plaintiffs’ counsel who had argued that the the medical marijuana definition approved by Florida voters in November 2016 included “all types of medical marijuana,” including smokeable forms.  Plaintiffs’ counsel also argued that Amendment 2 implicitly recognized the right to smoke medical marijuana in private since the Amendment indicated there was no right to smoke it in public places.

The State of Florida quickly appealed the Order which will delay, at least temporarily, any right to legally smoke cannabis in Florida.

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.

Grow Your Own Case

Recently, I posted about a Leon County, Florida Court case in which the Judge found in favor of a medical marijuana patient who sought permission to grow his own medical marijuana because he needed the raw plant for the treatment his state-certified doctor had prescribed to him for his stage 4 lung cancer.  Medical cannabis dispensaries in Florida do not provide raw plant product.  Following that Court Order, Florida’s Department of Health filed an appeal.

The First District Court of Appeal in Florida has temporarily blocked that ruling and reinstated the stay that prevented Joe Redner, the medical marijuana patient, from growing his own medical marijuana.  We will continue to monitor this matter.  Mr. Redner has indicated that he will pursue his case to the Florida Supreme Court.

Smoking Case

As I’ve posted before here and here, the regulations implementing Florida’s Amendment Two (medical marijuana) banned the smoking of medical marijuana.  And, not surprisingly, litigation was immediately filed challenging the smoking ban.

The trial in the case challenging the smoking ban is scheduled to start tomorrow and we will be monitoring it as it progresses.  The trial judge in the smoking case is Leon County Circuit Judge Karen Gievers.  Judge Gievers is the same Judge who ruled in favor of Joe Redner in the grow case noted above.

In Other Florida News

Despite a slow start in implementing medical marijuana and getting licenses issued and regulations written, Florida now has more than 100,000 registered medical marijuana patients.

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.

Green California Vector IllustrationIn an Alert published Thursday, Fox partner Tracy Gallegos and associate Lynnel Reyes examined new emergency regulations recently proposed by the California Department of Public Health to allow Type 6, 7, or N cannabis licensed manufacturers to register their facility as a “shared-use” facility. The regulations also provide for a new license, the Type S license, which would allow licensees to create infusions, package and label cannabis products and conduct extractions with butter or food grade oils (provided that the extract or concentrate produced may only be used in infused products manufactured by that licensee.) The regulations are expected to be approved by tomorrow, April 13, 2018.

Tracy and Lynnel outline the details of the proposed regulations and the new Type S license, including its benefits, associated concerns and the application process.

To read their full discussion, please visit the Fox Rothschild website.

Florida’s medical marijuana regulations do not presently permit medical marijuana patients to grow their own medical marijuana.  Florida’s Department of Health’s website states the following:

Florida law only allows the licensed dispensing organizations to grow, process and dispense marijuana. The department will refer any business or individual suspected of violating state law to local law enforcement for investigation. It is important to remember marijuana is illegal under federal law.

Joe Redner, of Tampa Florida, challenged this Florida regulation and argued in his lawsuit that he was entitled to grow his own medical marijuana because he needs the raw plant for the treatment his state-certified doctor has prescribed to him for his stage 4 lung cancer.  Medical cannabis dispensaries across the state do not provide raw plant product.

Leon County Circuit Judge Karen Givers recently ruled in Mr. Redner’s favor and found that the

Florida’s Constitution provides Mr. Redner’s right to grow his own medical marijuana so he can follow his physician’s recommendation.  Until and unless the [Florida Department of Health] stops violating its Constitutional duty and adopts the mandated presumptive regulation, the evidence clearly demonstrates that Mr. Redner is entitled to follow the recommendations of his certified physician.

However, this ruling is limited solely to Mr. Redner and no other Florida medical marijuana patients can grow their own medical marijuana pursuant to this ruling.  The Florida Department of Health is likely to appeal the Court’s Order.

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.