CBD Confusion

Posted by Raza Lawrence on November 14, 2018

Cannabidiol (CBD for short) is a naturally-occurring element of the cannabis plant that has recently exploded in popularity and availability.  Like tetrahydrocannabinol (THC), CBD is believed to have therapeutic and medical benefits, but unlike THC, CBD has no intoxicating effects.  Across the country, people can now find CBD products everywhere.  But are they safe and legal?

Many products advertised as CBD are imported from other countries or produced in unregulated, unlicensed operations, with no verification that they are free from toxic compounds or that they even contain CBD.  Even if the products contain “pure” CBD, knowledgeable experts contend that CBDs have little or no benefits when they are stripped from THC and other cannabinoids and compounds naturally occurring in the marijuana plant. CBDs appear to exhibit their medical and healing properties only when they are left combined with the other cannabinoids like THC, as they are found in nature.

CBD Production and Sales Remain a Federal Crime Without FDA Approval and a Doctor's Prescription

The law on CBD products is confusing, due to conflicts among local, state, federal, and international laws.  Under the Supremacy Clause to the US Constitution, federal law controls to the extent it conflicts with state or local law.  State law also controls to the extent it conflicts with city or county laws.  Federal law in this area is moving, but it is not clear in what direction.  Some predict the federal government will relinquish all regulation of CBDs and cannabis generally to the states, and keep a hands-off approach.  Others expect the federal government to strictly regulate CBDs and cannabis as they do with prescription drugs through the FDA, leaving the states with little control.  This approach was foreshadowed by the DEA’s recent memo announcing that drugs including CBD with THC content below 0.1% will be taken off of Schedule 1 of the controlled substances schedules, and moved to Schedule 5, which allows CBD products to be sold through traditional pharmacies with a doctor’s prescription so long as the particular product is first approved by the FDA. The order also disallows any importing or exporting of CBD products without a permit.

Under federal law, CBD with THC content above 0.1% remains classified as a Schedule 1 controlled substance, subject to severe criminal sanctions. The Rohrbacher-Farr amendment creates a limited exception, preventing the DOJ from prosecuting anyone in strict compliance with state medical marijuana laws (adult-use or recreational uses of CBD products may still be prosecuted).

Without Commercial Cannabis License, CBDs Are Banned in California Food Products

In California, the Department of Public Health recently issued a memo confirming that CBD products are not allowed in any food products in the state (unless the products are regulated as commercial cannabis edibles, which by definition contain THC levels of at least 0.3%). Thus, under state law, CBDs are allowed to be sold and ingested as long as they include THC, and are banned in food if they come from industrial hemp with little or no THC. The reason CBD products with no THC are banned by state law is that California incorporates federal law regarding food additives, dietary use products, food labeling, and good manufacturing practices for food.  Currently, the United States Food and Drug Administration (FDA) has concluded that it is a prohibited act to introduce or deliver for introduction into interstate commerce any food (including any animal food or feed) to which THC or CBD has been added.

This is regardless of the source of the CBD – i.e., whether the CBD is derived from cannabis or industrial hemp. CBD used as a topical or smokeable product could arguably be allowed under either federal or state law as it may not be considered to be a food that is ingested.

Los Angeles Allows CBD Businesses Without a Cannabis License to Register for Business Tax Certificate to Engage in Commercial Activities

The City of Los Angeles recently issued a form for businesses seeking a Business Tax Registration Certificate to engage in commercial activities related to industrial hemp and/or CBD derived from industrial hemp in the City of Los Angeles. This form allows your business to pay local taxes, but it does not protect you from criminal prosecution under state or federal law.  It likely also signals that enforcement of state CBD laws is not a high priority of the Los Angeles Police Department.

International Treaties Ban All Cannabis Extracts Including CBDs

In addition to local, state, and federal law, international treaties place obstacles to the sale of CBD products. The United Nations has had a series of International Drug Control Conventions (treaties of which the US and Canada are part), and while CBD is not specifically listed in the schedules of the Conventions, "extracts" of cannabis are apparently included within Schedule 1, meaning they are prohibited.

Given the controls required by the UN Conventions, the US would be unable to keep its obligations under the treaties if CBD products were de-controlled under federal law. The Federal Controlled Substances Act, moreover, indicates that scheduling decisions will be made in accordance with treaty obligations.  For example, under section201(d)(I) of the CSA, if control of a substance is required under an international treaty or convention in effect on October 27, 1970, the Attorney General is required to impose controls on the substance by placing it under the schedule he deems most appropriate to carry out such obligations. 

The World Health Organization Expert Committee on Drug Dependence is scheduled to review the UN’s classification of CBD, THC, and cannabis in general at its November 2018 meeting, which could lead to a change in the international treaty.

The result of all these different layers of law leave many confused. We expect that the laws will adapt over time to allow for open sales of CBD products, whether or not they also contain THC.  For now, however, the law is full of problems for CBD products and cannabis in general, and we applaud those working to reform the laws for these products that are all around us.

Everything You Need to Know from the Pasadena Application Workshop

Posted by Raza Lawrence on November 14, 2018
On Tuesday   night, the city of Pasadena hosted a presentation on cannabis licensing with a planning consultant. Here is what we learned from the meeting.  
 
Regulations for cannabis businesses were voted in on   June 5th  by Pasadena voters. As a pragmatic and conservative city, Pasadena's licensing focuses on exercise of local control – with the aim of protecting its residents from secondary effects through land use regulation. 
 
The application period is from   January 1st to January 31st at   11:59 p.m.  There will be a notice of the 30-day period on   December 14th. Currently there is a draft of the review criteria available. The final criteria will be released on   December 14th.  
 
The whole application, as well as payments, may be submitted electronically. Pasadena's selection committee will not give special weight to applications submitted on   January 1st  versus   January 31st, and will not look at anything until the application window closes. The application fee will be approximately $10,000 per category. 
 
The application requires qualifications of the operator, cover letter, business plan, background, experience dealing with government agencies, neighborhood compatibility and enhancement, and security plan. The limit is 50 pages of text and images. You do not have to have a confirmed site in order to apply. 
 
When the application portal closes, there will be an initial screening of applications - did the applicant answer all questions? is the application in full compliance? - to ensure the application is complete and responsive. 
 
Once applications are scored, top applicants will be notified and will have the  opportunity to go forward and secure land use permits and public  health permits – this is period when you need to lock down your sites,  look at buffer zones, and so on.  These sites must also be located at least 1,000 feet from  any other cannabis retailer.
 
All the scoring will be based on written submissions, but the city reserves the right to start an interview process of the final applicants. 
 
Pasadena will allow up to 6 retail permits in the city, one per council district, so long as they meet the required separation from schools, parks, and residential properties. 
 
Another point about delivery: people with licenses in other cities are allowed to deliver in Pasadena. Pasadena will not have separate delivery licenses, but the retail licenses will allow both storefront and delivery. 
 
Pasadena will allow up to 4 cultivation sites in the city, indoor only. These cultivation sites must be in commercial general and industrial general zones. 
Pasadena will also allow 4 testing laboratories in the city where other medical labs are allowed. 
 
For more information from the workshop, see the handouts at the City of Pasadena website. These include details of the proposed scoring system. 
 

Medical Marijuana Labeling Requirements 101

Posted by Donna Thompson on November 6, 2018

Guest post by Donna Thompson, customlabels.net

Medical marijuana has been legalized in more than half of the states in the U.S. It is used for easing the symptoms of pain, nausea and vomiting, glaucoma, post-traumatic stress disorder (PTSD), and epilepsy. Although the number of people that advocate legalization of marijuana for medical purposes is on the rise, not all states in the U.S. have said “yes” to the legalization.

That’s why there is no federal law, and there are variations in medical marijuana laws in different states.

While some states allow the use of medical marijuana extract only, in other states it is allowed to use the whole plant.

When it comes to ways of obtaining medical marijuana, in some states dispensaries are the only place where you can buy it, but in others, like Michigan, you are also allowed to cultivate the plant in your own home.

Also, lists of medical conditions that qualify for medical marijuana treatment differ from state to state. That means that if you get a medical marijuana card in one state, you can buy a medical marijuana product in some other state only if that state lists your condition as one that can be treated with medical cannabis.

The absence of federal laws affects both consumers and producers of medical marijuana.

Besides all of these differences, states that legalized marijuana usage for medical purposes have different requirements for labeling and packaging medical marijuana products. Thus, when medical marijuana producers want to put their product on the market, they must comply with state specific regulations. For example, when it comes to packaging, products need to be tamper-proof and child-proof. As for labeling, the following infographic shows what common labels for medical marijuana products look like in the states that have legalized marijuana:

Cannabis and the 2018 Midterm Elections

Posted by Erin Williams on November 5, 2018
The 2018 Midterm Elections are perhaps the most important in recent memory. They are the first, best, and last hope the Democrats have to set a blue wave through Congress and provide some much-needed resistance to the actions of the Trump administration. However, the excitement has overshadowed the conversation on cannabis. 
 
On   November 6th, Michigan and North Dakota will vote on statewide measures to legalize recreational cannabis. Meanwhile, Utah and Missouri will consider legalizing medical marijuana.  
 
Although California is one of the most pot-friendly states in the nation, the future of the legal cannabis industry does depend on a few races. 
 
In the governor's race, Lt. Gov. Gavin Newsom is predicted to beat Governor Jerry Brown. Gov. Brown has said unflattering things about cannabis users in the past. However, in recent months he has approved a bill giving   privacy  to recreational marijuana users and signed another bill that   expunged many marijuana-related crimes. Still, Lt. Gov. Newsom, a former San Francisco mayor, is the frontrunner and a longstanding supporter of cannabis reform.
 
For the U.S. Senate, eyes are on Sen. Diane Feinstein (D) to be re-elected. Feinstein has evolved her position over the years from supporting the war on drugs to supporting states' rights to set cannabis policy. It is also worth mentioning that as a member of the Senate Judiciary Committee, Sen. Feinstein recently co-sponsored a bill that would deschedule cannabis. 
 
Another incumbent, U.S. House Representative Dana Rohrabacher (R-Huntington Beach) faces Democratic challenger Harley Rouda.  Rep. Rohrabacher was one of the creators of the Rohrabacher-Farr Amendment, which protected legal medical marijuana users from federal prosecution. But Rohrabacher's vocal support of Russia and Putin could lead to his defeat   on Tuesday. A recent   New York Times  poll  shows Rohrabacher and Rouda tied. Rouda has not come forward with any cannabis policy and is assumed to be neutral.
 
For more information on cannabis this midterm season, Leafly has an excellent   piece. Find your polling place   here
 
And from everyone at Margolin & Lawrence, GO VOTE!

Where are Cannabis Lounges Allowed?

Posted by Margolin & Lawrence on November 1, 2018

As recreational cannabis becomes legal in California, the marijuana industry is expanding into a number of different spaces that previously were impossible to operate in legally. One of the most exciting of these new opportunities is the cannabis lounge. Made famous by Amsterdam’s marijuana cafés, lounges are cannabis retail businesses that also allow for the on-site consumption of cannabis – an exciting possibility for customers, business owners, and investors alike. However, while a great deal of interest in these businesses exists across the state, only a few jurisdictions in California plan to allow cannabis lounges, and only some of those locations currently are open to licensed cannabis lounge operations.

When it comes to cannabis lounges currently in operation, the Bay Area is ahead of the pack by a wide margin, with a number of cannabis lounges fully licensed and open for business – seven in San Francisco and one in Oakland, according to a recent Leafly article. No other jurisdiction, in California or elsewhere, has more individual lounges in operation. However, several other cities in California are in the process of opening up for fully licensed cannabis lounge business.

After the Bay Area, the Los Angeles area is furthest ahead in the process of cannabis lounge licensing. Earlier this year, West Hollywood opened applications for cannabis lounges, planning to grant a total of 16 licenses – 8 for edible-only lounges, and 8 for lounges allowing edibles, smoking, and vaping. These applications are still under review, but the city plans to announce its decisions by the end of November, meaning operational businesses may be only a few months away. The city of Los Angeles has also shown interest in social consumption lounges. Between LA City and West Hollywood, this indicates that LA county may not be far behind the Bay Area when it comes to cannabis lounges.

While San Francisco and Los Angeles are the largest California cities to move toward legalizing cannabis lounges, several other areas in the state are beginning to explore the possibility as well. Earlier this month, the city of Eureka voted to allow on-site consumption. After voting to approve cannabis lounges last year, the city of Palm Springs issued its first permit for on-site cannabis consumption this summer, and, though the business in question has yet to open, several other communities in Coachella Valley are considering following suit.

While cannabis lounges remain a controversial issue in many communities, with local residents concerned about the potential nuisances that may come with legal on-site consumption, many cities across California are also beginning to see their potential economic and social appeal. Given the large amount of consumer interest demonstrated in the cities that have already moved toward licensing on-site consumption, the number of jurisdictions embracing legal cannabis lounges can be expected to increase in the future.

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This blog is not intended as legal advice and should not be taken as such. The possession, use, and/or sale of marijuana is illegal under federal law.