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California Jurisdictions Open for Cannabis Retail

Posted by Margolin & Lawrence on January 8, 2019

Despite all the talk about cannabis retail in the news, it can be difficult to tell exactly when and where it's possible for businesses to apply for a cannabis retail license. Here are a few jurisdictions where applications for cannabis retail are either currently open or planned to open in the near future. 

Riverside County

Per the county planning department, Riverside is planning to give out a maximum of 19 retail licenses. While no date is currently set, the proposal process is scheduled to begin later this year.


Santa Barbara County

County is currently accepting cannabis permit applications. Storefront retail permits are limited to eight countywide, with no more than two in any supervisorial district.


Cathedral City

Applications for retail businesses are currently open, with an application form available on the city website.


City of Chula Vista

The city’s application for cannabis businesses will open on January 14th and remain open until the 18th (for Storefront Retail, Non-Storefront Retail, and Cultivation businesses) and the 25th (for Manufacturing, Distribution, and Testing Laboratory businesses.)


City of Desert Hot Springs

Conditional use permits for cannabis activities, including Cannabis Sale Facilities, are available on the city’s website.


City of Goleta

Goleta is currently accepting applications for up to 15 total storefront retail businesses.


City of Jurupa Valley

Jurupa Valley will accept priority applications for cannabis retail from January 22nd to February 6th, with non-priority applications opening on April 1st. The number of retail businesses permitted will be linked to the city's population, with 1 license given for every 15,000 residents. This currently means that the number of licenses given will be capped at 7. 

 

City of Lompoc

Lompoc is currently accepting cannabis retail license applications.


City of Moreno Valley

In December, the city raised its cap on dispensary licenses from 8 to 23. In addition to admitting qualified applicants from the last round of applications, the city will make proposal forms for new applicants available online.


City of Pasadena

The city will license up to 6 retail establishments. The permit application process is open on the city website through January 31st.


City of San Diego

The city is currently accepting applications for cannabis outlets with retail sales, up to a limit of four businesses per council district.


City of San Luis Obispo

Applications for 3 storefront retail businesses and an indefinite number of delivery-only retail businesses are open on the city website through January 29th.


City of Vista

Per the ordinance released in December, the city will be granting 3 delivery-only (non-storefront) retail licenses this year.

Asylum Seekers' Stories From the DHS "Ice Box"

Posted by Margolin & Lawrence on January 4, 2019

Last week, Senator Dianne Feinstein called for a Senate Judiciary Committee hearing on the Department of Homeland Security’s detention practices. In December, two children who were detained for attempting to cross the US border died while in government custody. As the department overseeing the Border Patrol and Customs and Border Protection, the DHS has faced intense scrutiny for its role in these deaths, as well as for the practice of child detention in general. In particular, United Nations human rights experts are investigating whether the children were being held in a type of cell known as a hielera, or “ice box.” These cells are notorious for poor conditions that reportedly include low temperatures, overcrowding, and little access to food or water. The following are accounts from other individuals who have been detained while seeking asylum, as told to attorney Jennie Stepanian.

Contra Costa Cannabis Update

Posted by Margolin & Lawrence on January 2, 2019

In November, a measure to tax and regulate cannabis businesses in Contra Costa County was approved by more than 72 percent of the county’s voters. Given that the election indicated overwhelming local approval for legal cannabis, the county has been moving toward finalizing its cannabis regulations, focusing on the county’s land use restrictions for cannabis businesses and its application process for potential cannabis operators. In December, the county’s Board of Supervisors met to discuss these issues in an open hearing. As of January, here’s where the county stands on the two matters.

Land Use Restrictions

Contra Costa currently plans to limit the number of permits granted for certain commercial cannabis activities. The proposed restrictions are as follows:

  • 4 Permits for Storefront Retail

  • 10 Permits for Cultivation

  • 2 Permits for Manufacturing in Agricultural Zoning Districts

The county has provided an interactive online map allowing prospective applicants to look up a property in order to determine its eligibility for a given cannabis activity, as well as which permits will be required to do business.

A complete list of permits that may be required for a specific property/activity, including health and water use requirements, can be found on the county’s Commercial Cannabis Permitting website.

Application Process

The Contra Costa Board of Supervisors released a preliminary draft of the county’s Request for Proposals (RFP) form. Designed as an invitation for cannabis business applicants, the RFP lays out the Contra Costa cannabis licensing process for the numerically-limited activities listed above.

First, applicants will submit a Letter of Intent (LOI) containing the basic information about their proposed business. The LOIs will be reviewed by the county, which will invite some businesses to submit full proposals. These proposals will make up the main part of the application, including complete descriptions of the prospective operation and the applicant’s qualifications.

Once an applicant’s proposal has been reviewed and selected by the county, the business will be eligible for a Land Use Permit for their commercial cannabis activity. Permits for non-numerically-limited commercial cannabis activities, on the other hand, can be applied through directly through the county’s Land Use Permit process, without the added LOI/RFP requirement.

The county currently plans to release its final RFP form on January 24, with LOIs due by February 14, proposals due by April 18, and permit eligibility granted in June/July. However, the terms of the RFP, including these estimated dates, are still subject to change. The application process, including the RFP, will be revised and brought before the Board of Supervisors again on January 22.

Lessons From the Cape

Posted by Margolin & Lawrence on December 20, 2018
By Allison Margolin with Erin Williams
 
Last week, I travelled to Brewster, Massachusetts, a small town on Cape Cod, to speak to the city planning board about a client's proposed cannabis cultivation license. The client's proposal was the first of its kind in Brewster. Since Massachusetts legalized cannabis in 2016, so far there are only three recreational dispensaries in the whole state, with more expected to open in the coming months. Nearly 80 towns have issued bans and about 90 others have moratoriums. In other words, the change has been slow. 
 During this meeting with the planning board, I quickly realized the city seemed open to the plan, but had some basic questions on what a grow and potential retail location would mean for their small community. A few board members voiced their concerns on the effects of cultivation on groundwater and the energy costs, the town traffic (a key issue for an area with two lane highways), and potential increases in crime in the area. 
 Personally, I found these questions very encouraging. When Raza and I first started our practice almost a decade ago, the stigma against marijuana use was high, especially outside of California. Now that 33 states and the District of Columbia have legalized either recreational or medical cannabis, public opinion has shifted, too. None of the questions I heard in this meeting were about the morality of using cannabis. Instead, they were all practical concerns on the industry's impact on the environment and town safety. Here I will try to address these broad concerns.
 
Impact on Environment 
 
Obviously, this will vary with each site proposal, but what I can guarantee is that a regulated cannabis market will take the necessary precautions in meeting each state and city's guidelines than the illegal cannabis market. 
One environmental concern is water use. Cannabis plants are a  thirsty bunch, which poses more of a problem for desert climates like Southern California than places like Cape Cod. Still, it is far better to have a regulated cannabis grow in your town than an illegal grow, which might divert water or disrupt irrigation. 
Another issue is the potential clearing of forests and the effects on soil as well as the potential for pollution through the use of pesticides, herbicides, and fertilizers. Many in the industry are combatting this issue by using plant nutrients and fertilizers with a low environmental impact. 
There is also the issue of energy usage. Colder climates like Massachusetts' Cape will almost always use indoor cultivation, which will require a lot of electricity. There are ways to offset these energy costs by using solar panels, LED grow lights, etc. The more that area has renewable energy options, the better things will go for the city. 
In short, there will be environmental costs, but it will not be any more harmful than say, driving an SUV or eating too much factory-farmed meat.
 
Impact on Crime Rates 
 
Although I did not get any questions on the potential for crime – probably because Brewster is one of the safest cities in the region – this is another common question for places new to legal cannabis. Will legal weed will make your town more dangerous?
In the  5 years since Colorado and Washington became the first states to legalize recreational cannabis, there has been a decrease in violent crime for both states and a decrease in youth use of marijuana. The legal market also led to an economic boom in these states. The negative result is that there is an increase in impaired driving and traffic accidents.
Ultimately, as long as there is federal prohibition, the cannabis industry will be inherently riskier than other industries. Still, the evidence shows that legal cannabis is safer than the unregulated black market, not only for cities and states but for individual consumers which requires product testing. 
 
Harm Reduction 
 
Although I never got the chance to dive into this subject at the planning board meeting, there is evidence showing that places with legal cannabis are not being hit as hard by the nationwide opiate crisis. After 14 years of steady increases in opioid-related deaths in   Colorado, there was a 6.5% reduction in 2014. This result is consistent across other places with legal cannabis, whether medical or recreational. 
Cape Cod, a vacation area that sees little business for nine months of the year, has been deeply impacted by the opioid epidemic. A 2018  report in the  Cape Cod Times showed rescuers responded to 15% more overdose calls on the Cape in 2017 than they had in 2016. The expanded use of the opioid overdose reversing drug Narcan saved a lot of lives. Even as the rest of the state saw a decrease in opioid-related deaths for the first time in 6 years in 2017, the problems facing the Cape remain. The community is aging and the lack of opportunities have driven its youth to the major cities inland like Boston. The research implies that the medical benefits of marijuana, as well as the economic opportunities that marijuana businesses provide, would only support the Cape's community.
 I believe there will always be some potential for risk when introducing a new industry to a community, especially when that industry is centered on a federally illegal substance. However, I think the rewards far outweigh the risks. 
 

Attorney Allison Margolin on Hemp Legalization & The Farm Bill

Posted by Margolin & Lawrence on December 18, 2018

In a new video for Cheddar, Allison Margolin explains some common misconceptions about hemp legalization and the 2018 Farm Bill: 

Click here to watch the full video on Cheddar's site.

The 2018 Farm Bill: What it Means for Hemp and CBD

Posted by Margolin & Lawrence on December 11, 2018

The House Committee on Agriculture is in the process of finalizing the 2018 Farm Bill, which is expected to go into effect later this month. It’s likely that the bill’s provisions will include the legalization of hemp, in the form of the removal of the plant from the government’s list of Schedule I Controlled Substances. Not only will this mean that hemp can be grown much more widely, it will also affect the production of hemp derivatives, including hemp-derived CBD. However, the legality of CBD products remains more complicated than this news may suggest.

As discussed in a prior blog post, the legal status of CBD can be very confusing to consumers, businesses, and lawmakers alike. As a substance that is derived from the cannabis plant, but is not cannabis’ main active ingredient, CBD currently occupies an unclear middle ground – particularly in California, where the state has imposed additional rules affecting how the various types of CBD may be legally used.

The legalization of hemp, though a step forward in the overall process of cannabis legalization, doesn’t do much to resolve the confusion surrounding CBD products. Even after hemp is legalized, CBD will be considered a drug and therefore subject to regulation by the FDA. Though the FDA has approved certain cannabis-derived CBD medications, CBD’s status as a drug makes it illegal to use as an ingredient in any kind of food or food additive.

Topicals, oils, and other non-edible forms of hemp-derived CBD, on the other hand, may not necessarily be banned once hemp is legalized. However, the FDA has yet to make a statement regarding this possibility – though they have sent unambiguous legal warnings to CBD businesses that make unsubstantiated or false claims about their products, indicating that they plan to regulate all CBD products to some degree, they’re less clear about the future legal status of hemp-derived CBD and non-edible hemp derivatives in general. 

In California, the law on CBD edibles will remain paradoxical even after hemp is legalized. While CBD products with THC levels of 0.3% or more will be treated as cannabis edibles and therefore legal, CBD products with lower THC levels – or no THC at all – will be considered food products and therefore banned, regardless of whether they’re derived from cannabis or hemp. However, hemp-based non-edible CBD products are not currently regulated by any state agency, meaning their legal status remains unclear. For the sake of the state’s cannabis consumers and businesses, hopefully California will respond to the new Farm Bill by clarifying the legal status of these products.

For more information on the legal status of hemp and CBD, check our Guide to California Cannabis Laws or contact our cannabis attorneys at info@margolinlawrence.com

Cannabis Update: New York / New Jersey

Posted by Margolin & Lawrence on December 5, 2018

Steps toward the legalization of cannabis in New York and New Jersey have been in the news recently. But how close are these states to having fully licensed legal cannabis supply chains? Here's a brief overview of the two states' marijuana laws and where they stand in regard to cannabis licensing.

NY State Licensing Overview

Currently, there are ten (10) “Registered Organizations” responsible for manufacturing and distributing medical marijuana in New York State. Pursuant to the Compassionate Care Act (CCA), which established New York’s comprehensive medical marijuana program in July 2014, each Registered Organization is authorized to have up to four (4) dispensing facilities. 

New York’s State Department of Health (NYSDOH) began accepting applications for registrations for a Registered Organization on April 27, 2015, with a deadline for receipt of applications on June 5, 2015. Of the original 43 applicants, five (5) Registered Organizations were approved July 31, 2015; another five (5) were registered by NYSDOH on August 1, 2017. The NYSDOH has yet to announce opening another application window for additional prospective Registered Organizations.

While New York’s Medical Marijuana Program is currently closed to would-be applicants looking to manufacture and dispense medical marijuana under the CCA, a spokesperson for Gov. Andrew Cuomo recently stated that the administration expects to introduce a comprehensive proposal for legalizing and regulating recreational adult-use marijuana in 2019. Therefore, cannabis businesses interested in becoming licensed in New York State should be looking down the road to determine next steps in preparation for licensure.

NJ State Licensing Overview

Currently, there are six (6) “Alternative Treatment Centers” (ATCs) responsible for manufacturing and distributing medical marijuana in New Jersey, pursuant to the Compassionate Use Medical Marijuana Act, which established the state's medical marijuana program in 2011. In August 2018, the New Jersey Department of Health (NJDOH) accepted 146 applications in response to its request to add up to six (6) additional ATCs. Despite a November 1st target date, NJDOH has yet to announce the successful applicants, stating that additional time is needed to complete a full review of the applications submitted. The NJDOH is not currently accepting applications to open additional ATCs. But on November 26th, the state Senate and Assembly budget committees passed Senate Act S2426, which, once passed by the full Senate and Assembly and signed into law by Gov. Phil Murphy, would require the NJDOH to issue licenses for 34 new dispensaries and six new cultivation facilities within 90 days.

Additionally, the most recent version of the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act (the NJ Act) was released last week and also passed by the state Senate and Assembly budget committees yesterday, November 26th. The next step for New Jersey is a vote by the full Senate and Assembly slated for mid-December. Until then, negotiations between Gov. Phil Murphy and NJ’s legislature will continue, mostly with regard to the tax rate and how much power the proposed Cannabis Regulatory Commission will exercise over the industry.

Next Steps

Because New York is at the inception of legalizing recreational marijuana, regulations and licensing requirements for adult-use cannabis businesses have not yet been implemented. That being said, a review of the NYSDOH Medical Marijuana Program Application for Registration as a Registered Organization (https://www.health.ny.gov/forms/doh-5138.pdf) is likely a good place to start for prospective medical and recreational cannabis businesses alike.

New Jersey is closer than New York to recreational legalization, and could have a bill passed before 2019. It is important for anyone looking to establish a medical cannabis business in New Jersey to keep an eye on the passage of S2426, which would mandate NJDOH’s licensure of 34 new dispensaries and 6 cultivation facilities within ninety (90) days. However, it remains unclear whether the NJDOH would open another application window, or choose from the 146 applications submitted in August 2018. In the meantime, it would behoove any prospective cannabis business licensee to take a look at both the NJ Act (S2703), as well as the ATC permit request application materials (https://www.nj.gov/health/medicalmarijuana/alt-treatment-centers/applications.shtml). Because the NJ Act gives local governments the power to enact their own cannabis regulations and ordinances – prospective licensees will first need to make sure their cannabis business will be permitted by their local jurisdiction.

While we recognize that any future recreational adult-use business license applications will differ from the above-mentioned applications for Registered Organizations and ATCs, much of the information requested will most certainly be the same. As is standard throughout jurisdictions that have legalized the use of both medical and recreational marijuana, any cannabis business seeking licensure will need to make full disclosures of entity, ownership and financial information, as well as identify and describe proposed facility locations, buildings and equipment. Additionally, those seeking licensure will need to provide licensing authorities with an extensive operating plan with detailed descriptions of policies and procedures related to its operations including but not limited to: processes, devices, security, quality assurance, recalls, staffing and record keeping.

To get a head start as the regulatory frameworks for cannabis businesses in New York and New Jersey continue to develop, anyone looking to establish a cannabis business in either state should be taking steps to create a tentative operating plan, focusing on those aspects and information that can be reasonably assumed as required for any future licensing application.

For more information on cannabis licensing in New York, New Jersey, and any other state, contact our cannabis attorneys at info@margolinlawrence.com.

How Would a White Labeling Ban Affect Cannabis Business?

Posted by Margolin & Lawrence on December 3, 2018

What is white labeling, and how might the proposed white labeling ban affect commercial cannabis deal structures?

Both established and nascent players in the cannabis industry have turned to white labeling – rebranding an existing product under a different producer's name – as a means to carve out their niche. For instance, some manufacturers in the process  of obtaining proper local and state licenses have entered into contractual arrangements whereby they source product from licensed cultivators or manufacturers before branding and distributing the product as their own. Other deals see established brands, traditionally unassociated with cannabis, staking their industry claim by offering their intellectual property (branding) and promotional efforts in joint ventures with licensed manufacturers looking to find brand awareness for their product.

Despite the fact that white labeling is standard operating procedure in product manufacturing at large, the current version of the California Bureau of Cannabis Control’s proposed regulations have been interpreted by industry stakeholders who are disturbed at what is being called an outright ban on intellectual property licensing. While §5032 seems to be taking aim at arrangements whereby non-licensees are purchasing, packaging and selling cannabis without a license, the language has been interpreted to reach as far as to ban licensees from entering into trademark licensing agreements with brand owners. Such interpretation could even prohibit a parent company from holding its licensed cannabis manufacturing operations in one entity and its unlicensed brand in another – suggesting the need for license options to facilitate trademark licensing in the cannabis space:


If  §5032 is promulgated as currently drafted, the strictest interpretation would force parties currently engaged in white labeling to re-structure their deals or get proper licensing. Established brands may need to sell rather than license trademarks – effectively forcing or keeping brand owners out of the cannabis industry and companies holding their brands in separate entities may need to obtain additional licenses – an expensive and time consuming endeavor.

Other types of arrangements may or may not meet regulatory requirements. For instance, would it be OK for a cannabis brand to operate as an unlicensed subsidiary of a licensed manufacturer? What if the unlicensed cannabis brand acquires an ownership interest in the licensed manufacturer, but remains unlicensed itself? At the moment, the answers to these questions are unclear.


Until the industry is provided with some official guidance from the BCC or the regulations are tested, many licensees and non-licensees operating in cannabis will need to examine and possibly modify their business relationships or look into licensing options in attempt to stay compliant.

Fun fact: Wine industry folks who purchase bulk wine before bottling/branding/selling it as their own combine two licenses (17/20) to achieve ABC compliance. A type 17 is a beer/wine wholesaler license and a type 20 is an off-premise beer/wine retailer license.

For more information on cannabis business and licensing, reach out to our California cannabis attorneys at info@margolinlawrence.com.

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.

New Cannabis Legislation in Riverside County

Posted by Margolin & Lawrence on October 30, 2018

Last Tuesday, the Board of Supervisors in Riverside County approved an ordinance allowing the following commercial activities starting on 26th December: Testing, Manufacturing, Distribution and Wholesale Nurseries. There is now a 60-day deliberative period regarding the cannabis businesses in Riverside based on the newly approved ordinance. The Board also voted to allow a limited number of dispensaries and cultivators to operate in 2019. Up to nineteen dispensaries and fifty grows will be permitted in unincorporated Riverside County as decided by a 3-2 vote following a public hearing that last nearly four hours. The Board also approved an “Implementation Plan for Retail and Cultivation” uses that is scheduled for process in early January 2019. The proposal process will include pre-registration by interested applicants, and the issuance of a Request for Proposals by the Planning Department. However, there are certain conditions that will be enforced regarding additional taxation and fees associated with each of these activities as determined by the Planning Commission.

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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.