Raza Lawrence

Raza is a partner at Margolin & Lawrence. Previously, he worked in civil litigation at one of California's most well-known law firms. He also clerked for a Federal Judge on the 8th Circuit.

Recent Posts

Los Angeles Cannabis Update: November 29 LA Cannabis Regulation Commission Meeting

Posted by Raza Lawrence on November 30, 2018
Our cannabis attorneys attended yesterday's meeting of the LA Cannabis Regulation Commission. Here are our main takeaways on what was discussed.
 
1.  Enforcement Tactics Against Unlicensed Dispensaries
 
The following enforcement tactics are being considered by City Council:
  • Disconnecting DWP utility services to unlicensed businesses
  • Issuing citations to certain employees working in unlicensed businesses
  • -Sending cease and desist letters to businesses and landlords
  • Requiring all licensed retailers to display an emblem so the public knows whether a given business is licensed
  • Sending letters to creditors and contractors of unlicensed businesses 
  • Bringing civil and criminal cases against unlicensed businesses

2. Opportunity to Appeal Rejected Dispensary Permits


Applicants who applied in Phase 1 and were found to be ineligible based on failure to qualify as an Existing Medical Marijuana Dispensary were given a chance to appeal the written findings of the DCR. These parties were given an opportunity to present their points, with back-and-forth discussion on the points of the appeal with members of the commission.

Each Applicant appealing was allowed either have a single person present the appeal or to have multiple witnesses – each side was allowed to submit any documents up until a week before hearing, and given 10 minutes to present arguments and evidence. The DCR was then allowed to present its case and findings for 10 minutes. The hearing officer could grant either side more time if appropriate, and the applicant was allowed 5 minutes at the end of the session to address DCR’s comments, followed by discussion and questions.

The main issues in the appeal were whether the Applicant had a 2017 L050 BTRC or, if no 2017 BTRC, if the Applicant had a L050 2015 or 2016 BTRC and met all the pre-ICO requirements, including registering for the ICO in 2007.  One applicant was rejected who met all the requirements other than registering for the ICO in 2007 (the City reviewed records of office of city clerk regarding who was on the ICO registry), even though the business had BTRCs from 2007 to 2015 and had been paying taxes all along.

One applicant claimed another applicant mis-used the applicant’s ICO filing, applying under it for priority registration even though he was not an officer or director of the ICO registered entity. However, it turned out the ICO registered entity had registered as a sole proprietor “doing business as” a name similar to the current applicant, and the current applicant corporation was just using a similar same name as the 2007 entity but had a different legal name and different tax history and was a separate legal entity.

There were disputes during the appeals involving BTRCs issued with different account numbers or different entities, BTRCs that had been erroneously issued for addresses outside LA and then closed out, and BTRCs issued to related entities that had failed to follow merger process with the city. As a rule, only the same business entity that meets the eligibility requirements is eligible for priority processing.

Parties found ineligible for priority processing were encouraged to re-apply in Phase 3 general licensing, anticipated to open in 2019.  Going forward, the DCR will prioritize annual licensing for Phase 1 and 2 applicants first, then registration for social equity applicants, and then Phase 3 will open.

For more information on the cannabis licensing and social equity process in Los Angeles, keep checking this blog or reach out to our cannabis attorneys at info@margolinlawrence.com.

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. 
 
1

Categories

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.