After Jeff Sessions’ January 4 Memo on Marijuana Enforcement, many property owners and business people are wondering if federal asset forfeiture could become a growing problem. The asset forfeiture laws allow the federal government to seize assets (e.g., bank accounts, cash, vehicles, homes, or other buildings) that the government alleges are tied to the distribution or production of controlled substances, including cannabis. They remain a problem for all cannabis businesses, although some recent reforms have reduced the impact of asset forfeiture.
On January 4, Jeff Sessions’ Justice Department issued a new Memo on Marijuana Enforcement that has left many people in states that allow marijuana confused or worried. The feds dropped this news just as California and its many cities are getting their new cannabis regulation systems going. For the first time in California, cannabis will be grown, distributed, and sold in a highly regulated environment. Substantial new tax money and jobs will be created in the state. Many have wondered, should they scrap their cannabis licensing plans and pick a new line of work?
As of January 1st, 2018, the long wait is over: cannabis business owners can apply for California state trademarks. The application form can be obtained here: http://bpd.cdn.sos.ca.gov/ts/forms/tm-100.pdf. Because cannabis is still federally illegal and cannabis products themselves cannot be trademarked, this is a viable avenue for many California cannabis brands that will protect your business marks within the state. You can read our prior post about USPTO Trademarks here.
According to the website for the Office of the California Secretary of State:
“Beginning January 1, 2018, customers may register their cannabis-related Trademark or Service Mark with the California Secretary of State's office so long as:
1.The mark is lawfully in use in commerce within California; and
2.Matches the classification of goods and services adopted by the United States Patent and Trademark Office.
If the application submitted to register a Trademark or Service Mark is found deficient, the application will be returned to the registrant for correction.
Note: Not all cannabis-related products can be registered under current law due to the inability to meet federal classifications.”
This means that in order to obtain your state marks, you must be lawfully using the marks in commerce at the time of the application. Therefore, you will need to be licensed in compliance with SB 94, both at the local and state level, before you’re eligible for trademark approval. Otherwise, if you claim an unlicensed use, you may run into issues with the Secretary of State. Further, once your license is obtained, you must also show that you’re making actual, bona fide use of the trademarks on your products in the stream of commerce. That means that customers are identifying you by your brand when they purchase your goods or services in the marketplace.
The complex cannabis regulations that have been rolled out by local and state governments across California means that as a cannabis operator you will be working with a number of different regulatory agencies. The rules for many of the cannabis activities are promulgated by different agencies - for example, the Bureau of Cannabis Control regulates retail, distribution and delivery in the state of California, while CalCannabis (a division of the CDFA) regulates cannabis cultivation in the state. One area of great confusion for many cannabis cultivators that our Los Angeles cannabis attorneys have been fielding questions on is the issue of obtaining a state water license. The regulations for water were passed in October, and the application portal is currently open to apply for a water permit. The water policy aims to protect California's natural streams and bodies of water from pollution and prevent diversion of water for cannabis cultivation.
On October 17, 2017, the State Water Board adopted a state-wide policy establishing strict environmental standards for cannabis cultivation. The state-wide policy is designed to protect water flows and water quality in the state of California. All cannabis cultivators will need to comply with this state-wide policy. In addition to complying with the Water Board’s state-wide policy, cultivators will need to comply with all other state, federal and local laws.
The state-wide policy will be implemented through a water quality permit known as the Cannabis General Order and through conditions for cannabis-related water rights known as Cannabis Small Irrigation Use Registration.
All cultivators will need to register their water right and water discharge using the Water Board’s online portal. The Water Board’s online portal can be found here. Depending on the cultivator’s water source, the state-wide policy may or may not apply to them.
To see the cannabis cultivation policy, click here. If you are a cannabis cultivator and have questions relating to the state-wide policy, to speak with one of our cannabis attorneys.
2018 is here, and there is a lot of confusion in Los Angeles about the new cannabis laws. The question causing the most confusion is whether existing operators can stay open. Under Measure M, existing dispensaries with BTRCs who comply with Proposition D still have limited immunity until they are licensed. Under state law, a retailer needs a state and local license in order to conduct commercial cannabis activity. The City is currently holding a press conference on the issue and we will update our blog as this issue develops. Our LA cannabis attorneys give their opinion on the matter below.
Update: At 1pm today, the City confirmed via a press conference that EMMD cannabis retailers in Los Angeles can remain open through the licensing process.
For years under California state law, commercial marijuana activity has been limited to medical dispensaries and cultivation sites organized as non-profit collectives or cooperatives. The City of Los Angeles has allowed medical marijuana dispensaries to operate in the City under various sets of rules, most recently under Proposition D, which passed in 2013 and provided immunity from a general ban on commercial cannabis activity to a specific group of medical marijuana dispensaries that have been in operation since 2007 and met various other requirements.
Under California’s Proposition 64, which passed in 2016, starting January 1, 2018, Californians are allowed to commercially grow, distribute, and sell both medical and non-medical marijuana, but only to the extent allowed by local governments (cities, or for those in unincorporated areas, counties). The City of Los Angeles has a new system for regulating commercial cannabis activity, Measure M and portions of the Los Angeles Municipal Code implementing Measure M, which will allow for both medical and non-medical commercial cannabis. It is expected that Los Angeles will begin open up its applications on January 3, and begin issuing licenses within a few weeks after that. Under the terms of Measure M, the provisions of Proposition D were repealed beginning January 1, 2018.
Many have asked whether existing commercial cannabis businesses are allowed to continue operating under the old system of rules, until they are able to secure licenses in the new system. Existing commercial marijuana dispensaries will retain their legal protection under state and local law, so long as they submit their applications for the new system within the time window provided by the City. Los Angeles has announced that, for the first 60 days after opening its applications, only existing commercial cannabis businesses will be able to apply for licenses, in a “priority” round, and after this 60-day period, new commercial cannabis businesses will be eligible to apply for licenses. Measure M makes clear that existing medical dispensaries can continue operation after January 1, 2018, and need not shut down before applying for licenses, as long as they operate as non-profit collectives, follow all the rules set forth in Proposition D, and submit their applications for licenses within the 60-day priority period.
Measure M describes this protection as follows: “An existing medical marijuana dispensary (“EMMD”) that is operating in compliance with the limited immunity provisions (Los Angeles Municipal Code Section 184.108.40.206) and tax provisions (Los Angeles Municipal Code Section 21.50) of Proposition D, may continue to operate within the City at the one location identified in its original or amended business tax registration certificate until such time that the EMMD applies for and receives a final response to its application for a City permit or license for commercial cannabis activity being conducted at that location. The City's designated licensing or permitting agency shall give priority in processing applications of EMMDs that can demonstrate to the City’s designated licensing or permitting agency that the EMMD has operated in compliance with the limited immunity and tax provisions of Proposition D. To avail itself of the terms of this Section, including the priority processing, an EMMD must apply for a City permit or license within sixty calendar days of the first date that applications are made available for commercial cannabis activity. If the City issues the EMMD a license or permit for commercial cannabis activity, the EMMD shall continue to operate at its location within the City in accordance with the rules and regulations set forth by the City."
California state law also provides that the provision giving legal protection to medical marijuana patient collectives and cooperatives, Health & Safety Code section 11362.775, will sunset one year after the State begins issuing cannabis licenses. Until this law goes away, patients will still receive protection under state law for non-profit, collective cannabis activity.
Accordingly, existing medical marijuana dispensaries in Los Angeles may continue operating under California’s medical marijuana non-profit collective laws, and Los Angeles’s Proposition D, as long as they submit their applications for licenses during the 60-day priority period.
For medical marijuana cultivators, manufacturers, and distributors not located at one of the Proposition D dispensaries, there is no explicit protection under Los Angeles law for continued operation pending licensing. Los Angeles has, however, provided a priority licensing system for these existing non-retail businesses that have been around since before 2016 and supplying a Proposition D dispensary since before 2017. This suggests that the City does not intend to prosecute such businesses in current operation, but until these businesses retain licenses from Los Angeles, they face some risk of being prosecuted.
As we prepare for January 1 and recreational cannabis in California, many legal questions remain for cannabis businesses. In this video, Los Angeles Cannabis Attorneys Margolin & Lawrence explain the local and state licensing process for cannabis businesses in California. If you are looking for a high level overview of what you will need to do to start a cannabis business, or get your existing cannabis business into compliance, this is the place to start.
L.A. County released long-awaited draft cannabis regulations yesterday. The Board of Supervisors, which creates laws that govern all of the unincorporated areas of the county (any area that is not part of an incorporated city) has been listening to the findings of the Cannabis Advisory Group over many months and has released the zoning requirements that will apply to commercial cannabis in the county, as well as the activities that will be licensed.The County will be issuing for Adult-Use (recreational) and Medical cannabis uses. Our LA cannabis attorneys have reviewed the proposed cannabis regulations and our findings are below.
Our Los Angeles Cannabis Attorneys are constantly fielding questions about a popular license category called microbusiness. The Type 12 license allows you to engage in multiple cannabis activities on the same premises. For example, you could cultivate up to 10,000 sq. ft. of canopy, and distribute, and deliver under one license for microbusiness. The chance to diversify your business and conduct multiple activities under one license is appealing to many existing and prospective cannabis business owners.
The Bureau of Cannabis Control (BCC), released their final regulations for cannabis microbusiness licensees last week, after revising them post SB-94 (you can read more about the process here). Here’s what they have to say about the restrictions on cannabis microbusinesses:
- Microbusinesses must engage in at least 3 different commercial cannabis activities
- Microbusiness applicants have to describe operating procedures as required for each activity
- If a microbusiness license is revoked or suspended, it affects every activity done using that license
- Microbusiness license fees range from $5,000 to $120,000 depending on size of operation (up to $5 million)
- Retail operations & Microbusinesses with retail sales can give out free samples to medicinal marijuana customers, as long as it meets the same conditions as normal retail sales
- Sales at events are allowed
- Retailers & Microbusinesses with retail will have to employ security guards
Cannabis attorney Allison Margolin addressing the LA City Council on the new zoning regulations on Monday:
Today the LA City Council will vote to determine all of the City's. the city's new restrictions on where a cannabis business may be located. The current California cannabis law requires that cannabis businesses be located more than 600 feet from all schools.
On top of that, LA's most recent draft of its location ordinance required businesses intending to conduct on-site retail sales to be located 750 feet away from sensitive-use areas, including schools, public parks, libraries, and drug treatment facilities, as well as any existing marijuana retail business.
While this is a more lenient approach to sensitive-use areas than LA's previous zoning restrictions, which called for an 800-foot buffer zone, some cannabis businesses and marijuana advocates, including our Los Angeles Cannabis lawyers, argue that introducing two different distancing standards will only complicate the already-opaque standards for marijuana zoning.
The City Council's vote will take place at 10 A.M. tomorrow, December 5th, at 200 N. Spring St.
Yesterday, the Los Angeles City Council met to discuss cannabis issues before voting on the final ordinance next month. Our Los Angeles Cannabis attorneys were present and are closely following developments on the path to a final LA Cannabis Ordinance and Social Equity Program. Broadly, the Los Angeles Social Equity Program aims to prioritize applicants who were disproportionately impacted by the war on drugs and criminalization of cannabis, and give them an opportunity to participate in the now legal, newly regulated market.
The discussion yesterday centered around the social equity program and the tier system, which establishes priority to individuals with a criminal history. The social equity program will benefit disadvantaged communities. As a reminder, Tier 1 applicants are those who have a prior cannabis related conviction, a cumulative household income below the federal poverty line and have at least five years residence in an area impacted by the War on Drugs. So the question becomes, should priority be given to individuals with a criminal history?
Opinions were heard on both sides of the controversial issue. The purpose of the social equity program is to help remove barriers for persons with a criminal history to equitable ownership and employment opportunities. Concerns were raised the criteria for Tier 1 was limited to cannabis only related crimes. The LA Dept. of Cannabis Regulation reasoned the purpose is to provide legitimate business opportunities in a now legalized industry. Oppositions were raised that the tier system did not distinguish between the level of offense such as, a misdemeanor or felony and excludes low income neighborhoods not impacted by the War on Drugs. This suggests person(s) convicted of a minor cannabis crime will have priority over person(s) who have been established in a disproportionately impacted community for many years. Recommendations were made to the Dept. of Cannabis Regulation to define distinct requirements to qualify as a Tier 1 applicant. For more information on the social equity program click here.
In addition to the Social Equity Program, the Council is also considering the revised Location Ordinance which introduces new distancing requirements. An important change to the proposed zoning ordinance is the addition of a 600 foot buffer to sensitive use areas for all activities including cultivation and manufacturing. Make sure you check the location
of your business is compliant with the land use ordinance. The vote is next week so make your voice heard and submit your comments to the City Council by December 4th.