Federal Cannabis Update: 2018 Spending Bill Keeps Rohrabacher-Blumenauer Amendment

Posted by Margolin & Lawrence on March 27, 2018

Last week, despite controversy, criticism from both sides of the aisle, and talk of a veto, President Trump agreed to sign the federal government’s omnibus spending bill for 2018. To the relief of many in the legal cannabis industry, the spending bill retains a provision known as the Rohrabacher-Blumenauer (or Rohrabacher-Farr) amendment, which provides limited protection from federal prosecution for state-level legal cannabis activity.

Given both Trump’s and Attorney General Jeff Sessions’ tough talk on drugs and threats to crack down on the cannabis industry, the continued presence of this amendment is a silver lining for those anxious about the future of legal cannabis. While this won’t mean a change in the federal treatment of marijuana – the amendment has been included in every spending bill since 2014 – it does indicate that the government intends to keep on its current course with regard to cannabis, as the provision has to be renewed every year to remain in effect.

Likewise, though the actual protections afforded by the Rohrabacher-Blumenauer amendment are limited, its being signed into law was, and remains, an important indication of the federal government’s shift in attitude regarding cannabis: as the LA Times reported following the provision’s first inclusion in the spending bill, “Congress for years had resisted calls to allow states to chart their own path on pot. The marijuana measure, which forbids the federal government from using any of its resources to impede state medical marijuana laws, was previously rejected half a dozen times.” In this light, the amendment was a notable pivot from a top-down to a state-level approach to cannabis regulation.

California cannabis consumers and business owners shouldn’t get too comfortable, though: not only does the amendment not change anything about the federal government’s cannabis policy in and of itself, its terms only apply to medical marijuana, not recreational cannabis. So far, the government has rejected proposed amendments that would grant recreational cannabis operations the same protection from federal intervention. For the time being, California cannabis business owners’ best bet is to stay in full compliance with state and local law as the federal situation develops.

Cannabis CBD v. THC

Posted by Margolin & Lawrence on March 22, 2018

The cannabis plant contains over 480 elements. Two of them being THC and CBD. Both are ubiquitous in modern day cannabis products, with different benefits and side-effects to each.

Ask a Cannabis Lawyer: What Is The Legal Status of CBD? (Part 1 of our CBD Series)

Posted by Margolin & Lawrence on September 6, 2017

Our marijuana lawyers are frequently being asked about one particular cannabis derivative: cannabidiol, also known as CBD. The popularity of cannabidiol as used in CBD-only products, which do not contain THC and are non-intoxicating by design, has surged in recent years in the wellness community. In Los Angeles, CBD products aren't just found at dispensaries, but can be bought over the counter at health shops and even a few high-end grocery stores. Given this wide acceptance, our clients often ask: “Do I need a license to sell CBD?” The answer may surprise you.

CBD can be derived from hemp as well as cannabis plants. It is a common misconception that because hemp is non-psychoactive, its derivatives are therefore non-regulated, or that because CBD isn't an intoxicant, its sale isn't subject to existing marijuana laws. In fact, both of these assumptions are wrong: Hemp and CBD are regulated by federal, state, and local law (though few local jurisdictions are currently regulating hemp). In California, the SB-94 bill does not cover hemp; instead, it's regulated by the Food and Agriculture Code, which defers to federal law under the 2014 Farm Bill. For now, the Farm Bill only allows for the cultivation of hemp for research, and also requires registration with the state.

Under federal law, the DEA has issued multiple statements to clarify that, as a cannabis derivative, CBD qualifies as a Schedule I controlled substance, the same as cannabis itself. However, this doesn't mean that CBD is without advocates beyond the state level: the FDA has determined that CBD has beneficial effects, and the World Health Organization is also evaluating the potential health benefits of CBD. You can play a role in shaping CBD policy by participating in the FDA and World Health Organization’s request for comment on CBD by September 13, 2017.

This request was made in the hopes of gaining information on the “abuse liability and diversion” of a number of drugs – in other words, how easy it is for the use of these substances to become dangerous. The official notice listed 17 drugs, with a breakdown of their specific effects and uses. Of those substances, only CBD was deemed by the FDA to have positive qualities. The WHO’s judgment about the potential benefits of this marijuana derivative, informed by the FDA's text and submitted comments, will inform the organization’s recommendations about whether CBD should have international restrictions placed on its use.

In its own way, though, the FDA’s statement may inform drug policy and cannabis law here in America. Stay tuned for part 2 of our Regulating CBD series next week.

How Can I Advertise My Cannabis Business?

Posted by Margolin & Lawrence on August 24, 2017

One of the most frequent questions our cannabis lawyers get from savvy business owners is: How can I legally market my cannabis products? As with many branches of marijuana law, cannabis business advertising regulations are complex because they fall under an overlapping set of legal regimes, some of which are in conflict with each other. When considering advertising cannabis four bodies of law apply: Federal, State, Local, and Internet TOS (the terms of service and operating contracts that govern your relationships with digital advertising hosts). Cannabis marketers must navigate all four sets of regulations here.

Federal Law places an absolute ban on cannabis advertising under the Controlled Substances Act of 1970. The Act stipulates: “It shall be unlawful for any person to place in any newspaper, magazine, handbill, or other publications, any written advertisement knowing that it has the purpose of seeking or offering illegally to receive, buy, or distribute a Schedule 1 controlled substance.” Further, “It shall be unlawful for any person to knowingly or intentionally use the Internet, or cause the Internet to be used, to advertise the sale of, or to offer to sell, distribute, or dispense, a controlled substance where such sale, distribution, or dispensing is not authorized by this subchapter or by the Controlled Substances Import and Export Act.” In other words, as far as federal law is concerned, there's no such thing as a legal marijuana advertisement.

California has recently placed regulations on marketing under the MAUCRSA (aka SB-94). This means that, if the regulations are followed, an advertisement can be in compliance with California law. Among its requirements are that advertisements must identify the license number of the advertiser, must not be targeted at individuals younger than 21, and must not contain false or misleading information about the products advertised. While these standards are relatively straightforward, figuring out how to advertise within the existing marijuana laws can be tricky even for California-based businesses. Local laws may differ from the state regulations, and a host of pending legislation like AB-175 (Marijuana: county of origin: marketing and advertising) and AB-76 (Adult-use marijuana: marketing) may change the state’s standards even further.

On top of that, the terms of service of online sites which host advertisements, such as Google and Facebook, often ban any mention of marijuana, on the basis that federal law still forbids it – since, of course, any online advertisement can be seen outside of California. This rapidly evolving area of law will be discussed at the State of Marijuana Conference this weekend in downtown Los Angeles, where attorney Allison Margolin will be leading a panel on Next-Gen Cannabusiness Marketing. For more information, check our guide to California cannabis business law or contact us at info@margolinlawrence.com to speak with one of our Los Angeles cannabis lawyers.

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Do I Need A Cannabis Lawyer To Advise My Business?

Posted by Margolin & Lawrence on August 3, 2017

As California gears up for the full legalization of adult-use commercial cannabis, entrepreneurs across the state are considering breaking into the marijuana industry. However, the entry costs for marijuana businesses can be high, and the exact legal requirements for starting an operation are often confusing. Given this background, a would-be cannabis enterpreneur might wonder: is it worth it for a new marijuana business to hire an attorney?

On this subject, it's fair to take a cannabis law firm's comments with a grain of salt – a little like asking a barber whether you need a haircut. That said, as lawyers with years of experience providing legal support to california's top cannabis businesses, we're familiar with the legal demands of the cannabis industry in California. Given this inside perspective, we will advise you that the state and local laws which marijuana businesses must adhere to are extremely complex and intertwined, with harsh consequences possible for even relatively minor violations. In this context, our view is that it's a dangerous gamble to try to maintain a business in the cannabis industry without a cannabis attorney. 

Of course, we can’t advise anyone to enter the industry in the first place – according to federal law, possessing, using, or selling marijuana in any capacity is still entirely illegal. The only thing protecting California marijuana consumers and businesses from federal prosecution is the Department of Justice's decision to allow “state and local authorizes [sic] to address marijuana activity through enforcement of their own narcotics laws.” While this federal deference to state law has been the norm since 2013, there's no guarantee that this won't change in the near future, especially given that Trump administration appointees like Attorney General Jeff Sessions have announced their intent to crack down on marijuana use. To avoid federal prosecution, then, it's crucial to stay within the bounds of state and local law. However, in a state as large as California, this is easier said than done.

While California currently affords limited immunity from prosecution to certain marijuana businesses, many cities and counties don't, which means that even a business which follows state law to the letter could be operating in a manner that violated local regulations. Our Los Angeles cannabis lawyers have advised hundreds of businesses who ran into issues with Prop D and have defended their rights since even before that regulation was passed. With the new cannabis regulations being introduced into the City of LA, it is important to speak to a los angeles cannabis attorney who is familiar with the regulations and can advise you on how to set up your business for success. (For more on these changes, see our recent blog posts on LA marijuana licensing.)

Retaining a cannabis lawyer provides a degree of access and ease in interpretation of these regulations that a private citizen doesn't have. Though it's easy to find information online, but the amount of outdated, contradictory, misleading, or outright false advice on marijuana business on the internet is nothing short of overwhelming.

For these reasons, it's worth considering hiring a california cannabis attorney for your business. Not only does having legal counsel help you stay within the law, it helps offset the financial risk inherent to any new business by ensuring that your organization's paperwork and cannabis licensing applications are in order. For more information or to arrange a consultation with one of our los angeles cannabis lawyers, check our brief overview of California's marijuana laws or email us at info@margolinlawrence.com.

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Ask A Cannabis Lawyer – Are Edibles Legal Under The MAUCRSA?

Posted by Margolin & Lawrence on July 11, 2017

Reflecting the fact that cannabis edibles have become an increasingly popular alternative to smoking marijuana, California's MAUCRSA introduces new regulations on edible cannabis manufacturing. Cannabis manufacturers must take heed of these new limits and regulations to ensure that their products are not only within compliance, but also effective and safe for human consumption.

The MAUCRSA defines an “edible cannabis product” as manufactured cannabis intended for human consumption, either in whole or in part. “Manufacturing” of cannabis is the production, preparation, propagation or compounding of cannabis products. This includes the extraction and infusion processes, packaging, repackaging, labeling and relabeling of manufactured medical cannabis or cannabis products.

According to theLEAFonline, many other forms of manufactured cannabis, including tinctures, have a maximum of up to 1,000 mg of THC. However, under the proposed regulations, edible cannabis products will only be allowed to contain 10 mg of THC per serving, with the finished product capping no more than 100 mg of THC per package. This caution speaks to a key concern about edible cannabis: consistency.

Due to its being absorbed through the stomach rather than the lungs, edible cannabis doesn't usually reach its full potency for at least an hour after consumption. When combined with inconsistent labeling, this makes edibles easy to consume to excess before their full effects are felt. As WikiLeaf writes, this may cause side effects like anxiety, paranoia, cottonmouth, and lethargy. Nevertheless, these effects often differ from person to person, depending on factors such as the frequency of use, size and weight of the user, and whether the edibles are taken on an empty stomach. Consistent dosage helps to prevent these possible adverse effects. For this reason, edible products that contain more than a single serving must be recorded, defined, or otherwise marked to indicate how many servings they contain. 

Under the MAUCRSA, manufacturers would be required to take reasonable measures to ensure that their products successfully communicate:

  • How many milligrams of THC are in each serving

  • What the recommended dosage would be based on specific criteria, such as weight, size, etc.

  • What, if any, side effects may occur if taken in excess

With these THC dosage limits in place, a consumer can easily understand how many servings are needed to achieve their desired results without any side effects.

The proposed regulations have also stated that edible cannabis products cannot contain any infused alcoholic beverages, nor any non-cannabinoid additives such as caffeine and nicotine. This is to ensure that these additives don't combine to increase the potency, addictive potential, or toxicity of cannabis edibles.

The MAUCRSA is vague, however, in determining whether natural caffeine is permissible; some caffeinated edible cannabis products, such as tea to alleviate pain and insomnia, are currently available for medical use, but it's unclear what their status would be under the new regulations. Manufacturers may bear the greater burden when it comes to remanufacturing their products to comply with state law.

LA Cannabis Licensing & Social Equity

Posted by Margolin & Lawrence on June 29, 2017

As explained in our previous blog post, “compliance” will be a major factor in the distribution of marijuana licenses in Los Angeles – and cannabis lawyers around the city are fielding a number of questions about what, exactly, LA’s priority licensing process will entail.

The draft regulations the City has released extend a certain amount of privilege to existing marijuana sellers when it comes to licensing. Businesses and dispensaries that have operated “in substantial compliance” with prior iterations of marijuana law will be given priority, allowing them to continue operating while their license approvals are pending. Clearly, this confers a major business advantage, which has raised concerns about whether a compliance-based approach to awarding priority is equitable.

Disqualifying potential cannabis business owners for past violations, but opening the door to “compliant” newcomers, threatens to reinforce inequality. As Drug Policy Alliance policy director Cat Packer, slated to head the City of LA’s Cannabis Commission, explained in an interview with Merry Jane, “The impact of marijuana prohibition and the drug wars was heaviest in black and brown latino communities. If you say people with prior arrests and convictions can’t participate, it automatically has a disproportionate effect on communities that were punished by the War on Drugs.” In other words, privileging “compliance” could compound the negative effects of marijuana prohibition, blocking communities which have historically been more likely to be punished for cannabis use from gaining access to the benefits of the new, legal marijuana industry. As attorneys who have practiced in cannabis law for many years, we have seen the damage prohibition has done to these communities, and are fully supportive of a restorative approach to justice through the licensing process.

The LA City Council recently moved to create a Social Equity Program for marijuana licensing, intending to serve “those individuals and communities that were disproportionately harmed by cannabis prohibition.” This follows in the path of a similar program in Oakland, which reserved half of new dispensary permits for residents who lived in certain neighborhoods, had below-average annual incomes, or had previously faced cannabis convictions. Given how much larger Los Angeles' marijuana industry is than Oakland's, however, the mechanics of the LA program may need to be worked out, and it may not be able to mirror the Oakland model in every way.

Whatever the exact parameters of LA's Social Equity Program end up being, (and however they'll be affected by recent changes to state and city licensing regulations,) the priority-based system will continue to play a major role in deciding which marijuana businesses are allowed to operate. At present, the city plans to reserve a special round of applications for organizations that fit a profile similar to the requirements Oakland used. For more on priority and marijuana laws to the new state law (MAUCRSA), check our previous blog posts or guide to Prop 64, or email us at info@margolinlawrence.com.

 

Which Marijuana Dispensaries Will Los Angeles Allow?

Posted by Margolin & Lawrence on June 20, 2017

Los Angeles is moving ahead with regulating marijuana, a shift that will bring many businesses out of the gray and black and into compliance with municipal and state law. As cannabis lawyers who have been practicing throughout the implementation of various California marijuana regulatory regimes, we could not be happier to see these changes coming to fruition. The city will go from granting limited prosecutorial immunity to a short list of dispensary operators, as it did under 2013’s Prop D, to fully regulating a host of medical cannabis businesses with the implementation of 2017’s Measure M. This post will give you an overview of the Draft Regulations released by City Council President Herb Wesson’s office in June 2017, and will answer the question of how the city will treat existing cannabis businesses.

The regulations treat dispensaries differently from cultivators and manufacturers, and lay out different requirements for priority processing for each. Measure M will give priority to existing medical marijuana dispensaries (EMMDs) that have a 2016 or 2017 Business Tax Registration Certificate, are operating in compliance with current zoning law, and have been in “substantial compliance” with the city’s 2013 regulations. Those regulations, as laid out in Proposition D, require 1000-foot distancing from sensitive use areas, restrict operating hours to between 10 a.m. and 8 p.m., and introduce a host of other factors for compliance. “Substantial compliance” has not yet been defined by the city. Note that it is expected the City of LA will put a cap on the number of dispensary licenses granted. This number is not established in the draft regulations, but will likely be decided upon in the next 50 days, through discussions with Angelenos in the public comment period.

For existing medical marijuana businesses (EMMBs) which are not dispensaries (i.e. cultivators and manufacturers), the rules are similar. If an EMMB is located within the correct zoning, hasn't violated earlier regulations, and has been operating from a consistent location since January 1, 2016 or earlier, they qualify as “compliant.”

If an existing cannabis business that meets the above requirements applies for a license within 30 days of the applications opening, it'll have a chance to receive a compliance certification – which not only puts them in the first round of applications, but also allows their business to continue operating while its license is being processed. Any organization which isn't an EMMD or EMMB must wait until after they're licensed to begin operating.

The second round after “priority processing” will be the Social Equity round, which we will discuss in our next post. For more information about marijuana licensing, consult our blog post on Gov. Jerry Brown's recent changes to licensing restrictions, our guide to California marijuana laws, or email us at info@margolinlawrence.com.

How Many Cannabis Licenses Can I Have In California?

Posted by Margolin & Lawrence on June 6, 2017

Update: The MAUCRSA, which passed June 22, repealed the provisions of the MCRSA that placed restrictions on vertical integration. As of June 30, the state has confirmed in §26053(c) of the California Business and Professions Code that a business may hold more than one license. However, it's still unclear whether there will be a limit on the total number of licenses allowed.

As many of you are well aware, California is in the process of implementing two parallel regulatory regimes that will govern cannabis production, distribution, and sales: the MCRSA, which pertains to medical marijuana, and the AUMA (a.k.a. Prop 64), which pertains to “adult use” or recreational marijuana. Originally, the MCRSA and AUMA had very different treatments of how many activities a business could be licensed for. The MCRSA favored small producers by placing restrictions on the combinations of licenses a single business could hold. The AUMA, on the other hand, allowed for total vertical integration, so one license holder could be licensed for almost the full supply chain of activities.

In California, marijuana licenses are divided into six activities, covering the entire industry: Cultivation, Manufacturing, Testing, Dispensary, Distribution, and Transportation. To ensure that testing facilities remain disinterested, both the MCRSA and the AUMA don't allow a business with a Testing license to hold a license in any other category. On top of that, the MCRSA places a similar restriction on businesses with a Distribution license, and prevents any business from holding licenses in more than two categories. The AUMA forgoes these additional restrictions, making it much more lenient on licensing.

To reduce the confusion caused by the differences between the two acts, a draft trailer bill released on April 3, 2017 by Gov. Jerry Brown’s office proposes that the AUMA's licensing structure be used for both recreational and medical marijuana. Under this proposal, the MCRSA’s restrictions on which types of licenses one licensee can hold would be loosened, potentially allowing for vertical integration not only under the AUMA but also under the MCRSA. However, opinions are divided on whether this change would help or harm California's marijuana businesses.

Under the AUMA's licensing structure, a single business could operate in almost every section of the cannabis supply chain. The MCRSA's licensing structure was explicitly designed to prevent this kind of vertical integration, out of concern that lighter restrictions would allow large corporate interests to dominate the industry. However, the draft bill argues that, since the AUMA includes other anti-monopoly measures, small independent businesses would also benefit from access to vertical integration. Whatever the outcome, this change in licensing structure would present a major turning point for California's marijuana regulations.

Under California’s Administrative Procedure Act (APA), regulatory bureaus must present draft regulations and receive comments on those regulations from the public (a requirement called Notice & Comment). The California APA allows the public to participate in the adoption of state regulations in order to ensure that the regulations are clear, necessary, and legally valid. The MCRSA is no exception, and you have a few more days to make your voice heard. If you have an opinion about Vertical Integration, you can email California’s Bureau of Medical Cannabis Regulation at bmcr.comments@dca.ca.gov.  For more information on the AUMA and Prop 64, consult our guide to California's marijuana laws or email us at info@margolinlawrence.com.

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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.