Legislation

High Hopes and Torched Dreams

This week’s cannabis news was filled with high hopes for some and torched dreams for others. On the one hand, the Food and Drug Administration made history by approving Epidiolex, a cannabis-derived medication used in the treatment of two rare forms of epilepsy. On the other hand, Massachusetts’ Attorney General, Maura Healey, issued a ruling that permits cities and towns in the Commonwealth to extend the temporary moratorium on retail and other marijuana businesses through June 2019—almost a full year past the date approved by Massachusetts voters when recreational sales were to commence. This marked a reversal by Healey, who previously indicated that local freezes could not extend beyond December 31, 2018, due to constitutional concerns.

The Epidiolex announcement cuts at the very argument used by many anti-cannabis activists that all too often focus on the lack of research into cannabis as a reason to uphold its prohibition. In a statement, FDA Commissioner Scott Gottlieb said:

This approval serves as a reminder that advancing sound development programs that properly evaluate active ingredients contained in marijuana can lead to important medical therapies … We’ll continue to support rigorous scientific research on the potential medical uses of marijuana-derived products and

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Crimson Galeria Limited Partnership et al (the Plaintiffs) vs. Healthy Pharms, Inc. et al (the Defendants), in Civil Action No. 1:17-cv-11696-ADB (the Complaint), which is currently pending in the United States District Court for the District of Massachusetts, is an interesting case to watch, as it could have far-reaching implications for the cannabis industry. In it, Plaintiffs allege that all Defendants are criminally conspiring to grow and sell cannabis and cannabis products, in violation of the Controlled Substances Act and the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. This is a stretch, as one of the defendants, Century Bank and Trust Company, only provides banking services to Healthy Pharms, Inc., a Massachusetts-licensed registered marijuana dispensary located in Harvard Square. Not to put too fine a point on the dispute, but by invoking the RICO statute, Plaintiffs are attempting to make a federal case out of what amounts to a Harvard Square landlord dispute, because the landlord does not approve of Healthy Pharms, Inc.’s operation and is concerned about the potentially negative ramifications it may have on its own business and real estate value.

On December 15, 2017, Century Bank filed a brief in support of its motion to … Keep reading

Last week’s presidential support of states’ rights to regulate cannabis was a welcome development for many in the legalized marijuana space. It shouldn’t have necessarily come as a surprise, though—after all, on the campaign trail, then-candidate Trump often espoused his view that the issue should be “up to the states.”

And it seems that many in Washington are beginning to come around to the President’s thinking on the matter, second-guessing long-held beliefs that have influenced federal policy for decades. In just the past week, two of the nation’s foremost media drivers of political thought/coverage have run articles that categorize the march toward legalization as having a cadence unmatched by any in history.

Per Politico:

Evolution on the marijuana issue is proceeding at warp speed in political terms. [Former House Speaker John] Boehner is just the latest in a string of noteworthy newcomers to the legalization movement that has been barreling through state houses for the past decade. Just in the past several weeks, Mitch McConnell fast-tracked a Senate bill to legalize low-THC hemp. Chuck Schumer announced that he would introduce a bill to deschedule marijuana entirely … The Food and Drug Administration opened a comment period on the

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After threatening to block any Department of Justice nominations following Attorney General Jeff Sessions’ revocation of the Cole Memorandum, Senator Cory Gardner of Colorado said in a statement that President Trump has given him assurances that states in which marijuana is legal will be protected from federal interference.

Per Senator Gardner:

Since the campaign, President Trump has consistently supported states’ rights to decide for themselves how best to approach marijuana. Late Wednesday, I received a commitment from the President that the Department of Justice’s rescission of the Cole memo will not impact Colorado’s legal marijuana industry. Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.

Because of these commitments, I have informed the Administration that I will be lifting my remaining holds on Department of Justice nominees. My colleagues and I are continuing to work diligently on a bipartisan legislative solution that can pass Congress and head to the President’s desk to deliver on his campaign position.

If true, this indicates a willingness on the part of the president to break sharply from the stance of Attorney General Sessions, who, in nixing the Cole … Keep reading

Green Hands Aren't Unclean Hands: 9th Circuit BAP Retreats from Mandatory Dismissal in Marijuana Cases

A 92-year-old landlord who leased a storefront to a marijuana dispensary will receive a new hearing after a court dismissed her bankruptcy case on the grounds that acceptance of rent payments from the dispensary disqualified her from bankruptcy relief. Last month, a Bankruptcy Appellate Panel for the 9th Circuit remanded the Chapter 13 case after finding that the Court did not adequately detail a bad faith finding and, therefore, did not support its conclusion that the debtor violated federal law (namely, the Controlled Substances Act).

The landlord, Patricia Olson, owned a shopping center in Lake Tahoe, California, and, in 2013, began leasing space to Tahoe Wellness Cooperative, a state-licensed dispensary. However, the CSA makes it illegal to knowingly lease a property for the purpose of distributing marijuana. At the initial hearing to authorize the sale of the shopping center, the Bankruptcy Court for the District of Nevada took issue with the fact that Ms. Olson had continued to accept rent payments from the dispensary during her bankruptcy proceedings. The Court went so far as to say that Ms. Olson committed a crime by leasing to a business operation deemed illegal under the CSA. Accordingly, the Court concluded that … Keep reading

Massachusetts’ Cannabis Control Commission landed firmly in the middle of the road when it voted on February 26, 2018, to postpone granting licenses to marijuana home-delivery services and “social consumption” operations. In justifying the delay, the CCC claimed that it needs additional time to craft rules that address public health and safety concerns, such as impaired driving and underage sales. Despite the postponement, it’s important to note that these limitations in no way impact retail marijuana dispensaries and their suppliers, which remain scheduled to open for business in July 2018.

While the decision is a setback for those in favor of an immediate roll-out, the CCC did agree to initially grant delivery and social consumption licenses to individuals affected by the War on Drugs, meaning that they will not be boxed out of the market when those licenses become available in 2019. This policy is meant to preserve a place in the market for lower-cost marijuana businesses, like delivery services.

While Governor Baker applauded the CCC’s action as part of establishing a “safe and responsible retail” market, others may view it as an opportunity that will appeal to entrepreneurs lacking investment capital, as the types of businesses affected will … Keep reading

Cannabis in the Commonwealth: What Are People Saying?

I recently attended the New England Real Estate Journal’s “Cannabis: The Next Phase in Commercial Real Estate” summit, which brought together a number of local players for networking and a high-level discussion of where the industry stands in Massachusetts. In addition to being fantastic networking opportunities, events such as this allow attendees to get a sense of where the conversation on cannabis is heading, and for us, can be invaluable in terms of helping to anticipate concerns that clients will have and issues they’ll face.

Some of my takeaways:

  • Despite the Attorney General’s stance on marijuana, nothing has really changed. For now, the federal government seems content leaving it to state and local authorities to ensure that cannabis industry players adhere to state laws when establishing and operating their businesses.
  • When it comes to launching a cannabis business of any kind, it’s critically important to educate people about what your operation will entail, and what it won’t. You need to meet with municipal boards, with community groups, with public safety officials, to really drive home the message that: “Yes, we’re in the cannabis business, but we’re not the big, bad wolf. We’re just a dispensary, or a
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Massachusetts Cannabis Control Commission Releases Draft of Regulations for Implementation of Adult-Use Marijuana

On December 21, 2017, the Massachusetts Cannabis Control Commission filed a first draft of regulations for the purpose of implementing the legality of adult-use marijuana. The draft—935 CMR 500.000—reflects more than 80 policies discussed and voted upon the prior week.

It details, among other things, the approval of products and requirements for labeling, packaging, advertising, and serving sizes, as well as the enforcement of regulations, security, and municipal protections.

Following is a summary of some of the regulations pertaining to business establishments.

Marijuana Establishments

General Requirements

  • No licensee shall be granted more than three licenses in a particular class, except as otherwise specified. An independent testing laboratory or standards laboratory may not have a license in any other class. No individual or entity shall be a controlling person over more than three licenses in a particular class of license.

License classes are as follows:

  1. Marijuana Cultivator:

               Tier 1: Up to 1,000 square feet of canopy

               Tier 2: 1,001 to 5,000 square feet of canopy

               Tier 3: 5,001 to 10,000 square feet of canopy

               Tier 4: 10,001+ square feet of canopy

  1. Craft Marijuana Cooperative
  2. Marijuana Product Manufacturer
  3. Marijuana Retailer (Storefront, Delivery-Only, Marijuana Social Consumption Establishment, Primary Use, Mixed Use)
  4. Marijuana
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As we’ve blogged before, we don’t believe that Attorney General Sessions’ revocation of the Cole Memorandum will have much impact on the regulated, licensed marijuana industry. As of this post, we’ve neither heard nor read of any U.S. Attorney seeking to prosecute a licensed, compliant marijuana operation. Beyond statements by key political players, certain data points can give the industry comfort. Below are some that we believe illustrate that the attorney general’s actions and statements will not meaningfully reverse the progress that the industry has realized over the past few years.

  • Per an October 2017 Gallup poll, 64% of Americans support marijuana legalization, including 51% of polled Republicans. Per a July 2017 Quinnipiac University poll, 75% of Americans, including 59% of Republicans, oppose the enforcement of federal marijuana laws in states that have legalized cannabis.
  • The legal cannabis industry (not including cannabis-adjacent businesses) employs an estimated 165,000 to 230,000 workers. This is two to three times more workers employed by the coal-mining industry.
  • Although estimates of actual revenues from legal cannabis enterprises vary, The Arcview Group states that, in 2016, the industry generated at least $6.7 billion—that figure is projected to increase to $21 billion by 2021.
  • The cannabis
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Congratulations to Vermont

Last week, the Vermont House and Senate passed H.511, which seeks to permit recreational- and adult-use marijuana in the state. The law would remove civil penalties by allowing individuals to possess one ounce or less of marijuana, as well as up to two mature and four immature marijuana plants to grow at home. Expected to be signed into law by Governor Phil Scott, the bill would go into effect on July 1, 2018.

Although H.511 does not provide or allow for licensure of adult-use cannabis cultivation, processing, or dispensary operations, supporters nonetheless see it as an important first step to full implementation of an adult-use marijuana program in Vermont.

As other commentators have noted, the passage of H.511 is important for two other reasons:

  • This is the first time a state legislature has legalized recreational marijuana. The eight states that presently permit adult use got there via citizen ballot initiatives.
  • The legislation was passed (and the governor has pledged to sign the bill into law) after Attorney General Sessions’ revocation of the Cole Memorandum, giving hope to many in the industry that Sessions’ actions will not chill the industry.

Here at the Blog, we congratulate Vermont’s legislature … Keep reading