As longtime Los Angeles cannabis business attorneys, we help break down what legislators are after.

The new bill, introduced by Democrats and Republicans in both the House and Senate, is titled the, “Breakthrough Therapies Act.” It seeks to revise the U.S. Controlled Substances Act by establishing a procedure through which certain Schedule I narcotics can be considered “therapies” by the U.S. food & Drug Administration. Either that, or they could qualify for a waiver via the U.S. food, Drug, and Cosmetic Act (FDCA). This waiver would allow the drugs to be transferred under a lower-schedule classification to research facilities and pharmaceutical laboratories.

The bill says that drugs that meet certain criteria making them eligible for legitimate research could be rescheduled as Schedule II medications – which are heavily restricted, but accepted for certain medical uses.

The bill notes that substances like psilocybin (what’s found in so-called “magic mushrooms”) and MDMA (also known by the street name “ecstasy”) have already been identified as having potentially significant value in the treatment of conditions like addiction, depression, and post-traumatic stress disorder (PTSD). If Congress passes the bill, it would do away with rules and regulations that are unreasonably overbearing and either delay or outright prevent research that could be potentially very valuable for those struggling with serious and potentially fatal mental health conditions. Sen. Corey Booker (D-NJ) identified the patients who could benefit from this research as “urgently needing care.”

Across the aisle, Republican Senator Rand Paul (R-KY) said he was “proud to co-lead this legislation,” which he hopes will compel the government to take a backseat and allow doctors, scientists, and researchers to do the work necessary to determine whether these substances can prove a greater benefit to those grappling with mental health and addiction issues.

An older version of the same bill left out provisions that would have simplified the registration process and paperwork researchers needed to complete to request a reschedule of certain Schedule I narcotics.

As Los Angeles marijuana and CBD lawyers, we know that scientists and doctors have long lamented the burdensome process that accompanies research of drugs restricted by the U.S. Drug Enforcement Administration under the CSA – particularly Schedule I drugs, which marijuana still is. A bill addressing this issue with respect to marijuana – the “Medical Marijuana and Cannabidiol Research Expansion Act” – was signed by President Joe Biden last year.

The new measure contains a provision that indicates any drug that is rescheduled from a Schedule I to a Schedule II for a breakthrough therapy or via a waiver could still be reverted back to a the high-level Schedule I if it’s established that there isn’t any accepted medical use absent the strictest of regulations. The process for doing so would require a recommendation from the leadership of the U.S. Department of Health & Human Services to the U.S. Attorney General’s Office. From there, the AG’s office would have three months to issue a final ruling regarding the drug’s scheduling.

A separate bill introduced last year called the “Right to Try” law would have given very ill patients the opportunity to take Schedule I narcotics (including psychedelics) under the recommendation of a physician. That measure, however, did not gain enough support to pass.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Cory Booker And Rand Paul File Revised Bill To Reschedule Psychedelic Breakthrough Therapies, March 7, 2023, By Kyle Jaeger, Marijuana Moment

More Blog Entries:

Can California Cannabis Patents Survive Illegality Doctrine? Feb. 20, 2023, Los Angeles Marijuana Business Lawyer Blog

Voters in Colorado recently passed a ballot initiative during the recent election that makes it lawful for adults to buy, possess, and use a number of psychedelic substances, including:

• Dimethylryptamine (DMT). Sometimes called DMT, Dimitri, or Spirit Molecule, this naturally-occurring tryptamine that occurs in many plants and animals. It can also be reproduced in a laboratory. It’s used recreationally in the U.S. and the U.K., but has a long history of use by various cultures for ritual purposes. It’s a Schedule I narcotic under the U.S. Controlled Substances Act.
• Ibogaine. This is a naturally-occurring psychedelic derived from a Central African shrub. It’s rarely used recreationally, but has shown some anecdotal success in helping treat conditions like post-traumatic stress disorder (PTSD) and addiction.
• Mescaline (excluding peyote). This is a naturally-occurring, hallucinogenic alkaloid found in a fast-growing cactus that has effects comparable to LSD and “magic” mushrooms. Despite its state-legal status, it remains on the list of Schedule I narcotics under the U.S. Controlled Substances Act.
• Psilocybin. This is the naturally-occurring psychedelic compound found in some 200 species of fungi.

The measure, Prop 122, was approved by 52 percent of Colorado voters – roughly 1.2 million people. That news comes just two years after 55 percent of voters in Oregon agreed to make recreational use of psychedelic substances legal. Beginning in 2023, people in Oregon will be able to use one of those – psilocybin – at licensed service centers, but not in their homes.

Prop 122 comes a decade after Colorado and Washington became the first states to legalize recreational marijuana for adults and 26 years after California became the first state to legalize medicinal marijuana. As it stands today, 21 states plus the District of Columbia offer legalized cannabis for adults. Five states had recreational marijuana on the ballot this year, with voters in two of them – Maryland and Missouri – approving those measures.

Growing Acceptance of Psychedelic Substances

Even though the federal government continues to cling to the Schedule I classification of these substances, research by many prominent universities has indicated psychedelics may hold very promising potential in larger treatment plans.Numerous studies in recent years have concluded that psychedelic substances can be beneficial for a broad range of mental health conditions (PTSD, chronic pain, anorexia, addiction, etc.). Even the U.S. Food & Drug Administration conceded in 2018 that psilocybin is a “breakthrough therapy” for treating severe depression.

A number of states have set aside funds in recent years to study the potentially therapeutic impacts of psychedelics – psilocybin in particular. Connecticut, Utah, Texas, Washington State, and Maryland are among those funding research. Several cities have approved decriminalization measures, including Oakland, California.

That’s not to say the conclusion is foregone. Last year, California Senate Bill 519, a measure that would have decriminalized possession and non-commercial sharing of psychedelics for those over 21, failed to gain sufficient traction. The author of that bill noted that trying to address drug use by arresting and incarcerating as many people as possible isn’t effective, and said a new approach is necessary.

This is almost certainly going to crop up again in California. Even if there are a few fits and starts, we anticipate an ultimately favorable outcome.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Colorado just legalized ‘magic mushrooms,’ an idea that’s growing nationwide, Nov. 12, 2022, CNBC

As our Los Angeles cannabis lawyers understand it, the complaints, filed a few months ago with the state’s Department of Cannabis Control and the federal Securities and Exchange Commission, assert that the executives at Weedmaps has opened to the door to black market marijuana purveyors, giving them a platform where customers can find them, as well as products that exceed safe, legal THC levels. The complaints assert that Weedmaps is aware that they are facilitating black market business and sales through their website, but has failed time and again to take action to stop it.

Black market activity, of course, directly harms legal, licensed businesses. This is well-established. The complaint alleges that Weedmaps is giving underground operators an edge competitively by allowing them to advertise on the platform. Inevitably, they’re going to be able to sell their product (which isn’t heavily taxed and hasn’t undergone rigorous testing) at much lower rates. Although Weedmaps purports to serve the legal market, this practice ends up undercutting that stated objective.

You may recall, it’s been a little over four years now that Weedmaps caught the ire of state authorities over allegations of illegal advertisements. The company, based in California, took down some of its online advertising two years ago, prior to going public last year.

The current complaints were made by leaders at a Los Angeles-based licensed marijuana company. They say they first went to Weedmaps directly with their concerns, but the business was unresponsive. As a result, they say, their legal firm has incurred substantial losses, potentially in the tens of millions of dollars. So when it appeared Weedmaps had no intention of taking action, the executives turned around and gave reams of reported evidence and documentation of these violations to state and federal regulators. If the company is found to have engaged in wrongdoing this time around, it could face very substantial regulatory fines.

That isn’t a guaranteed outcome, but it’s worth noting that similar advertising practices were precisely what got Weedmaps in hot water with California authorities back in 2018.

A spokesperson for the company declined to comment to MJBizDaily. Representatives for the regulatory agencies say they have launched investigations.

MJBiZDaily reported that it had independently verified some of the allegations against the online platform, identifying numerous live pages with advertisements for unlicensed retailers and unlawful products.

Among the ads the publication identified:

• Advertisements for edibles that are far too potent to be legal, including THC gummies and brownies with more than 1,000 milligrams of THC.
• Advertisements for cannabis companies that don’t display the company’s license number, despite a policy that required this in 2020.
• Advertisements that display state license numbers belonging to a different business than the one the ad is about.
• Advertisements for operating hours that are outside the legal parameters, such as cannabis deliveries after midnight.

The complainants say the “trust and safety team” at the online platform is nothing more than a front to assert plausible deniability. In addition to involving state and federal regulators, the complainants say they are considering civil litigation against Weedmaps. The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734. Additional Resources:

Weedmaps again advertising illegal marijuana retailers and products, complaints allege, July 25, 2022, By John Schroyer, MJ Biz Daily

More Blog Entries:

California Cannabis Tax Cuts May Help Ailing Industry, July 11, 2022, Los Angeles Marijuana Lawyer Blog

Although our Los Angeles marijuana business lawyers know this news might cause wariness among those in the pot industry, it’s worth pointing out that such data is already gleaned from businesses in other industries, such as convenience stores, car dealers, liquor stores, and casinos. It may in fact by a sign that the federal government is starting (albeit at a snail’s pace) to recognize the state-legal cannabis market as legitimate.

The Treasury’s Office of the Comptroller of the Currency posted its notice in the Federal Register indicating that it plans to keep tabs on cannabis companies as part of its regular yearly filings required of banks. In addition to marijuana businesses, other markets of emerging interest to federal financial regulators are ATM operators and crypto asset traders. The Money Laundering Risk system used by the OCC boosts the ability of federal investigators and banks to flag and investigate potential money laundering risks.

Public comment on these proposed changes is open through early August.

We don’t know exactly how information gleaned from those bank-submitted Risk Summary Forms are analyzed, but the notice indicates the data is used to help authorities better pinpoint those that “may pose heightened risk” of money laundering activities.

As of last September, it was reported there were more than 750 banks and credit unions actively serving cannabis company clients. That was an uptick of 7 percent since the previous quarter.

Within the last year, the U.S. Census Bureau also began gathering information on state government revenues generated from state-legal marijuana. Also, the U.S. Economic Classification Policy Committee issued a recommendation to include marijuana companies as an official designation within the North American Industry Classification System. This system helps the government keep tabs on market and employment information on industries throughout all of North America.

Why Money Laundering is a Concern in the Marijuana Industry

Historically, marijuana has been not only illegal, but considered incredibly dangerous. Despite the fact that many states have passed laws making cultivation, sale, and possession of the drug legal for medicinal and/or recreational uses, it remains, per federal law, a Schedule I narcotic – the classification with the tightest restrictions, indicating a powerfully-addictive substance with no medicinal value. The 2018 Farm Bill removed the sale of hemp and hemp-derived CBD products from the federal law.

Still, banks and other financial institutions are in a tight spot when it comes to accepting marijuana business clients because they’re regulated by federal law. That means they must navigate federal anti-money laundering statutes – knowing full-well they’re engaging in financial transactions involving proceeds generated from the sale of cannabis.

The Financial Crimes Enforcement Network has released specific guidance for financial institutions regarding the provision of services to both hemp business customers and marijuana business customers, but these are still technically in conflict with federal law. The FinCEN guidance doesn’t legalize such activities, and it doesn’t expressly rule out law enforcement action by federal banking regulators or criminal law enforcement agencies.

Still, following the FinCEN’s guidance is important for marijuana-related businesses to ensure their compliance with the Cole Memorandum principles, as well as applicable state laws. As our Los Angeles marijuana business lawyers can explain, doing so is likely to substantially reduce the odds you’re going to run up against federal enforcement action.

Guidance issued in 2014 by the U.S. Department of Justice indicated that prosecution of a financial institution under federal money-laundering laws might be appropriate if it were discovered a business to whom the institution provided banking services was violating the Cole Memo provisions, such as selling cannabis across state lines. Willful blindness to violation of state marijuana laws might also be grounds for federal prosecution of a bank, per the DOJ guidance. The DOJ puts the burden on the banks to effectively identify the nature/scope of their marijuana company customers’ activities and to implement continual monitoring to ensure there are no Cole Memo violations.

Ensuring you are fully in compliance with all state laws, the Cole Memo, and other relevant provisions of law, contract with an experienced marijuana business attorney.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Cannabis Banking: Proceed with Caution, February 6, 2020, By James J. Black, marc-Alain Galeazzi, American Bar Association

More Blog Entries:

Feds to Return $1.1 Million in Marijuana Fund Seizures, May 14, 2022, Los Angeles Marijuana Lawyer Blog

Funds at issue belonged to Empyreal Logistics, an armored car company based in Pennsylvania that was targeted by local and federal task forces in San Bernardino County in November and December. As our Los Angeles marijuana business lawyers understand it, the cars were carrying cannabis business cash in conjunction with legal marijuana operations in California. A task force comprised of the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA), and the San Bernardino County sheriff’s office resulted in confiscation of cash.

While the company was operating legally under state law, the problem is the conflict with existing federal forfeiture laws, which open the door to target even compliant businesses. This is not new. Civil forfeiture law has enabled law enforcement agencies to seize millions from legal business proceeds – with threats to keep it. That’s precisely what happened here – and Empyreal Logistics sued.

With the funds’ return, the lawsuit against the federal agencies will be dropped – though this fails to set a hard-and-fast precedent for future cases. Unless/until federal marijuana laws change, legitimate marijuana businesses will continue to face the potential threat of civil forfeiture. Without black-and-white legal protections at the federal level, companies remain especially vulnerable to the whims of various administrations.

Further, although the case against the feds has been dropped, claims against the San Bernardino Sheriff’s Department remain open. A spokesman for that agency said the federal settlement is under review by its office.

It’s worth noting that this particular sheriff’s office leads the Inland Regional Narcotics Enforcement Team, which allows local agencies to partner with federal agencies in civil forfeiture cases – and collect up to 80 percent of the proceeds from those civil forfeiture cases in their jurisdiction. That means the sheriff’s office would have been entitled to as much as $800,000 from these two busts. The motivation not to immediately acquiesce seems fairly clear – despite the fact that both medicinal and recreational marijuana are legal in California.

At the federal level, marijuana remains classified as a Schedule I drug – alongside heroin and cocaine. The classification is supposed to be reserved for drugs that are both highly addictive and harmful with no medicinal value. Marijuana clearly doesn’t fit, but federal lawmakers have yet to agree on a plan to reschedule.

Beyond the California seizures, there is another pending case involving the same company in Kansas, where a driver was stopped while en route to Colorado, transporting cash from a medical marijuana dispensary in Missouri.

As Los Angeles marijuana business lawyers, we recognize delivery companies are especially vulnerable to law enforcement action. It is imperative for any company transporting cannabis, CBD, hemp, or related cash and products to be working closely with a legal advisor, ensuring every step is legally compliant, substantially narrowing the window of opportunity for adverse legal action that could be financially detrimental to your operations.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

The Feds Will Return More Than $1 Million in Marijuana Money That California Cops Stole From Armored Cars, April 14, 2022, By Jason Sullum, Reason.com

As reported by Reuters, this approach breaks some ground on numerous fronts. Small investors, for the first time, can put up as little as $100 or as much as $500,000 to buy a stake in the outcome of the civil litigation. Although the U.S. Securities and Exchange Commission has long allowed individuals to invest in litigation finance deals, those individuals had to meet SEC accreditation criteria. This approach of sidestepping those rigorous requirements is allowed under an SEC provision that permits up to $5 million in litigation financing through crowdfunding. Furthermore, to the best of our Los Angeles cannabis attorneys’ knowledge, this is a first for tokenizing litigation funding through blockchain. What that means is if the firm ends up winning the case and getting paid, investors will be paid their share of the verdict in tokens from the company.

Within a day of the request going live, the company had raised more than $156,000 from 85 investors – more than 60 percent of the target minimum of $250,000.

This is an interesting approach that we imagine many California marijuana business lawyers are going to be watching closely, as it may allow a greater number of plaintiffs of all sizes to pursue civil litigation for unfair regulatory action, such as destroying crops or license revocation.

There is some concern that smaller investors may not have enough savvy in terms of litigation to make informed choices about which investments are likely to pay off. However, commercial litigation investors are likely investing millions, while individual investors chipping in $100 here and there may be less risk averse. This particular deal reportedly shields investors from losses in case the matter is immediately dismissed.

The case in question involves the sheriff’s office in Kern County as well as the state Department of Fish & Wildlife. The government reportedly ordered 500 acres of the company’s hemp harvest to be bulldozed. The company not only grows the hemp but conducts research and even partners with two local community colleges. Attorneys for the firm insist the product was lawfully grown and unlawfully destroyed. It claims violations of both federal and state constitutional rights. Both the county and state governments are pushing to have the matter dismissed, arguing that the firm was growing marijuana (not hemp) unlawfully for commercial distribution. They argue that because the crop was contraband, there is no constitutional or valid property right claim.

As longtime marijuana business attorneys in California, it’s apparent that not only the facts but the underlying laws are complex, particularly given that there were community colleges involved and interpretations of federal law that have exempted hemp from the U.S. Controlled Substances Act.

If the government is successful in having the claim dismissed, investors will lose 20 percent of their investment, while the rest of their money would be refunded. However, if the case is lost at a later stage, investors would lose all their money. If the company wins, however, investors will be entitled to a cut of the damages awarded.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Cannabis, crypto and crowdfunding in first of its kind litigation finance offering, Oct. 27, 2021, By Alison Frankel, Reuters

More Blog Entries:

California Cannabis Company Sues State Regulators Over High Taxes, Illicit Market, Oct. 21, 2021, Los Angeles Marijuana Business Lawyer Blog

Our dedicated cannabis lawyers in Los Angeles are committed to assisting marijuana and hemp farmers, producers, retailers, and ancillary firms navigate the changing legal landscape.

Hemp Regulations

The first, Assembly Bill 45, passed easily in both the state House and Senate. The measure is the result of years of advocacy to update the laws for hemp companies in California.

If signed by Gov. Gavin Newsome, the bill would:

• Allow hemp extracts, including CBD, to be used in food, drink, and cosmetic products.
• Establish an outline of rules for farmers, retailers, and ancillary companies for the production and sale of hemp. This would include things like lab testing standards – similar to what is in place for those growing and selling marijuana.
• Require that imported hemp products be held to the same quality and regulatory standards.
• Prohibit the sale of products like delta-8 THC outside of regulated cannabis sales methods.
• Allow the sales of smokable hemp after legislators come to an agreement on a tax structure for inhalable products.

This measure has been somewhat controversial over the last few years. The primary benefit to the marijuana industry is that low-THC hemp products would be subjected to the same rules, testing requirements, and taxing as other cannabis products. Marijuana companies have long argued that these products were not so dissimilar to what they were offering, and yet they’ve been undercut because of comparatively lax requirements for hemp and derivative products.

Proponents of the measure opine consumers will benefit as well from a more regulated marketplace for CBD.

Some hemp farmer advocates were opposed to the measure, but ultimately changed their stance on the law to neutral, after a number of last-minute amendments. As of last year, there were nearly 500 hemp farmers in the state operating on more than 17,000 acres.

Medical Marijuana in Hospitals

The second measure is a bill that would allow for medical marijuana use in medical facilities where terminally ill patients are treated. This has been a fight two years in the making, though with recent passage in the Assembly by a vote of 57-1, it now seems more likely than ever.

The big question, however, is whether the policy would jeopardize any federal funding those facilities receive by doing so, given the fact that marijuana is still legally considered a Schedule I narcotic by federal standards.

Supporters note that for many people in California, especially those suffering from terminal conditions, medicinal cannabis is preferable to other harder drugs. It can provide similar or even superior relief without many of the awful side effects of other drugs.

Although Gov. Newsom is pro-legalization, he rejected an earlier version of the bill over concerns about the implications for federal funding.

The bill is being referred to as “Ryan’s Law,” after the son of state senator and bill sponsor who died of cancer and was initially denied medical marijuana treatment.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

CA lawmakers approve hemp regulatory bill that divided marijuana sector, Sept. 9, 2021, MJ Biz Daily

The case, California v. Raybon, involves five inmates in a California state prison who were convicted on felony charges after being found with marijuana in their cells. The men appealed to the 3rd District Court of Appeal in Sacramento, which overturned their convictions after determining that while they could not legally eat or smoke pot in prison, possession of marijuana is no longer a criminal offense. As our Los Angeles marijuana defense lawyers can explain, this ruling conflicted with those of other appellate courts.

The state supreme court weighed in after a challenge from the state attorney general. In a split 5-2 ruling, the high court held that Prop 64, which legalized recreational marijuana in California, was not applicable to prison inmates. The majority opinion held that there as nothing in the ballot materials for the law that indicated voters had considered or were even aware of how this might impact possession of the drug in prison. The court stated, “it seems implausible that the voters intended to essentially decriminalize marijuana in prison.”

Had the public intended to alter the laws and policies regarding possession of cannabis in prison settings, they would have stated so explicitly, the court ruled. Further, it would make no sense that voters would wish to continue to criminalize the consumption of cannabis in prison, yet allow inmates to legally posses it.

The court stated it was sympathetic to the assertion that state law allows for a wide disparity in the way it treats possession of cannabis outside a correctional facility versus how it is managed inside, but noted the same is also true for other substances – alcohol included. These inmates were given an eight-year prison sentence for possessing less than one gram of cannabis. The court agreed that this could be viewed as “unduly harsh.” However, the court stipulated that it was not in the business of judging the wisdom of public policies. Instead, it’s the court’s responsibility to interpret the statutory language.

The two dissenting justices disagreed with the ruling in part. They did not take issue with the matter of the drug’s legality; in fact, they conceded that marijuana was not legal for prisoners under Prop. 64. The dissent was based on concern about how prosecutors might opt to file charges when statutes overlapped, favoring those that allowed for harsher penalties.

Still, the majority ruling was no real surprise. Many other state appellate courts have held the same, and arguing the legality of keeping marijuana in prison was always going to be something of a long shot.

Those who are charged for possession of marijuana in prison will require the services of an experienced marijuana criminal defense lawyer, as they will continue to face the harshest penalties on the books. Our dedicated team of L.A. marijuana lawyers can help.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

California v. Raybon, June 11, 2019, California Court of Appeals for the 3rd Appellate District

As of the beginning of this month, recreational marijuana was legal in 18 states, while medical marijuana was legal in 36. Since March of this year, five more states have enacted or introduced legislation that would legalize production, sales and use of the plant. Further, more than 9 in 10 Americans queried by the Pew Research Center believe cannabis should be legal at least for medicinal use.

Despite all this, though, marijuana continues to be classified as a Schedule I narcotic under federal law. As our Los Angeles marijuana business lawyers can explain, that’s the same category used for drugs like heroin – highly addictive and with no medicinal purpose. Obviously, the label isn’t congruent with the reality, and there is a clear disconnect between federal and state laws that has proven a fine line for cannabis companies to walk.

Last year, when House Democrats passed a marijuana legalization bill, it was ultimately stymied by Republicans in the Senate. Even Republicans who generally support legalization opposed the MORE Act, citing concerns about certain taxes intended to cover social equity programs. This year, though, Democrats control both Chambers – and the White House. All of this has risen the hopes of cannabis activists about federal legalization.

However, some are not so sure. For example, some opine the line of questioning by Thomas had less to do with the issue of marijuana legalization and more with his well-known problems with federal overreach in general. Beyond that, many lawmakers consider cannabis legalization a low priority, especially in this moment as the country is still struggling to its feet after the pandemic.

And then there is the fact that Joe Biden has stopped well short of voicing support of full legalization, though he has vocally backed medical marijuana rights and decriminalization.

As for Thomas’s line of questioning (in a case involving a challenge to tax rule 280E preventing marijuana businesses from writing off common expenses), it’s important to remember that the courts do not make the laws. They can set legal precedent, but really they’d need sort of “the perfect case,” perhaps involving an in-all-ways stand-up marijuana business owner complying with all applicable state laws and industry standards yet is still being dragged by federal repercussions. But this scenario may be unlikely considering federal authorities haven’t routinely arrested or prosecuted business owners operating under state-legal programs since the Obama years. And even small changes to 280E tax cases and banking cases don’t seem to be making the sort of sweeping changes that some activists had been hoping for. That puts the ball back in Congress’ court, which means change could be slower.

But how much does it actually matter in a state like California, where cannabis is already legal for adult recreational use? A lot, actually, particularly with regard to banking and taxation – both of which currently aren’t on the side of cannabis businesses as a direct result of marijuana prohibition.

Although some credit unions and smaller banks will take on marijuana businesses (albeit quietly), credit card corporations and major banks won’t touch the industry, for fear of being slapped with federal money laundering charges because of the drug’s continued federal classification.

Beyond that, legalization could allow cannabis companies to grow beyond state borders. A cannabis farm in California can only sell its product in our borders. If they wanted to sell to marijuana shops in Nevada or Oregon, they have to invest additional funds to also grow in that state. California is renowned for having some of the best marijuana crops in the world. Export of those products would be a huge boon for state revenue – but that can only happen if the U.S. makes it legal.

If you are operating a marijuana business and are having difficulty navigating the legal market, our Los Angeles cannabis lawyers can help.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Could cannabis be made legal in U.S. under Biden? Signs are mixed. July 2, 2021, By Brooke Staggs, The Orange County Register

Cannabis companies would be wise to turn to Los Angeles marijuana advertising attorneys before launching any sort of marketing campaign, as the navigating the legal waters of such enterprises can be fraught with peril. The reality is, marijuana marketers can’t afford to turn a blind eye to federal law that is on the side of consumers in these cases. After mounting a defense and settling a case, you could easily be looking at six-figures.

One of the primary issues in these cases are reported violations of the Telephone Consumer Protection Act (TCPA), a federal law that prohibits transmitting unsolicited advertisements of any goods, property or services to a person without their express prior permission or invitation. A cannabis advertising lawyer in California can help you review your marketing practices to make sure you aren’t risking vulnerability to such claims.

Even more mainstream industry operations have found themselves ensnared in this type of litigation. For example, a marketing company in Oregon was ordered to pay a $925 million verdict for violating the TCPA last fall. Three years ago, the Dish Network was slammed with a verdict of more than $60 million.

California cannabis companies are already squeezed to the max financially due to strict regulation and heavy taxation. A marketing lawsuit isn’t something you want to risk.

Some marijuana business lawyers refer to the TCPA as an extortion statute. Such claims are perfectly legal, of course, but it can be a means for other attorneys to compel marijuana businesses to pay dearly in settlement negotiations in the hopes of avoiding an even pricier trial and verdict.

All the consumer needs to establish is that they did not give their consent to be contacted. Worse, even if you did have their consent, you could still be compelled to pay to defend yourself in the matter – a cost that may run you more than the initial demand. The onus is on the defendant in these cases to prove that it had the required consent to send the text advertising. By the time the case reaches that point, you may have already paid more than that on legal fees.

As reported by MJBizDaily.com, some of the TCPA lawsuits filed in recent years include:

• A federal lawsuit in California filed last summer against marijuana retailers in California, Washington and Colorado.
• A federal lawsuit in Southern California against a Utah-based company in January. It was dismissed without prejudice this summer and can be refiled.
• An April lawsuit filed in the Central District of California this spring, also dismissed without prejudice (meaning it can be refiled).
• A lawsuit filed in May in the Eastern District of California against a company that sells marijuana cultivation materials.

Several of these and other cases are ongoing.

Consult an Ad Planning Attorney

There are many ways that cannabis companies can protect themselves from litigation while also effectively advertising.

First and foremost, your company should ensure you aren’t sending any SMS messages without first obtaining the mandated written consent. The TCPA bans all text solicitations unless you have gotten express, written opt-in from that particular consumer. This is the most important aspect if you want to protect yourself from liability.

If you’re working with a third-party marketing company, you need to make sure they are complying with the statute as well. Several of these cases involved a single marijuana marketing company that was working on behalf of numerous retailers – who are now potentially on the hook for the marketing firm’s unlawful practices. An L.A. marijuana marketing attorney can review your contract with your marketing firm to ensure they are abiding best practices and that you are legally protected.

Understand too that just because you’ve obtained your customer’s contact information doesn’t automatically mean you have consent to solicit them via phone calls or texts. Be straightforward with customers before sending ad or deal texts. Be wary too of opt-in lists that are sold by potentially unscrupulous third parties.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Text-message ads from marijuana companies spur spam-related lawsuits, Oct. 9, 2020, By John Schroyer, Marijuana Business Daily

The most significant changes in this latest series are to marijuana advertising and banking laws.

Governor Approves Marijuana Business Regulation Changes

As our Los Angeles marijuana business lawyers know, finding legal banking services is still a challenge for many cannabis companies. AB 1525 will have the effect of removing the state-level penalties against banks that provide services to operations that profit from marijuana sales.

Another measure, SB 67, establishes a program for marijuana labeling that is similar to how California labels wines, by indicating where the plant is grown and how it might influence the character of the product. This is called and appellation program. The provisions prohibit cultivators and processors from using the name of a designated region or city in marketing the product unless all the cannabis from the region is grown there. Several counties already have such protections in place.

The main benefit of this for outdoor growers is the recognition of something called terrior. As most cannabis cultivators understand, this refers to a combination of unique environmental environments such as sun and soil that can alter the quality and properties of a marijuana product. Indoor growers will have the opportunity to claim representation of a certain region or hometown.

Yet another measure, AB 1872, pauses state cultivation and excise taxes on marijuana for all of next year, something proponents hope will give cannabis companies the stability of financing they need to pull through next year. It should be noted that as a state, California’s marijuana taxes are the highest in the country.

As to the other marijuana law changes, most are minor enough as to likely be unnoted by Los Angeles marijuana business owners and their clientele. For instance, one of the other laws allows a bit more TLC in certain edible cannabis products, while another gives state-licensed marijuana testing laboratories the ability to provide services to law enforcement agencies.

There were, however, several proposed marijuana laws that cleared the legislature but not the governor’s desk.

Pot Proposals the Governor Vetoed

One of those, AB 1470, would have given pot processors the ability to send prepackaged pot products to testing labs for analysis, something some industry insiders advocated to reduce costs. Newsome, however, said the proposal isn’t aligned with existing regulations, which require the products submitted for testing to be sent in their completed, packaged form – something he said is imperative to prevent products that may be unsafe or uncontaminated from entering the retail market. He added that while the proposal might have cut down on packaging waste, allowing products to be tested in their less-than-final-form would only help some smaller operators but could have an outsized impact on consumers as a whole.

That said, the governor indicated there is likely to be some changes to pot testing next year when lawmakers consider a pending plan to streamline the state’s regulatory and licensing agencies.

Similarly, while the governor vetoed a measure to dissolve the state’s Bureau of Cannabis Control, the entity that oversees the state-legal pot industry. In a statement, Newsome said the proposal was premature, considering that there are plans in the works for broader reform. Specifically, the governor wants to consolidate the state’s three marijuana regulation entities into just one department. The goal will be to reduce business time and costs incurred by red tape and unnecessary packaging, while still enforcing state pot product standards.

Ongoing Push for Federal Changes to Cannabis Law

Meanwhile, Congressional Democrats have continued to push for a cannabis law overhaul at the federal level. One of those measure from representatives in the House is a coronavirus relief bill that would incorporate protections for marijuana banking. In the past, such measures have been axed by Republicans in the Senate.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

California Governor Approves Changes To Marijuana Banking And Labeling Laws, Sept. 30, 2020, By Ben Adlin, Marijuana Moment

One such company, Eaze, a San Francisco-based online cannabis shopfront and delivery service, noted an uptick of 81 percent more women purchasing marijuana related products from the company, between 2018 and 2019.

With this shift, women now make up 40 percent of the company’s total customer base. Eaze also shared, that in 2018, women also accounted for 38 percent of its first-time deliveries, and that that figure grew to 43 percent in 2019.

If you need help with your online cannabis shopfront, our Californian marijuana business lawyers can help.

Making Changes to Reach Women While the National Institute of Drug Abuse statistics tell us men have long been heavier users of marijuana than women, the margin appears to be shrinking. Once companies see such large increases in the purchasing power of women, they quickly recognize the value in actively striving to appeal to female customers. But if changes need to be made to win women over, proceeding delicately is key, so as not to alienate the existing customer base.

Sheena Shiravi, senior director of marketing at Eaze, said the company is very mindful of offering educational content relevant to women, in settings they already frequent and enjoy. One example of how Eaze does this, is by hosting informative events at local fitness centers and nail salons.

Shiravi added that making sure products women enjoy are easily available on the platform, is very important too.

Appealing to New Users The most successful online companies definitely offer products that appeal to new users. CBD products and microdose products, for example, offer a certain comfort level as they allow a new user to ease themselves into cannabis.

Cannabis Use by Women of Different Generations Eaze noted the following demographic breakouts when examining female cannabis purchases across its platform:

• Baby Boomer women account for 46 percent of the segment (granting this demographic the narrowest of gender divides);
• Gen Z follows closely behind, with women comprising 40 percent;
• Millennial women account for 37 percent; and
• Gen X women make up 35 percent.

Product Preferences Eventhough Eaze has tweaked its product line and marketing strategy to appeal to women, the company says product preferences across gender, differed only slightly.

According to past purchases at Eaze, women are more likely to purchase:

• Edibles (six percent more likely);
• Pre-rolls (four percent more likely); and
• Topicals and drops (each three percent more likely)

While men are more likely to purchase:

• Flower (five percent more likely); and
• Concentrates (three percent more likely).

White-Glove Service Another San Francisco-based online cannabis shopfront and delivery service, Juva, strives to provide its customers with what it calls “white-glove service,” basically going above-and-beyond to exceed customers’ expectations as it delivers cannabis right along the San Francisco Peninsula, from San Mateo to Mountain View.

Juva works hard to attract, and keep its customers, not only by offering top-notch purchasing, education and customer support throughout its customer experience, but also by rotating generous deals. Loyal customers are rewarded with points that convert to store credit, and are encouraged to come back often to see new discounts and deals as they post.

Examples of current deals, targeting:

• First Timers – offered to all new customers, via 20% off their first purchase.
• Experienced – offered to all customers 55 years and over, who receive 15% off all purchases.
• Veterans – offered to all current and ex-military service men and women, who receive 15% off all purchases.

Implications If a trend is emerging here, we see that online platforms are taking very seriously the responsibility of educating the public on the benefits of cannabis use, and then are taking that next step of making it a very easy, convenient and comfortable experience to get cannabis out to those who need it most.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: National Institute of Drug Abuse

A study published in the June 20 issue of American Journal of Public Health, looked at U.S. federal health data for more than 200,000 high school students between 1991-2017. The results show marijuana use among teens within that time frame, has increased tenfold.

Study author, Hongying Dai, of University of Nebraska’s College of Public Health in Omaha, noted the “surge” in teens using marijuana is troubling, and “highlights the importance of marijuana prevention among youths.”

To date, a plethora of studies have investigated the long-term effects of marijuana use in teens. Concern often centers around effects of the drug on the prefrontal cortex areas of the brain, which control judgment and decision-making, and continue to develop well into a person’s early 20’s. Marijuana use in such studies, has also been linked to an increased incidence of mental health disorders, including depression, psychosis and other long-term psychiatric effects.

Common Side Effects of Cannabis Use in Teens The Center for Disease Control and Prevention (CDC), for example, warns of the following common side effects found among teens using marijuana:

• Disjointed thinking and difficulty problem solving;
• Decreased memory function and challenges learning;
• Impaired co-ordination;
• Difficulty maintaining attention;
• Decline in academic performance and higher drop-out rates;
• Increased risk of mental health issues (depression, anxiety and psychosis);
• Impaired driving ability and increased danger on the road (decreased co-ordination, reaction time and concentration); and
• Potential for addiction.

Despite the associated health risks, as opinions towards and regulation surrounding marijuana use are relaxed, teens nationwide are increasingly using the drug.

Interestingly, in her analysis of the data, Dai also noted “the percentage of high school seniors perceiving regular marijuana use as harmful, fell from 78.6 percent in 1991 to 29 percent in 2017.”

National Incidence Data on Teens and Marijuana Other key findings from Dai’s study of the U.S. federal health data show:

• Teens admitting to using marijuana within the last 30 days has increased from 0.6 percent in 1991 to 6.3 percent in 2017
• More than double the number of young people are using both marijuana and alcohol (7.6 percent in 2017 vs. 3.6 percent in 1991)
• Between 1991-2017, marijuana usage rates increased more significantly among teens within minority populations
  • Use among black teens is up from 2 percent to 13.5 percent
  • Use among Hispanic teens rose from less than 1 percent to 9 percent
  • Use among white teens increased least from 0.3 percent to 3.7 percent

Changes in public opinion toward marijuana, as well as the relaxing of restrictions surrounding marijuana use, have likely contributed to the uptick in teenagers using the drug, said Dai. It appears there is more work yet to do, in educating teens on the dangers they face if using marijuana before reaching adulthood.

Marijuana Use by California Teens For a snapshot of marijuana use specifically among Californian teens, a separate study by the Californian Department of Health Care Services and the California Department of Education showed differing results. In its independent California Healthy Kids Survey, the 2015-17 study surveyed 45,264 students, comprised of randomly selected seventh, ninth and eleventh graders. Key takeaways included:

• A 47 percent decrease in cannabis use among seventh graders from 2013 to 2017;
• Pot use among ninth graders dropped 25 percent within the study period;
• Eleventh grade cannabis use dipped 16 percent during the same time frame; and
• Teens reportedly using cannabis multiple times within the last 30 days, fell across all grade levels.

These findings were gathered within the sixteenth biennial, statewide, nonpartisan Californian student survey, which was funded by state taxes.

The obvious question then, is in a state that has regulated and legalized the use of marijuana among adults since 2016, why are Californian teens apparently using pot less than their counterparts across the country? One reason may be that deregulation removes the lure of rebelling with marijuana use during adolescence. Another points to California’s continued advertising budget allocation, to educate its young people on the side effects associated with cannabis use, and to discourage pot use among its youth.

It will be interesting to observe whether the 2017-19 CHKS survey results show a continued trend of declining pot use among teens across California, or if an uptick matches the national data analyzed by Dai. Keep an eye out for those 2017-19 CHKS survey results, which are expected to be released sometime next year.

Need Legal Help For Cannabis Possession? Our Southern California marijuana defense lawyers can help answer any questions you may have.

The Los Angeles CANNABIS LAW Group represents growers dispensaries, ancillary companies, patients and those facing criminal marijuana charges. Call us at 949-375-4734. Additional Resources: The Center for Disease Prevention and Control-Marijuana Fact Sheet California Healthy Kids Survey 2015-2017

The interest of companies adjacent to the cannabis industry especially is expected to soar – everything from packaging and advertising to purveyors of point-of-sale technology that allows marijuana producers to keep accurate track of their products from seed-to-sale.

Supply chain companies are increasingly willing to form ties with the cannabis industry, which just 10 years ago was illegal in most states. The fact that it’s still illegal under the U.S. Controlled Substances Act means there is still some risk for those associated. That’s why it’s best to check in with an experienced Los Angeles cannabis business lawyer before signing any contracts to ensure your operations meet California cannabis regulatory compliance rules, thereby reducing your risk of both state and federal scrutiny.

California Cannabis Partners Anticipate Big Profits

Among leaders interviewed by Reuters who opined business-to-business partnerships with California cannabis companies had the potential to significantly bolster their growth and sales:

• Cryogenic equipment manufacturers;
• Point-of-sale firms
• Advertising agencies
• Tax company
• Accounting and payroll companies
• Security firms

Already, a number of these industries have reported significant boosts.

Technically, marijuana business law firm fall into that category too, though it’s worth noting our Los Angeles marijuana lawyers have been involved in California cannabis law practically since the beginning of medical marijuana.

How Much Could Marijuana Magnify Supply Chains?

As for the exact impact, the economic growth analysis experts say the repurposing of the cannabis supply chain might even give some companies big opportunities to branch off into other legs of growth.

A good example: the lawn and garden industry. In the case of one company, Scotts Miracle-Gro Co, within four years, it transformed from a brand known for helping grow pretty flowers to one closely associated with cannabis cultivation. It is considered a major power player, a go-to for many cannabis farmers in need of fertilizer, marijuana-specific row systems and lighting. Growth occurred so rapidly, it was able to acquire a top competitor last year and the value of its shares are up 30 percent year-over-year. (By the way, that’s roughly twice the benchmark needed to gain S&P 500 status).

But aside from those companies that market direct to cannabis-related companies, there are a number that are several steps removed. For supply chain companies and third-party logistics sources, growth analysts say the safe estimate on uptick is a few percentage points annually. That’s not to say it won’t be significant for these firms. Those familiar with California’s Gold Rush history will remember it wasn’t the miners who made the most coin, but rather those that stepped in to sell them the picks and shovels.

As it now stands, marijuana is the fastest-growing business segment for many firms, particularly in Western states and especially in California. If you have questions about launching a Los Angeles cannabis company or entering into a contract agreement with one, our L.A. marijuana business attorneys can help.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: How cannabis is firing up the U.S. supply chain, April 4, 2019, Reuters More Blog Entries: California Employers Ease Zero Tolerance on Cannabis, April 15, 2019, Los Angeles Marijuana Lawyer Blog