Even mor recently, the California Department of Industrial Relations issued a reminder to cannabis employers that they are bound to comply with California labor law requirements. Further, it was noted that labor protections apply to ALL workers – regardless of the worker’s immigration status or even the legal status of the business. That means individuals operating unlicensed cannabis businesses can catch heat not only for operating unlawfully, but also for failing to follow state statutes pertaining to worker rights.

As longtime Los Angeles cannabis lawyers who also practice employment law in Southern California, we are closely familiar with the intersection of these issues and the unique legal questions that can arise.

Cannabis businesses are expected to provide workers with:

• Minimum wage. The statewide minimum is $15.50 as of January 2023. Some cities may impose higher minimum wages.
• Overtime paid at 1.5 the regular rate. Generally, overtime rates must be paid if an employee works more than 8 hours in a day or more than 40 hours in a week. If the employee works more than 12 hours in a workday, they must be paid double for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
• Valid workers’ compensation insurance. If the worker is hurt on the job, they have a right to expect workers’ compensation coverage, which is required by almost all employers in the state. If the company doesn’t have workers’ compensation insurance, they can be fined by the government and the worker can can sue them for damages.

The new unit of the DCC is aimed at taking action against cannabis companies that coerce or threaten workers, compel them to work in dangerous conditions, or deny them pay, benefits, or breaks to which they are entitled.

Last year, the Los Angeles Times published an investigation exposing the unfair treatment of cannabis workers, who are sometimes cheated out of wages, threatened with physical harm, or compelled to work in dangerous conditions that have actually proven fatal for some.

Allegations of employee abuse involving some 200 cannabis contractors and farms (half lacking state licensing) have been filed since marijuana first became legal in California. An estimated 37 cannabis workers have died on the job since 2016. In Lucerne Valley in December, an 18-year-old cannabis worker died in a greenhouse from suspected carbon monoxide poisoning. It was the same cause of death for a 30-year-old Mexican who died while working at a greenhouse in San Bernardino County. Carbon monoxide poisoning is the No. 1 cause of death among cannabis workers in California.

Other deeply troubling cases involve alleged instances of Argentinian immigrant workers toiling 14-hour days for weeks on end behind locked gates on a Trinity County farm – using a single-burner propane stove for cooking outdoors, a portable toilet, and a shipping container in which some slept at night. Others slept in tents or in their cars. Some said they were paid less than $8 hourly – rarely on time – and provided text messages showing their employer threatened to report them to immigration authorities if they complained.

Longtime California cannabis lawyers know that part of the problem is that the cannabis industry was underground for so long. For decades, cheap, vulnerable laborers were sought for work that was paid in cash and commonly exploited. Still, this doesn’t excuse the continuation of such practices now that the industry has been pulled aboveboard.

A number of sheriff’s offices in Northern California have started teaching officers in the narcotics division about how to identify, investigate, and intervene in suspected human trafficking situations.

The DCC has it’s own such unit, based in Fresno. It’s called the Human Trafficking/Exploitation Assessment and Response Team (or HEART). This marks a notable shift in the DCC’s response to labor exploitation. The agency had been primarily focused on licensing and regulating commercial cannabis operations. Any suspected cases were simply forwarded to state labor agencies. Now, the agency has more than a half dozen detectives who can work on human trafficking cannabis cases and refer to them to prosecutors and/or federal authorities. The team also provides training to law enforcement.

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 workers face death and exploitation. California is stepping in after Times investigation, May 5, 2023, By Paige St. John, L.A. Times

More Blog Entries:

Los Angeles Cannabis Businesses Must be Audit-Ready, May 28, 2023, Los Angeles Cannabis Business Lawyer Blog

Basically, the illegality doctrine is a principle arising out of English common law (first articulated by American courts way back in 1775) that basically says courts don’t have jurisdiction over claims that arise from acts that are illegal. So for example, if someone is unlawfully selling heroin and robbed, the victim may have no recourse for restitution of the stolen heroin or trafficking funds – because they were illegal in the first place.

With regard to cannabis company patents, there have been a flood of new state-legal marijuana brands and products on the market in recent years. But protecting those unique patents and trademarks has proven extremely challenging because of the illegality doctrine. Patents and trademarks are protected under federal law – which also considers the underlying substance they’re trying to protect as illegal.

However, as our Los Angeles marijuana business lawyers can explain, that may not be the last word on it.

Take, for instance, the case last year of Gene Poole Technologies, Inc. v. Coastal Harvest, LLC. This was a decision handed down by the U.S. District Court for the Eastern Division in California. This was a noteworthy case because up until then, no federal court had addressed whether it would allow state-legal cannabis companies to pursue patent protections. Here, the court held that the illegality doctrine was not a bar to enforcing a California cannabis product patent.

The outcome of this case wasn’t a guarantee, particularly given that in a number of other non-patent cannabis cases in federal court, the effectiveness of the illegality doctrine as a defense has been a bit of a mixed bag.

For instance, a number of bankruptcy courts have held that cannabis company businesses – in clear violation of the Controlled Substances Act – weren’t entitled to the same bankruptcy protections as other companies. But then in a federal breach of contract case involving a state-legal cannabis company (Siva Enterprises v. Lance Ott) , the court held that it did have jurisdiction because it wasn’t being asked to consider any remedy that might compel one side or the other to violate federal laws on controlled substances. The actual production or sale, in that case, was not at issue.

So future claimants need to tread carefully, because despite the Gene Poole ruling (wherein the Siva ruling was cited), other federal courts aren’t necessarily bound by that finding – especially as it hasn’t even been cleared by the regional appellate court. Unless/until the law changes or the U.S. Supreme Court decides, the success of a cannabis company patent protection claim may depend on the regional precedent.

If you have questions about pursing cannabis patent protection or defending against such a claim, we 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:

Fighting The Cannabis ‘Patent Trolls’ – This Company Is Filing IPRs Against Gene Pool Technologies, Sept. 9, 2022, By Vuk Zdingjak, Benzinga Staff Writer, Benzinga.com

More Blog Entries:

Potential Complications for California Cannabis Company Real Estate Lending & Commercial Leases, Dec. 22, 2022, Los Angeles Cannabis Lawyer Blog

Note: Delta-8-THC-O and Delta-9-THC-O are different than delta-8-THC and delta-9-THC. While the latter both exist naturally in the hemp plant, THC acetate (better known as THC-O) doesn’t. That’s the underlying basis for the DEA’s position.

THC acetate is most typically a component of products like edibles and vapor cartridges. As Los Angeles cannabis business lawyers, we want to ensure any companies that currently produce, transport, stock, and sell these products take immediate note. It’s not immediately clear how this will impact the market, so it’s a smart idea to immediately consult with a cannabis lawyer on how best to proceed and ensure you’re on the right side of the law.

How the Farm Bill Factors

The 2018 Farm Bill opened the door to a number of cannabinoid products that are known to also have intoxicating properties. This has drawn the attention and ire of some politicians and interest groups. The additional scrutiny has led to legal challenges that have wound up in court.

Last year, the U.S. Court of Appeals for the Ninth Circuit involved a copyright/trademark/patent protection case. The defendant didn’t even contest that it was selling counterfeit versions of the plaintiff’s delta-8 THC products. The appellate court affirmed the lower court’s grant of a preliminary injunction’s on the defendant’s sales, and held that the plaintiff was likely to prevail on their claims. What the defendant argued was that plaintiff couldn’t own a valid trademark for its products because of the illegality doctrine (which has been cited in other cannabis trademark infringement and patent infringement cases). Basically, products that are illegal under federal law aren’t entitled to federal protections – such as those for trademarks. Plaintiffs argued that delta-8 THC was legalized under the 2018 Farm Bill as a hemp-derived product. Defendants argued that was not the intention of the legislature to approve legalization of psychoactive substances – which delta-8 THC is. The appellate court sided with plaintiffs, finding the 2018 Farm Bill language was unambiguous, and the delta-8 products in question fit the requirement of containing less than 0.3 percent of THC.

But Delta-8-THC-O and Delta-9-THC-O are not the same thing.

DEA’s Novel Cannabinoid Stance

Essentially what the DEA’s Drug & Chemical Evaluation Section has concluded is that if a certain cannabinoid or compound is produced naturally by the hemp plant – then it’s legal (as long as it doesn’t have more than 0.3 percent THC). It’s not a controlled substance, no matter how it’s processed or manufactured into the final product. That’s important to note because delta-8 actually is synthetically-manufactured from CBD (which is hemp-derived). However, trace amounts of it also occur naturally in the plant.

While the Delta THCO products do contain THC that has a similar structure chemically and similar pharmacological outcomes compared to hemp plants, they aren’t the same – and they don’t naturally occur in the plant. They can only be produced through processes that are synthetic.

The DEA’s statement doesn’t clarify the rules for all novel cannabinoid derived from hemp, but it’s a start.

If you have questions about how to ensure your Southern California cannabis business is adhering to current laws and regulations, our marijuana business lawyers 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: DEA Classifies Novel Cannabinoids Delta-8 And -9 THCO As Controlled Substances, Even When Synthesized From Legal Hemp, Feb. 13, 2023, By Kyle Jaeger, Marijuana Moment More Blog Entries: California Pot Purveyor Pushes Back Against Product Potency Lawsuit, Dec. 6, 2022, Los Angeles Marijuana Lawyer Blog

These types of contracts diverge from the normal model of cultivation employment, and they can even vary significantly from contract to contract. Basically land owners gain the appropriate cultivation permits from local and state authorities. From there, they contract with experienced cannabis crop growers who conduct the actual farming. Many of these farmers are legacy growers who weren’t successful in landing their own state cultivation permits due to so many barriers to entry. The land owners and the growers then split the profits. Additionally, farmers get their foot in the door of an industry they may not have otherwise. That could result in more opportunities down the line.

Cultivation contracts vary in length and scope, but they typically last a year or so, but some continue in perpetuity until one or both parties dissolves the relationship. Neither should enter such an agreement until having it carefully examined by a California cannabis business lawyer experienced in contract drafting and review. The importance of this is underscored by the fact that there have been numerous lawsuits stemming from these arrangements, with allegations including fraud, breach of contract and labor law violations.

Legal Challenges Involving California Cannabis Farming Contracts

Contract cannabis farming is more common than it used to be, particularly since the adult-legal recreational market has taken off.

Among some of the legal battles that have stemmed from California cannabis farming contracts, as reported by Marijuana Business Daily, were two similar cases filed at opposite ends of the state late last year. They involved farmers who alleged they were taken advantage of by landowners with cultivation licensing. The farmers were reportedly lured into doing all the farming work, but were never paid after the crops were harvested.

In one of the lawsuits, the plaintiff in Sacramento County alleges the defendants, a family company that owns and operates numerous marijuana businesses, defrauded the plaintiffs of some $1.3 million in its sharecropping agreement over the course of two years, plus another $700,000 in crop profits.

In another lawsuit, filed in Los Angeles County, plaintiffs allege they were cheated out of $700,000 in crop profits, plus another $500,000 that plaintiffs had paid to help get the farm up and running.

In both cases, the land owners had the money, the land and the permits – they just didn’t know how to successfully grow and harvest cannabis. Our Los Angeles cannabis contract attorneys note this situation is one with high potential for abuse.

Sharecropping in general isn’t knew to the marijuana industry, and many recognize it as a prime avenue to getting established in the market. Some liken it to an apprenticeship, where individuals learn how to manage another person’s farm before they can take on their own. But serious problems can arise when cannabis contracts aren’t meticulously drawn up. Every detail must be carefully communicated, and there must be stipulations for how to handle what should happen if the farm runs at a loss one season rather than a profit.

Having the specifics clearly and concisely stated in every cannabis contract is critical. We 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:

Contract cannabis farming gaining popularity in California, but practice draws lawsuits, July 15, 2020, By John Schroyer, Marijuana Business Daily

The bill states licensed growers, distributors, manufacturers, retailers and micro-businesses may allocate any already available inventory of cannabis and related marijuana products, for donation. Products set aside for donation can only be given by licensed retailers either directly to a medical patient, or to their primary caregiver.

Donation Requirements Our Los Angeles marijuana attorneys note that all cannabis and related products allocated for donation, are required to meet state marijuana regulations and provisions outlined in MAUCRSA. Those include:

• All donated marijuana products must travel within the licensed supply chain and meet all requirements surrounding cultivation, laboratory testing, distributing, manufacturing, and labeling and packaging, etc.
• Cannabis products that fail to meet regulatory testing and compliance standards are not permitted for donation.
• Donated marijuana products may only be made to qualified medicinal patients, and may only be donated by licensees permitted for retail sales, or non-profit organizations working directly with such licensed retailers.

Additionally, any licensee allocating items for donation must record each allocation within the Track-and-Trace system, as well as on sales receipts and invoices. Once a donation designation has been made, it cannot be changed. Any licensee that does try to change a donation allocation will have to pay sales and use taxes, and may also suffer disciplinary action. Manufacturers wishing to donate cannabis products must also label products “FOR MEDICINAL USE ONLY.”

Retailer Requirements Section 11362.7 of the Health and Safety Code states that retailers can only donate cannabis and related products to medical marijuana patients, or their primary caregivers, who possess a valid medical marijuana ID card, or recommendation from an attending physician.

Should a medicinal patient not hold a valid ID card, before donating any marijuana, the retailer must first:

• Verify the attending physician recommending the medical marijuana therapy is licensed, and in good standing, to practice osteopathy or medicine within the state of California. This must be verified with:
  • The Medical Board of California;
  • The Osteopathic Medical Board of California; and
  • The California Board of Podiatric Medicine.
• Take a copy of a government issued identification for the patient or primary caregiver; and
• Provide a written certificate stating the retailer has verified a physician’s medicinal marijuana recommendation, accordingly.

Daily Purchase and Possession Limits The Bureau of Cannabis Control (BCC) has clearly outlined daily purchase (Section 5409) and possession limits (Section 11362.77) within the Health and Safety Code. It is important to note that these limits still apply, both to patients and caregivers who may be receiving, or carrying, donated medicinal marijuana.

Implications Making marijuana donations to medical patients, and their caregivers, shows the industry’s compassion for those most in need. Offering cannabis business owners and operators tax incentives to get on board also helps to sweeten the act of donating. What will be interesting to watch is whether it will prove too cumbersome for retailers to jump through the hoops needed to get sign off to donate to those without a valid medical marijuana ID card, or whether they will do so gladly. 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: Senate Bill 34 The Medical and Adult-Use Cannabis Regulation and Safety Act Bureau of Cannabis Control – Health & Safety Code

Until now, companies like Juul Labs Inc., a San Francisco-based manufacturer of nicotine pods and vape pens, have managed to squash bills intended to prohibit the sale of flavored tobacco throughout California. Jull Labs Inc. spent $600,000 last year alone, lobbying and supporting political campaigns aligned with their business goals.

Why Change Now As vape products have risen in popularity, particularly flavored varieties appealing to young people, the country has also seen a spate of hospital admissions and deaths, all linked to vaping. Evidence has also shown that flavored vape products successfully lure teen users. So with a human toll already reaching 90, and a heightened awareness of a rising number of teens vaping cannabis and tobacco, the governor publicly announced his support to ban flavored vape products.

Another indication of a possible market shift is that Juul has also ceased selling flavored mint and mango pods in the U.S. If you need legal help with your vaping or cannabis business, our Los Angeles marijuana business lawyers can help.

Attracting Young Users The Centers for Disease Control and Prevention reported last year that one in 10 middle-schoolers and one in four high-schoolers admitted using e-cigarettes.

Of those middle-school users, 49 percent reported using flavored products in 2018. While that number was higher at 67 percent in high-school tobacco users.

With usage levels so high, select Californian lawmakers sought tighter vaping regulation, but those moves set off strong opposition both from the broader vaping industry and tobacco companies, alike.

Bans and Legal Action In 2019, after temporarily prohibiting flavored e-cigarettes, eight different states found themselves facing legal challenges. Similarly, several states also banned flavored cannabis product sales. So far this year, the National Conference of State Legislatures notes that of 184 vaping bills across 20 state legislatures, 47 include flavor restrictions.

In January, San Francisco was the first city in the nation to ban e-cigarette sales. While another 60 Californian cities and counties have followed, either limiting or banning flavored e-cigarette sales as well.

The State of California’s Response Following a particularly bad summer for vaping-related illness, the executive order Governor Newsom issued in September, instructed state agencies to:

• double down on California’s illicit vaping market;
• explore alternative vape product tax strategies; and
• establish a consumer awareness campaign shining a light on vaping risks.

When Governor Newsom unveiled his proposed 2020-2021 budget in January, he also confirmed his full support of Senate Bill 793, which would see California go a step further than the federal government. If approved, it would restrict all tobacco products featuring enhanced flavors, including mint, cotton candy, and fruit flavored vape pens, as well as tank-based products like menthol cigarettes, cigars, hookah tobacco and chewing tobacco.

San Mateo Democratic Sen. Jerry Hill said, “This is affecting our youth… The gateway is flavored product, and we can’t leave it to the industry to police themselves, because they failed to do that.”

Implications Currently, California legislature is yet to consider a bill that restricts flavored cannabis. But we can expect sizable push back from vaping companies within the cannabis industry, if this comes to pass.

Vaping companies throughout California responsibly called for tighter vaping product regulation immediately after illicit vapes began causing illness across the country. With many cannabis businesses already struggling to compete with illicit sellers, vaping companies would much rather see tougher regulation enforced, before banning flavored vaping all together.

The tobacco industry too has a steeped interest in keeping flavored vaping sales open. They also have very deep pockets and are willing to spend it lobbying, which makes them quite a formidable player to watch.

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 Centers for Disease Control and Prevention The National Conference of State Legislatures Senate Bill 793

Washington, where requirements for marijuana businesses are strict, yet muddled. What started as a residency restriction meant to control big outside mega corporations from putting local businesses at a disadvantage has led to corporations researching ways to exploit residency loopholes and limiting who longtime residents can bring on as partners. Now, due to unclear definition of what qualifies a person for residency, some are concerned how to prove their status.

You see, according to RCW 69.50.331(1)(b), one must be a resident of the state for six months to apply for a marijuana business license. Not only that, all members of the business, no matter how small the stake, must meet the same residency requirement. Further, a “partnership, employee cooperative, association, nonprofit corporation, or corporation” must be formed in Washington according to state laws and meet the above outlined residency requirements in order to be issued a license. Lastly, licensees must comply with residency requirements throughout the duration of the license. Without a firm definition on what constitutes residency, though, some businesses have been in the lurch.In 2016, the Washington State Liquor and Cannabis Board eased up the chokehold on businesses a bit by allowing for non-bank financing to come from out-of-state, but these investors still could not hold a stake in the company, as outlined in the Cannabis Law & Policy Project. This adjustment in regulations by the board also included the amendment that increased the residency requirement for all interested parties of the business from three months to the current six months. Both moves were an attempt to discourage out-of-state investors from setting up makeshift residency in the state and encouraging them instead to be a more passive investor.

Good news for some Californians, there are no such residency restrictions at the state level. Many cities and local governments, however, have their own residency requirements in an effort to favor in-state and local businesses, according to a report from Marijuana Business Daily. Some have only allowed pre-established businesses access to limited licensing, trying to give grassroots businesses who have been working in medical marijuana a fighting chance now that recreational cannabis has hit the scene. Others have rules designed to give preference to owners who come from neighborhoods most negatively impacted by biased drug enforcement policies of the past. Others, still, will welcome entrepreneurs from anywhere, primarily seeking the influx of tax revenue from new businesses.

Similar to Washington, these regulations can often raise more questions than they answer. How long does one need to reside in a certain area to be considered a resident? How much time do they need to be on the premises for it to be considered their home? What about neighborhoods affected most by the War on Drugs? Can someone new move in and take advantage of these special opportunities? If questioned, what proof must you show? Does everyone in the business need to be a resident? Luckily you do not have to be a scholar on local laws to break down these answers. Our skilled Los Angeles cannabis business attorneys are well-versed in residency rules and the distinct set of guidelines you will face in each city and county. A free consultation is your first step to making sure your business is fully in compliance.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

For Washington’s Pot Industry, Out-of-State Owners Could Supply a Lifeline — Or Invite Trouble, By Bob Young, Feb. 7. 2107, Seattle Times

More Blog Entries:

Strict Regulations Make Legal Marijuana Scarce in Washington, Oct. 11, 2014, Cannabis Law Group

world’s largest marijuana market. California Growers Association, based in Northern California, is merging with Southern California Coalition out of Los Angeles to leverage their combined strength when voicing needs of the cannabis industry to political representatives, according to Los Angeles Business Journal. A headquarters location for the far-flung group has not yet been selected.

Anyone who is familiar with the cannabis industry knows there are major cultural differences across the board — from the numerous farmers working the fertile lands of the “Emerald Triangle” in Northern California to posh dispensaries in L.A, and all of the laboratory testers, drivers, and processors in between. Each faction of the industry has different priorities, which has often kept the groups and their interests separate. Many in the state, however, are learning that more can be accomplished when we work together. The new CalGrowers-SoCal Coalition Collaboration is now 1,600 members strong, making the group a force to be reckoned with.There is a lot on the line, of course, for this group, composed of roughly 1,000 growers and about 600 manufacturers, lab workers, delivery drivers, distributors, retailers, and other marijuana industry workers. They are tasked with protecting an industry estimated to be worth $3.7 billion by the end of 2018 and $5.1 billion in 2019, with forecasts only growing from there. One hiccup anywhere along the chain can have vast ripple effects across all areas, making it essential for everyone in the industry to have each others’ backs. If a regulation is hitting distributors especially hard, it could have disastrous economic effects in all directions. All parts of the industry have to work in perfect harmony, so when a risk arises for businesses, consumers, or patients, it is beneficial to all involved that it be addressed quickly and efficiently.

Those who have stood in opposition of marijuana have learned that nothing is more effective than the power of numbers to spread your message. The more people are unified behind the same message, the more it gets repeated and the more traction it gets. That is how we found ourselves in the midst of the anti-marijuana “War on Drugs” that has devastated so many lives in this country. A single idea — “marijuana is dangerous” — gets repeated often enough, in school, by law enforcement, and in public service announcements, and people stop questioning how and why they came to that conclusion. Now, we need to use these same methods to spread the truth about this beneficial drug.

Our trusted cannabis business attorneys in Los Angeles know first-hand the power of working in teams. It is the spirit of teamwork and togetherness that we bring to each of our clients that we serve in the marijuana industry. Our collective knowledge and experience can be an asset to you and the broad network of cannabis businesses we have helped over the years. We are proud to provide consulting services, business plan strategies, and compliance advice to marijuana businesses in Southern California as another key to the long-term growth and success of the cannabis industry in the state.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

Leading California Cannabis Industry Trade Associations Collaborate to Create Powerful Political Voice and Unify World’s Largest Cannabis Market, July 27, 2018, By Hezekiah Allen, California Growers Association

More Blog Entries:

Small Marijuana Farmers Take State Department to Court, Feb. 7, 2018, Cannabis Law Group

on a U.S. stock exchange by a marijuana producer. Ontario, Canada-based cannabis conglomerate Tilray went public on New York NASDAQ recently. The stock price spiked 30 percent in one day proving what we have been saying all along: cannabis is very, very good for business. According to a report from Quartz, investors rated the value of Tilray at time at $2.65 billion.

Tilray grows and processes cannabis to meet pharmaceutical standards. The company has really taken off in the wake of Canada voting to make marijuana legal nationwide, but the company’s products can be found in 10 countries, including a production facility in Portugal. Though located in Ontario, the company has its roots in a private equity firm in Seattle that has been investing in brands connected to the marijuana industry in hopes of positioning businesses to be on the forefront as prohibition is lifted worldwide. Canada is the second country to make adult use legal (Uruguay being the first). The U.S. has 30 states that have legalized at least medical marijuana, though they are still somewhat bound by the federal Controlled Substances Act, 21 U.S.C. Section 812. Many countries have partial allowances, such as the infamous cannabis cafes in the Netherlands. Despite the best efforts of backward thinking anti-marijuana propagandists, the writing is on the wall for cannabis legalization to continue to grow, and companies like Tilray are primed and ready.

Simply being in the cannabis industry is not enough to guarantee success, though. Other marijuana stocks and pharmaceutical stocks related to the marijuana industry have faltered or gone stagnant. Like anything related to business, it takes the right ingredients at the right time to appeal to investors. There’s also a very real fear for these marijuana companies who are paving the way that once the U.S. finally wakes up and makes marijuana legal nationwide, big name brands will jump into the market, sucking up investors on their name recognition alone.

These concerns are true not only of big-time players in the stock market, but also of the bold entrepreneurs who have faced adversity in order to bring cannabis products to the people of California and other states who have legalized this highly beneficial drug. It is exciting to be a business owner getting in on the ground floor of what is clearly going to be the next big thing. As we’ve already established, though, it takes the right ingredients at the right time. Our Los Angeles cannabis business attorneys have acted as consultants for numerous businesses, giving advice on compliance issues and how to best work in the parameters of local, state, and federal laws. A strong infrastructure is key to long-term success. If certain regulations are skipped or issues are ignored early on, they tend to snowball, causing bigger problems down the road. Establishing yourself as a business owner that can be trusted now will increase your chances of having a loyal customer base in tact as the industry continues to grow and evolve, and being in compliance now will make you more agile as more changes head your way.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

Tilray IPO: Five Things to Know About the First Pot Company to Go Public on Nasdaq, July 18, 2018, By Max A. Cherney, Market Watch

More Blog Entries:

Investors Eye Marijuana Stocks, Jan. 23, 2017, Cannabis Law Group

country in the world to legalize adult-use cannabis after Senate recently passed the long-awaited bill. Uruguay was the first country to pass legalization measures, with sales starting last year. Canada’s size and global standing, however, give it a unique opportunity to set the tone for what legal marijuana could look like for the rest of the world. It will still be a couple months of preparations, though, before legal sales can begin, according to Los Angeles Times.

Uruguay has had a complicated relationship with legalization, primarily because the motivation was to regulate out-of-control crime syndicates related to the black market marijuana industry. An micro-managed infrastructure has made for a rocky start getting the legal economy off the ground, but officials are still confident their plans will help eventually neutralize illegal sales.Our Los Angeles cannabis business attorneys know California has played an important role in setting an example for other states and countries. The state is the fifth largest economy in the world, so there has been a great deal of interest in how cannabis legalization would play out. California had an advantage in being the first state to legalize medical marijuana in 1996 with the Compassionate Use Act, so there was already a decent foundation in place when the state moved forward with recreational legalization at the beginning of this year. Still there are issues that exist simply because federal law labels cannabis as a Schedule I narcotic, which means all eyes are officially on Canada to see what comes next. Simply being able to legally trade between provinces opens up a whole new world currently unavailable to cannabis business owners in the U.S.

Indeed the move is already having influence. Britain is beginning to soften on its stodgy anti-marijuana stance by opening discussions about medical marijuana. Like in the U.S., the British government is having a difficult time continuing to deny the growing pile of evidence that cannabis can be a safe and effective treatment for a variety of medical ailments under the proper supervision. While the country is still staunchly opposed to the idea of recreational marijuana, it is no coincidence discussions of lifting its ban for medical purposes aligned with the timing of Canada passing their full legalization bill. Once the medical hurdle is cleared, a lot of haze about the dangers of marijuana is also cleared, and it is easier to have an adult conversation about the matter that isn’t steeped in propaganda.

Indeed it is an exciting moment in history to be at the forefront of what is surely to be the norm as time goes on. Our legal team is prepared to equip new business owners with the tools they need to be a part of this important and groundbreaking movement in a way that is flexible enough to adapt to changes as they occur. With a patchwork of local laws in California on top of state regulations and the federal ban, it is essential to seek the guidance of skilled counsel like ours. Cannabis is clearly the future, and our team will help put you on the right track to be a part of it.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

After Canada, will U.K. be next to legalize marijuana?, June 20, 2018, CBS News and Associated Press

More Blog Entries:

U.S. Marijuana Stock Tepid, Canada Marijuana Stock Spikes, Dec. 20, 2016, Cannabis Law Group

six months, businesses have enjoyed a grace period that allowed them to sell marijuana products that were not in total compliance so long as they included a label indicating any safety standards the product did not meet. As of July 1, owners must clear their shelves of all product that does not meet regulations, resulting in an influx of cannabis sales in the month of June and could lead to an impending shortage, according to the Orange County Register. When Proposition 64 went into effect Jan. 1, it brought with it new sets of rules in regards to recreational marijuana sales. Because marijuana products were already in production long before then, having served the medical marijuana market for almost 20 years, California imposed a grace period in which production and labeling regulations could catch up. This led to retailers bulking up on less expensive products that were not in total compliance at the end of 2017 to keep their stores well stocked in the first half of the year. Now they will need to clear their shelves of any remnants of that stock. Meanwhile, owners will be clamoring to replace that inventory with new products that meet regulations.

As our Los Angeles cannabis business attorneys can explain, the new rules entail several aspects of marijuana production. First of all, products must go through a licensed lab to be tested. These labs will test for pesticides and fungus. They will also ascertain levels of THC and CBD in the product. This rule in particular will be a challenge as the state has licensed only 28 labs, with many still not opened.

The tests will be used to determine if the products meet the legal threshold of THC, with only 100 milligrams allowed per package for edibles. For non-edibles, 1,000 milligrams are allowed for adult-use and 2,000 milligrams for medical marijuana patients. This resolves an ongoing issue where customers would purchase products that were either too weak or too strong with little way to tell what they were getting.

Labels have to be more thorough going forward, and must include test results, the date the product was made and regulatory symbols, warnings and ingredients and nutritional information for edibles. In addition to proper labeling, packages must be child resistant before they arrive in the stores. Before July 1, marijuana business owners could place products in child resistant packages at the point of sale. Owners could work around the other regulations with labels warning that new standards were not met. Now they will need to follow the rules to the letter, and the Bureau of Cannabis Control plans on dropping by businesses for check-ins.

This is a time where having an experienced cannabis business owner on your side can be extremely beneficial. Our team has the skill to ease your business into new guidelines while helping you keep an eye on your long-term goals and objectives. Trying to manage compliance issues and business plans on your own can be risky. Our know-how can give you the confidence to make smart decisions today that will build a smarter future for your business tomorrow.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

Stock Up Now, California. A Lot of Cannabis Is About to Disappear From Stores, June 12, 2018, By David Downs, Leafly

More Blog Resources:

Fresno Law Enforcement Doesn’t Kid Around With Marijuana, May 12, 2018, Cannabis Law Group

business owners. Some legislators agree, but others think the higher taxes should stand, at least for a while longer. For now, the current tax rate will remain, as an assembly bill addressing cannabis taxation failed to advance out of committee, according to an Associated Press report.

AB-3157 seeks to amend The Control, Regulate and Tax Adult Use of Marijuana Act, which currently sets the excise tax rate at 15 percent of the average market price. The new proposal would drop the excise tax rate to 11 percent and suspend the cultivation tax, with each expiring June 21, 2021. Right now, when excise and cultivation taxes are combined with sales tax, county, and city taxes the total tax rate can be almost 50 percent. Some fear this high of a tax rate is driving people to purchase marijuana on the black market, instead. There is some compelling evidence to back that claim.Our Los Angeles cannabis business lawyers understand one of the enticing promises of recreational marijuana legalization was the boon of taxes in government coffers. Extra money could be used to bolster infrastructure, city and state programs, and assist with cannabis education and drug abuse prevention programs. However, paying up to 50 percent in taxes is an astronomical hurdle for many businesses, particularly new ones trying to get off the ground. That could explain why tax revenue related to cannabis was much lower than projected in the first quarter of fiscal year 2018. Excise tax in the first three months came in at just under $34 million. At this pace, it is unlikely the state will bring in the original prediction of $175 million for the year.

Californians are certainly getting their marijuana from somewhere, though, and if not at the licensed retailers, then where? Assemblyperson Tom Lackey, co-author of the new bill, says its the black market and that the oppressive tax rate is to blame. By lowering the excise tax rate, marijuana businesses would have a more even playing field with unauthorized sellers, helping to boost already licensed businesses and encourage unlicensed businesses to come into the fold as well. The bill was stalled in committee by assembly members seeking more evidence of a connection between the tax rate and black market. Temporarily adjusting the excise tax, however, would be the most efficient way of testing the market, while also lending a hand to local businesses.

It can be overwhelming for new business owners to sort through all that is required of them to satisfy legislators, while also providing a solid experience for their customers. It takes skill and experience to know how to create a successful business plan that takes into account state and local taxes, additional fees related to testing and distribution, and still remains in compliance with regulations and laws. That’s exactly what our marijuana business attorneys in California have to offer: the skill and experience you need to put you on a path to success. Cutting corners or making poor decisions early on can be extremely costly for businesses down the road. Our legal team can make sure you make smart decisions early on to help keep your business strong down the road.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

California Gov. Jerry Brown’s New Budget Says Pot Revenue is ‘Slower than Anticipated,’ May 11, 2018, By Jeff Daniels and Chloe Aiello, CNBC

More Blog Entries:

Tax Bill Would Offer Relief to Cannabis Businesses and Consumers, March 21, 2018, Cannabis Law Group

cannabis. Oregon in particular is reporting an excess in cannabis production, which is driving down the price of marijuana at dispensaries across the state, according to Associated Press. As a result, growers are exploring more options, including hemp (a low-THC strain of cannabis used in industrial goods) and CBD oil (made from the non-psychoactive compound in marijuana, cannabidiol).

It’s hard not to recognize the irony in this latest advancement: while hemp is a benign, useful resource that makes excellent, durable fabric, paper products, and oils, it was marijuana that helped usher it back into the spotlight. Marijuana has now been legalized in 29 states and Washington, D.C., at least for medical use with a handful also allowing recreational. This is in defiance of federal regulations prohibiting the sale or use of marijuana. California was the first to allow medical use with the Compassionate Use Act of 1996. It wasn’t until 2014, however, that the Agricultural Act, Sec. 7606 allowed agricultural departments and higher learning institutions to start cultivating hemp for research. Senate Majority Leader Mitch McConnell (R-KY) recently spoke in favor of a bill that would give power over hemp regulation to the states.

Because hemp has more CBD and less THC than other strains of cannabis, it is ideal for producing CBD oil. This is also convenient since the Agricultural Act has made it possible to more easily produce this beneficial oil, used commonly for inflammation and anxiety, without the buzz of marijuana. CBD oil laws currently vary from state to state, despite the lack of side effects that make skeptics wary of marijuana.

At the founding of our country, we recognized cannabis as a valuable crop. In the early 1600s, Jamestown settlers grew and exported hemp plants in support of England. George Washington is said to have grown hemp. Hemp rope and fabric was a major part of the economy in the 1700s-1800s. Cannabis even appeared on $10 bills. Then the narrative shifted, with states labeling it as poison in the early 1900s, and the hysteria only mounting from there. Tensions culminated with marijuana officially becoming illegal nationwide with the creation of the Controlled Substances Act. in 1970. Until recently, this effectively killed not only forms of cannabis that caused a high sensation, but also the production of hemp and all of the beneficial products that come with it.

Our Los Angeles cannabis business lawyers know the resistance to marijuana legalization is antiquated and unfounded. It is even more perplexing, though, that products made with hemp were ever outlawed simply because hemp is a member of the cannabis family. The time we have lost being able to use hemp as an easy-to-farm renewable resource is an absolute tragedy. Likewise, CBD oil has proven to be an invaluable addition to the lives of Americans. We are glad to see more barriers coming down in regards to cannabis products and excited to see more get into the hemp and CBD oil market. If you are looking to diversify your products, our cannabis business attorneys can advise you on the best path for your company as well as help you remain in compliance with state and local laws.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

McConnell Backs Bill to Ease Up on Hemp Cultivation, March 26, 2018, Burgess Everett, Politico

More Blog Entries:

Industry Guidelines for Hemp Regulation, Labeling and Manufacturing Released, April 13, 2015, Cannabis Law Group

in common with the natural drug as a circle to a square. Lawmakers have long been chasing down these dangerous substances, to no avail. But the Illinois State Senate is taking steps to close loopholes that manufacturers have been manipulating once and for all, according to Chicago Tribune.

SB-2341 would expand the list of Schedule I controlled substances to include all synthetic cannabinoids not approved by the U.S. Food and Drug Administration. This is a departure from current methods to control the substance, which has largely involved outlawing by formula. As our cannabis business attorneys can attest, this has so far been a fruitless system of control because each time a formula or chemical is outlawed, manufacturers alter it enough that it qualifies as a new substance. Just like that, a new synthetic cannabinoid is back on the market, but not necessarily any safer. The new law, if passed, would put the onus of proof on the manufacturer that a synthetic cannabinoid is safe rather than government officials proving the substances to be dangerous after they have already hit the market. This change is long overdue. Just recently in Illinois alone, a formula mixed with rat poison has made the rounds leading to four deaths and more than 150 hospitalizations from coughing up blood or having blood in urine or in the nose. This doesn’t account for all the harm the synthetics have done over the past decade under all the other formulas, even without rat poison. Documented effects in the past have included brain bleeding, heart attacks, seizures, and strokes. Synthetic cannabinoids have also seen some popularity with military and allegedly sent several dozen soldier and Marines to the hospital earlier this year.

While key chemicals have been outlawed over the years, the manmade concoctions always try to replicate the high of cannabis by triggering the same receptors that are affected by THC, with far more hazardous results. Also on the banned list are synthetic cathinone (which you may know by its street name “bath salts”) and piperazine (which mimics the effects of ecstasy).

Our cannabis business attorneys in Los Angeles applaud all efforts to put a stop to so-called synthetic marijuana. Not only is it proven to be unsafe, but it also is giving a bad name to natural cannabis products and the upstanding business owners we represent. Manufacturers, often located in China, saw a demand for marijuana in the United States that could not be filled by the real deal due to the Controlled Substances Act, 21 U.S.C. Section 812. So they created compounds that could mimic the sensations and have been chasing the market ever since. The promise to deliver the same feeling was very appealing to people who appreciated marijuana but were concerned about breaking the law. Such a shame that our country’s unfounded fear of cannabis has sent law-abiding citizens right into the arms of a truly dangerous drug. It’s time to once and for all ban these unstable, manmade knockoffs and declassify good old fashion marijuana in all its natural glory.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

The Spice of Death: The Science behind Tainted “Synthetic Marijuana”, April , 17, 2018, By Devin Powell, Scientific American

More Blog Entries:

Feds Consider Marijuana to be Criminal, While Legal Knockoffs Hospitalize Users, April 12, 2018, Cannabis Law Group

In the early days of legalization, before marijuana reached the popularity it is enjoying today, the Internet was the best place for cannabis advocates, business owners, and medical practitioners to learn and to share information. YouTube has always played a big part in that. The highly visual platform was an ideal way to show growing methods and techniques to people on the other side of the country. Today, a bounty of resources exists, but these ground floor YouTube channels still have a wealth of experience to offer.Some say the decision could be related to ad revenue. Given that advertisements randomly appear before videos, advertisers sometimes protest when their ads appear in conjunction with content that does not align with their brand, as happened with some of the more alarming gun videos. However, given that medical cannabis and/or recreational marijuana are legal in 29 states and the District of Columbia (with several states on deck to legalize this year), it is clear the country is trending in a pro-cannabis direction. Therefore, it would be surprising that suddenly a rash of advertisers objected to the content after years of existence. YouTube also has the ability to demonetize a channel, meaning the channel can no longer reap the benefits of advertising. In fact, some of the channels that were shut down reported not being monetized in the first place, making their removal even more confounding. Further, most of the channels were educational in content. YouTube alleges such content is allowed so long as it does not promote or link to content that promotes the sale of illegal drugs (including cannabis, which still resides on the list of controlled substances as a Schedule I narcotic, according to Controlled Substances Act, 21 U.S.C. Section 812). Meanwhile, some banned channel operators have complained, channels that feature people smoking marijuana, dabbing, and other methods of getting high on-air, have largely remained untouched, giving little credence to claims that YouTube is concerned about promoting illegal activity.

Given the desperate attempts by some to stop the burgeoning cannabis industry, this sudden attack on cannabis advocacy videos with little-to-no explanation or communication seems highly suspicious. It is not uncommon for those in power to try to stop progress. That’s why our knowledgeable Los Angeles cannabis business attorneys are using our years of experience to fight alongside the marijuana industry and the residents of California who depend on it. We know the law and will use it to fight for your rights and push back on those who are trying to drag us back into the anti-marijuana dark ages.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

The Boring Narcs at YouTube are Banning Marijuana-Related Channels, May 4, 2018, By Mona Zhang, The Outline

More Blog Entries:

Google, Facebook Won’t Friend Cannabis Business Ads, April 14, 2018, Cannabis Law Group

advertisers that allow them to focus their audience in a way that would be extraordinarily beneficial for marijuana products and dispensaries. They would be able to narrow down the viewers to only include people in states where cannabis is legal. They would also be able to add age restrictions, ensuring as much as possible that minors would not be exposed to the ads. It’s really a win-win, except for one very annoying catch.

Marijuana businesses are prohibited from advertising on Google or Facebook.

A recent report from Washington Post examined the challenges marijuana businesses face advertising to their customers while pot remains illegal under federal Controlled Substances Act, 21 U.S.C. Section 812. The act outlines guidelines by which to classify certain drugs based on how dangerous a risk they pose, whether they have any medical benefits, and if they are addictive. Currently, marijuana is Schedule I, the most restricted classification on the list, despite no evidence it fits any of those qualifiers. That very same act (under Section 843) states “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 I controlled substance.”

So how are there so many marijuana ads out there?

As our experienced Los Angeles cannabis business attorneys can explain, U.S. Code Title 21, Chapter 13, Section 863 (f1), does offer some wiggle room to advertisers. While the rest of this section describes in detail the illegality of drug paraphernalia and specifically cites that national and local advertising concerning drug use constitutes paraphernalia, it also says there is an exemption for those who “are authorized by local, State, or Federal law to manufacture, possess, or distribute such items.” This has given some leeway for advertising platforms whose reach is limited to within a state where marijuana use is legal. However, national media is still nervous about getting slapped by federal authorities.

Sometimes, according to the Post article, these outlets can be overly cautious, with some users reporting Facebook will even limit activity that does not explicitly talk about marijuana, such as an event where lobbyists were set to speak to politicians about legalization. This type of community building is the foundation of Facebook, and currently cannabis advocates are extremely limited in how they can take advantage of this resource.

Our trusted lawyers understand how important advertising is to a budding business venture. That’s why we include marketing strategy as part of our business consulting services. Our contacts within the marijuana business community have helped us to maximize operations and positively impact rate of return for clients. Our services include assisting with marketing ideas and advising on web design and strategy. In combination with our team’s public relations experience, training and education programs, compliance oversight, licensing assistance, and business plan building, an effective marketing plan can be the ticket to helping your cannabis business stand out among the many others in Los Angeles.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

The Legally Hazy World of Cannabis Marketing, March 23, 2017, By Erin Nelson, Contently

More Blog Entries:

Legal Concerns in California Cannabis Advertising, Sept. 21, 2017, Cannabis Law Group

working with medical marijuana operations obtain compliance with the law. More recently, we’ve been on the forefront of helping recreational marijuana businesses align their operations with the regulatory parameters set forth in Proposition 64 Jan. 1, as well as those guidelines established by local governments.

However, the level of success a business owner can achieve requires help from all levels, including government officials setting regulations and tax rates. Many owners face a broad range of challenges when transitioning from medical to recreational sales or opening a business for the first time under the new adult-use standards.

Rob Bonta (D-Oakland) and Tom Lackey (R-Palmdale) want to ease some of those pains. They have introduced Assemblybill 3157, which would reduce the state marijuana excise tax to 11 percent for three years. The tax currently sits at 15 percent. The bill states: “The cumulative tax rate imposed by existing law is substantial and undermines the legal regulatory system if high taxes cause prices to far exceed that what is found on the black market.”

According to Leafly, Lackey said he hopes this bill will give relief to legal cannabis businesses, who currently have a lot of competition from black market sellers. Legislators also hope this will help make it easier for businesses to transition into legal sales and get on their feet.

The bill also suspends the cannabis cultivation tax, easing added expenses that occur along the marijuana production chain.

A breakdown of current cannabis taxes shows they create an unusually high burden (one of the highest in the country). When all of the state taxes are added up, it comes to about 25 percent. And this doesn’t include extra taxes imposed by local governments, though some cities are also considering their own tax decreases to do their part in supporting business owners.

Our skilled Los Angeles cannabis business lawyers know the bill, if passed, would be a victory for business owners and consumers alike. The burden of these taxes is often passed along the customers in the price of the final product. Experts say these few small changes will potentially drop consumer prices by 9 percent, making it closer in price to black market sources. This increases the incentive for customers to choose a legal retailer, which in turn helps out local legal business owners. And more sales also means more taxes going into city and state coffers to make up for the decreased tax rates. Lackey told Leafly that Washington actually saw a significant bump in tax revenue after simplifying the tax structure. It’s a cycle of success, but it must begin with government action.

Our experienced attorneys know there are always growing pains when new major legislation is released to the public. We stand beside marijuana business entrepreneurs as they get their start and help them understand the best course of action to move forward while following the law. We are keenly positioned to help navigate these challenges and keep our clients in compliance. We are thrilled to see legislators joining us in standing up for these hard-working Californians and hope to see more action designed to assist already legal owners and create incentives for more companies to join a thriving and robust marketplace.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients, defendants, workers and those facing criminal marijuana charges. Call us at 949-375-4734.

Additional Resources:

California Bill Would Temporarily Cut State Cannabis Taxes, March 15, 2018, Leafly

More Blog Entries:

Warning Letters Sent to Unlicensed Cannabis Businesses in California, Feb. 18, 2018, Cannabis Law Group