Monopolies run contrary to basic free-market capitalism, and both federal and state laws exist to break them up.

In the California cannabis industry, the fear is that monopolies or near-monopolies will lead to reduced product quality, fewer mom-and-pop small businesses and more revenue funneled to large outside entities.

In some regions, just getting in the game in the first place without money or clout proves an efficient enough barrier. This is suspected by some in the city of Oceanside, an hour south of Los Angeles.

Marijuana Monopoly in the Making?

The San Diego Go Reader reported on a recent lawsuit filed after members of a prominent, local land-owning family managed to snag four of five available marijuana farming licenses in the city.

The family has lived in the community for generations, since the 1920s farming huge swaths of the area. Today, the family owns 375 acres of land in San Diego County. Their farms’ biggest seller historically has been flowers, sold globally. Cannabis may change that.

The crux of this lawsuit against the city is an allegation of unfair competition, and it references a “virtual monopoly.”

When Oceanside’s local marijuana market first opened up, a total of 16 companies filed for a license to cultivate. Those plans were graded on a point system that weighed numerous factors such as financial solvency and security plans. (Worth noting: Because applications are so carefully considered in the California cannabis business licensing process, budding entrepreneurs would be wise to have an attorney file and submit on their behalf.)

In this case, plaintiffs allege that despite at least one other contender scoring higher on the tests than the family-owned firm, the latter secured a license – plus the benefit of three others using their land to operate their cultivation operations – while the higher-scoring company was denied. What’s more, one of the successful applicants is technically state-barred from operating a marijuana company in California. That person is one of the three setting up shop on the influential family’s land – presumably for a fee to the landowner.

Plaintiff alleges the city was not transparent in its criteria for the third phase of scoring, and that requests for certain public records pertaining to these scores were unlawfully denied. The complaint also noted that original city rules restricted marijuana cultivation to one business per parcel, but then suspiciously pivoted on this point a few months later – ultimately benefiting four of the five businesses awarded licenses and gearing up for operation on this one family’s farm. In submitted business plan proposals, the four greenhouses designed for that land appear to be identical.

It didn’t escape the newspaper’s notice that several members of the family were heavy contributors to the campaigns of currently-seated city council members.

Fighting Back Against Monopolies

Anti-trust laws and other checks on unfair competition are never about denying successful companies their success. The reality is, sometimes competitors are going to be at a fair disadvantage if their product or service is sub-par.

What makes a monopoly illegal is when they are secured and/or maintained through acts deemed by law to be either illegal or unfair. Some examples of unfair practices include:

Price discrimination (selling the same or substantially similar goods at different prices to different buyers);

Exclusive deals (mandating a seller/buyer do all/most of their business with a single supplier);

Tying contract (selling services or products on the condition buyers agree to purchase other products or services).

If you are concerned about a monopoly in your local marijuana market or feel you may have been affected by unfair competition, Los Angeles cannabis business attorneys 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:

Oceanside awards for pot-growing questioned, July 9, 2019, By Ken Leighton, The San Diego Recorder

According to VOANews.com, a number of colleges have launched four-year degrees in in marijuana-related studies, such as medical plant chemistry, marijuana policy and law. Courses focus on the technical, horticultural, legal, social and political impacts of the plant in all areas of society.

As a law firm that has been focused on representing California marijuana businesses for nearly the last two decades, it’s been encouraging to see these areas of study morph from something of a joke to a field of studies that even Ivy League schools are taking very seriously, fully intent on preparing students for a blossoming career field.

Northern Michigan University kicked off its four-year degree in medical plant chemistry two years ago after one of the school’s chemists attended a conference wherein cannabis industry representatives spoke of the growing need for more analytical chemists in the field. Individuals in these positions earn upwards of $70,000 a year – just to start. Two years in, the school has 300 students from nearly all 50 states enrolled in its program. A similar career path is offered at a state school in North Dakota.

Meanwhile, students attending college in upstate New York in Morrisville can minor in marijuana studies through the school’s horticulture department.

Although some students report getting sly grins or wisecracks from peers and even parents, the reality is many area earning four-year degrees in tough subjects like organic chemistry – areas o study that will prepare them to make a good living in a fast-growing field.

Some of these deal help to prepare students to enter the legal recreational cannabis market in states like California, while others are more geared toward a medicinal marijuana track and still others are designed to ready students for trade in the hemp industry. Students are learning to cultivate, research, analyze, process and market marijuana – a move that in the end is going to create a more refined crop of cannabis entrepreneurs – from pharmaceutical researchers to quality assurance lab directors to marketing specialists and edible product developers.

It’s estimated by Arcview Market Research that the industry is poised to support nearly 470,000 cannabis professionals by 2022.

Los Angeles marijuana lawyers see something of a wild card in the in states where the drug still remains illegal, or still illegal at least for recreational purposes. In the case of many states in the latter category (namely Connecticut, New Jersey and New York), schools are still offering these types of courses in anticipation that legalization is going to happen. It’s not a matter of if, but when.

Agricultural schools are launching horticulture programs, business schools are launching dispensary management curriculum, nutritional and medical fields too are increasingly widening to allow room for this new field. Every state that opens its doors to marijuana widens the field of opportunity for new professionals. Our cannabis attorneys expect this is a field that will continue to expand for years to come.

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

Additional Resources:

Higher Education: Colleges Add Cannabis to Curriculum, March 4, 2019, Associated Press

More Blog Entries:

Cannabis Industry Safety & Health A Growing Priority, Feb. 26, 2019, Los Angeles Marijuana Business Lawyer Blog

The concern is that such action is poised to have a chilling effect not only on U.S.-Canadian relations, but also on the Canadian cannabis industry. Los Angeles marijuana business attorneys know that the CBP officers are empowered with very broad discretion not only to question those who wish to travel into the U.S. on a wide range of subjects. What’s less clear is what authority these officers or the agency in general has to issue lifetime bans into the country, particularly from our northern neighbors.

The Toronto Star reports the legal team behind the suit includes a former U.S. attorney now in private practice. The lawyer’s team alleges the U.S government has unlawfully withheld documents requested by his firm in accordance with the Freedom of Information ACT (FOIA) specifically pertaining to the practice of Canadian cannabis worker border bans.

Lawsuit: Canadian Cannabis Workers Entitled to U.S. Legal Basis for Bud Worker Bans

The federal lawsuit asserts time has run out for the CBP to respond to the FOAI request or file for a reasonable extension on the request. The cannabis worker attorney minces no words about his aims: To force the release of documentation that will force the government to give its legal argument for why the agency is legally allowed to ban cannabis workers. The law firm also seeks to recover costs and attorney’s fees related to the lawsuit it was required to file to obtain these answers.

Beyond even that, the attorney told The Star it wants to get to the heart of whether such actions are even lawful in accordance with U.S. statutes. The attorney, who has represented cannabis businesspersons in Washington and Canada, pointed out that if a central U.S. agency – say, the U.S. Department of Homeland Security – was providing directive to CBP officers to initiate these bans on Canadian citizens, the agency may not need any other legal grounds. It will depend on the answers the agency provides. Nonetheless, the law firm asserts the CBP should have responded to the FOIA by now.

The CBP in an email response to The Star said it does not, as a matter of policy, comment on pending litigation.

Even before marijuana became legal for recreational purposes in Canada last fall, most of our northern neighbors in the cannabis industry were aware that even being thinly connected could result in a formal “inadmissibility” stamp from the U.S. government. Those who were honest about their connections to the cannabis trade were told they were no longer allowed to enter due to the fact they were engaged in “aiding and abetting a criminal enterprise” and “drug trafficking.”

Our Los Angeles marijuana business attorneys know that where once there was a trickle of Canadians who were requiring assistance with inadmissibility in the past, suddenly it’s become more of a steady flow.

Canadian Marijuana Company Worker U.S. Bans an Opaque Process

Although more than two dozen states in the U.S (California included) have legalized medicinal and/or recreational cannabis, the drug is still illegal per the federal government. The problem for Canadians is that the U.S.-Canada border is run by the federal government. Not only is admission of involvement in a cannabis business in Canada known to be sufficient enough to warrant a federal ban on a traveler from entering the country – even an admission of mere use of the drug can do the same. Essentially, the U.S. government is incentivizing dishonesty from international travelers from Canada.

Starting in October, the CBP’s public regulations on Canadians with connections to the legal cannabis market in Canada were updated such that this technically is no longer supposed to result in inadmissibility. However, there is still the possibility that Canadian investors or businesspeople who have some type of link to the American cannabis industry could still be barred if those connections become known by CBP officials. The Washington state attorney, however, says the way these prohibitions are issued are a total mystery. None of the bans indicate on what authority the decision is based on and there is no obvious justification in federal law that would clearly indicate the ban is legit.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734. Additional Resources: Lawsuit seeks answers for Canadian cannabis workers banned at U.S. border, March 2019, The Star More Blog Entries: Pot Policy 101: L.A. Marijuana Lawyers Urge Polishing Up on Your California Prop 64 Proficiency, Jan. 19, 2019, Los Angeles Marijuana Lawyer Blog

Montana explained his reasons as somewhat philanthropic, saying he supports the industry as a whole because he believes in the power of the plant to offer pain relief with the potential to blunt the raging opioid crisis. (A number of retired football players have said they prefer pot for pain management.) And yet, he himself won’t cop to being a cannabis user, something that still apparently speaks to the stigma that followed the drug for so long. There is also a possibility that he, like many marijuana investors, is reticent to speak too much no the topic given the fact the drug is still illegal at the federal level.

Los Angeles marijuana investment attorneys know that first of all, the profile of cannabis company investors differs from that of the norm. Part of this is because many of the cannabis start-ups are simply too small to go for the big fish. What they can do is seek buy-in from single, high net-worth individuals. Another reason these arrangements are atypical is because investors need to know there are some elements that are a bit in the legal gray zone. Huge firms aren’t likely to buy-in for such a risk with relatively low returns (compared to their average). Most of this stems from the fact cannabis remains categorized as a Schedule I narcotic.

Even with the exit of U.S. Attorney General Jeff Sessions (who promised to roll back the Obama-era protections from federal prosecution), banks are still reticent to do business with or accept deposits from cannabis firms. (Though it is true that marijuana stocks soared after Jeff Sessions resigned).

In 2017, analysis by Arcview reviewed investment companies poured some $500 million into private cannabis companies.

A marijuana investment lawyer in California work for investors to help ensure the decision they’re making is legally sound. It’s true that someone like any other investment company, such as examining enough deals to make sure you’ve properly vetted the one on which you settle and that it truly seems like a promising deal But beyond that, there are legal issues specific to the industry and special regulations just in California about which investors need to be aware. For example, California marijuana is currently taxed at high rates and has a lot of competition from illegal black market sales. (Investors should be closely watching the recent proposal of AB 286 which proposed rolling back some of the tax burden for marijuana businesses).

Another potential issue is that by signing documents that are filed with state regulators, investors might be put at odds with federal law. Unless a product is going through the U.S. Food and Drug Administration, other businesses that profit from marijuana – even if they don’t have any part of growing or selling it – technically violate federal law.

That doesn’t mean investors should shy away from opportunities. There are plenty. To cover your bases, talk with a marijuana investment attorney.

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

Additional Resources:

Weed Stocks Surged After Jeff Sessions Resigned as Attorney General, Jan. 27, 2019, By Sarah Rense, Esquire

More Blog Entries:

CBD-Only Shops Cropping Up in California, Even in Cities Where Cannabis is Banned, Jan. 21, 2019, Los Angeles Marijuana Attorney Blog