Over the last few weeks, we have tried to glean what the direction of state and federal policy on marijuana may be. On May 5, Trump used a signing statement to signal his disagreement with provision 537, which prohibits federal funds from being used to prevent states from implementing their own laws that authorize the use, distribution, possession or cultivation of medical marijuana. This provision lists 44 states that have some form of medical marijuana legalization at the state level. (Indiana and North Dakota were not on the list but have enacted medical marijuana programs).

As these statements spur discussions, it seems people are relatively unaware of the current landscape of state marijuana policies. Numbers can fluctuate depending on how you classify marijuana and legalization, (some states only allow cannabidiol or CBD oil, others have laws allowing medical marijuana but it is inaccessible because the states lack infrastructure for the purchase, sale, and manufacturing). The below summary is done as a waterfall, so once it is in one category it will not appear in a subsequent category. (For instance, a state that allows recreational marijuana also allows medical or a state allowing medical marijuana may also decriminalize the possession of recreational marijuana). Below is a summary of state policies as of May 12, 2017.

Federal Policy

Cannabis is illegal at the Federal level. Under the Controlled Substances Act, Marihuana is classified as a level 1 drug, the same schedule as heroin. The DEA confirmed as recently as December, the level 1 classification covers all cannabiniods from marihuana and cannabis. This is vastly inconsistent with the majority of Americans’ views and state law definitions of marijuana. In fact, there is not a single state that penalizes an individual in the same manor for marijuana and heroin possession.

Some key points on the analysis – the analysis covers all 50 states and the District of Columbia. The population numbers used are from the U.S. Census bureau estimates on July 1, 2016, where the total U.S. population was 323,127,513.

Recreational

There are currently eight states and the District of Columbia that have passed legislation for legal adult-use (recreational/retail) marijuana. The states that currently offer licenses and have established legal frameworks are Alaska, Colorado, Oregon, and Washington. In November 2017, four more states approved adult-use marijuana and are developing a legal framework for licensing – California, Maine, Massachusetts, and Nevada. The District of Columbia allows you to possess and home grow marijuana but has not developed any legal structure for purchase, sale or manufacturing. That is 68.7 million people, or 21% of Americans live in a state (or district) that allows recreational marijuana. Continue Reading The States of Marijuana

Today, May 19, Steve Levine presented at the 5th Annual Recreational CLE Conference. The CLE program covers Weed & the Government: Post Election Outlook. Steve’s presentation specifically covered Mergers and Public Offerings. This event is being held at the Embassy Suites in downtown Denver and brings industry professionals up-to-speed on issues including real estate, employment, intellectual property, mergers and public offerings and ethics. For more details, please read here.

Vermont may become the 9th state to allow recreational marijuana and the 1st state to do so via legislation. Last Wednesday, the Vermont house approved a bill 79-66 which would create a regulatory structure for the cultivation, processing, sale and use of recreational marijuana by July, 2018. The Vermont Senate previously passed the bill with a 20-9 vote. The bill will now be sent to the Governor for a veto, signature, or no decision, only a veto would prevent it from becoming law. The other 8 states that allow recreational marijuana have done so through voter referendums.

July 2018 is not a random date, the bill references two neighboring states, Maine and Massachusetts, which will allow retail stores to sell marijuana in July 2018. Another border neighbor-Canada is looking at Summer 2018 for when licensed retail stores will begin selling marijuana as well.

We will update this blog either when the Governor acts on this bill or Ben & Jerry’s commemorates the passage with a new ice cream flavor. We are anxiously awaiting both.

Last week, the DOJ sent a letter to trustees who handle consumer bankruptcy reminding them that marijuana is a federally illegal drug and warned them not to handle any money from the sale of marijuana-related property.  The letter goes on to state “Our goal is to ensure that trustees are not placed in the untenable position of violating federal law by liquidating, receiving proceeds from, or in any way administering marijuana assets.”

What does this mean?

Colorado courts have already dismissed numerous cases where the company was engaged in state-legal marijuana cultivation and sales, so this is nothing new.  However, this letter might be illustrative of Attorney General Sessions’ previous statements that the DOJ will increase legal scrutiny on marijuana.

While it is clear that marijuana business likely do not have federal bankruptcy protection based on the current law, there are state laws regarding the receivership and assignment for the benefit of creditors that can be utilized to assist a failing marijuana company deal with its debts.

Young cannabis plants, marijuanaCheck out the Meet the Press interview with Governor Hickenlooper’s thoughts on the Trump administration’s stance on marijuana after his meeting with Attorney General Jeff Sessions.  His insight should be reassuring to the marijuana industry, but he explicitly stated that state-legal marijuana businesses that are not following the letter of state law should be prosecuted.

 

Young cannabis plants, marijuanaThe Colorado adult-use marijuana industry is off to a record-setting start in 2017, with sales increasing by more than 30% over figures from 2016.  This is on the heels of a record setting $1.3 Billion in sales last year and threats over a federal crackdown on adult-use marijuana.

What does this mean?

If the trends hold, 2017 will be the third-year in a row for Colorado seeing dramatic growth.  While there are numerous factors driving the increase, the linked article points to “hoarding” by regular users if their access is denied by the DOJ.  I would also point to wider acceptance from the community in general, less fear mongering of the dangerous of adult-use marijuana by the anti-legalization movement and more diverse product offerings from the industry.  Subject to federal intervention by the DOJ, I expect the adult-use marijuana industry to continue to grow and expand for several years to come.

Cannabis oil cartridgeToday, on 4/20, I was invited by the Academy of Hospitality Industry Attorneys (AHIA) to present on Colorado marijuana issues at the Spring 2017 meeting in Colorado Springs, CO.  This presentation will take a look at the current marijuana market in Colorado as well as discuss national marijuana trends. For more details, please read here.

Senator Ron Wyden and Congressman Earl Blumenauer introduced “The Path to Marijuana Reform” this week.  As provided for in the executive summary linked in the previous sentence:

The Path to Marijuana Reform includes three bills that pave the way for responsible federal regulation of the legal marijuana industry, including:

  • Small Business Tax Equity Act
    This legislation would repeal the tax penalty that singles out state-legal marijuana businesses and bars them from claiming deductions and tax credits.
  • Responsibly Addressing the Marijuana Policy Gap Act
    This legislation would reduce the gap between Federal and State law by removing federal criminal penalties and civil asset forfeiture for individuals and businesses acting in compliance with state law. It would also reduce barriers for state-legal marijuana businesses by ensuring access to banking, bankruptcy protection, marijuana research, and advertising. It would protect individual marijuana consumers in states that have legalized marijuana, by providing an expungement process for certain marijuana violations, ensuring access to public housing and federal financial aid for higher education, and ensuring that a person cannot be deported or denied entry to the U.S. solely for consuming marijuana in compliance with state law. Finally, it would remove unfair burdens by ensuring veterans have access to state-legal medical marijuana, and protecting Native American tribes from punishment under federal marijuana laws.
  • Marijuana Revenue and Regulation Act
    This legislation would responsibly deschedule, tax, and regulate marijuana. It would impose an excise tax on marijuana products similar to current federal excise taxes on alcohol and tobacco, escalating annually to a top rate equal to 25 percent of the sales price. Marijuana producers, importers, and wholesalers would be required to obtain a permit from the Department of Treasury, and the marijuana industry would be regulated in a manner similar to alcohol. Strict rules would prohibit sale or distribution of marijuana in states where it is illegal under state law.

What does this mean?

Of particular note is the Small Business Tax Equity Act.  This bill is notable because it is a potential fix to the massive problem of 280E but is also co-sponsored by Sen. Rand Paul (R-KY) and Rep. Carlos Curbelo (R-FL) is sponsoring companion legislation in the House.  Curbelo is a member of the House Ways and Means Committee, which oversee all tax-related legislation.  This is a great step forward for the cannabis industry in garnering bi-partisan support.

On Thursday, March 30, the Cannabis team at Husch Blackwell will host a cannabis seminar highlighting OSHA safety regulations. In January of 2017, the Colorado Department of Public Health and Environment released the “Guide to Worker Safety and Health in the Marijuana Industry.” This seminar will take a deeper look at this document and discuss OSHA safety regulations that affect your business. For more details, please read more here.

The House is not slowing down on the push for legalization of marijuana. There have been five bills introduced in the United States House of Representatives since the beginning of the 115th Congress (2017-2018). In addition, CO Representative, Jared Polis, has stated he will introduce his “Regulate Marijuana Like Alcohol Act” again this year. Four of the five bills were introduced by Republicans and one by Democrats, showing marijuana legalization is a bipartisan issue. All five bills are aimed at loosening federal restrictions on marijuana.

HR – 1227, titled “Ending Federal Marijuana Prohibition Act” was introduced on February 27, 2017 by Representative Thomas Garrett a Republican from Virginia. The text is the same as the Senate Bill introduced in 2015 (S. 2237) by Senator Bernie Sanders. The purpose is to remove “marihuana” and “tetrahydrocannabinols” from Schedule I of section 202(c) of the Controlled Substances Act (CSA). In 2017, Rep. Garrett’s bill is co-sponsored by six house members: Tulsi Gabbard (D-HI); Scott Taylor (R-VA); Jared Polis (D-CO); Earl Blumenauer (D-OR); Don Young (R-AK); Justin Amash (R-MI).

HR – 975, titled “Respect State Marijuana Laws Act of 2017” was introduced on February 7, 2017 by Representative Dana Rohrabacher a Republican from California. Rep. Rohrabacher introduced a “Respect State Marijuana Laws Act” in the 2013-2014 and 2015-2016.   The purpose is to amend the CSA for any provisions as related to marihuana.  The provisions shall not apply to any person who produces, possesses, distributes, dispenses, administers, or delivers marijuana in compliance with state law.  In 2017, Rep. Rohrabacher’s bill is co-sponsored by 14 house members:  Steve Cohen (D-TN); Don Young (R-AK); Mark Pocan (D-WI); Ted Yoho (R-FL); Earl Blumenauer (D-OR); Tom McClintock (R-CA); Dina Titus (D-NV); Duncan Hunter (R-CA); Jared Polis (D-CO); Justin Amash (R-MI); Barbara Lee (D-CA); Thomas Massie (R-KY); Mike Coffman (R-CO); Peter Welch (D-VT). Continue Reading Legislative Update: Multiple Bills Sitting on Capitol Hill