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

Yesterday, Sean Spicer attempted to call out a difference between medical and recreational marijuana at the federal level.  He clearly does not understand that ALL marijuana is federally illegal.  Further, he made a poor and factually incorrect analogy by comparing the current opioid abuse crisis to marijuana use.  Spicer ended his comments on recreational marijuana by stating that the DOJ will step up enforcement actions.

What does this mean?

As we all know, Trump is a wild card, and Spicer’s comments do little to clarify the administration’s position.  Previous statements on the issue indicate some degree of support for the cannabis industry, or at a minimum, support for states to determine their own regulations.  “In terms of marijuana and legalization, I think that should be a state issue, state-by-state,” Trump told The Washington Post. “… Marijuana is such a big thing. I think medical should happen — right? Don’t we agree? I think so. And then I really believe we should leave it up to the states.”

Further, the recent FY2016 omnibus appropriations bill contains the Rohrabacher-Farr Amendment which prohibits the Department of Justice from interfering with state medical cannabis laws was also widely supported by a GOP controlled Congress (passed in the House by a vote of 242-186, and the Senate Appropriations Committee approved it 21-9).  A recent Gallup Poll found nationwide support for legalization at 60%, the highest it likely has ever been.  Florida also passed its medical-cannabis initiative with 71% approval – Florida also voted for President Trump.  It is clear from Trump’s statements and Spicer’s comments that medical marijuana should remain a non-enforcement priority.

So based on Spicer’s comments regarding recreational marijuana – does Attorney General Sessions unwind years of hands-off federal policy towards state-legal recreational marijuana?  We’ll just have to wait and see.  I am hopeful that Spicer’s comments are just that, off-the-cuff comments with little substance or thought.  However, the recreational marijuana industry is now on notice.  I think we are in for a bumpy 2017.

 

On February 17, 2017 four Congressmen announced a bipartisan “Congressional Cannabis Caucus”. Republican representatives Don Young (AK) and Dana Rohrbacher (CA) joined democrats Earl Blumeanauer (OR) and Jared Polis (CO) as co-chairs of the new caucus.  In a press conference, they each outlined the importance of the caucus to their individual states and to the country.  Representative Rohrbacher started by outlining the changes to the country’s outlook on marijuana, as 44 states now have laws permitting marijuana at varying levels.  He noted the economic benefits and the importance of continuing to make progress on this issue.  Representative Blumeanauer outlined four critical areas that need to be addressed 1. Not allowing the Federal government to prevent marijuana research; 2. Gaining access to marijuana for veterans, (VA hospitals are not allowed to prescribe medical marijuana); 3. Removing IRS code 280E which prohibits marijuana businesses from deducting business expenses on their federal tax returns; and 4. Ending the banking prohibition.

Representative Don Young of Alaska further explained the impact of the banking prohibition. (Marijuana businesses have difficulty getting bank accounts, potentially making it an all cash business.) When there is a great amount of surplus cash, Rep. Young has seen it “cause lots of sideline problems”. He wants to ensure these businesses are able to be run as businesses.  Marijuana businesses should be able to utilize banks for loans and depositing cash.  However, Representative Young’s primary interest in this caucus comes from his belief in state’s rights.  During Q&A Mr. Young pointed out the hypocrisy of a conservative stance against legalization, “you can’t be a conservative and say we can pick and choose, you have to be for state’s rights or against state’s rights…”  Alaska voters “voted to legalize it…pretty large margin” and Mr. Young is a representative of those people. Continue Reading Marijuana Legalization – The Bipartisan Congressional Cannabis Caucus