Congratulations to Steve Levine for being named as a Top Lawyer in Marijuana Law by 5280 Magazine for the fourth year in a row. Since 2010, Steve’s major focus has been on the ever-changing cannabis industry where he keeps abreast of the shifting regulations governing the sale and use of cannabis in both the marijuana and industrial hemp sectors. He leads the firm’s cannabis practice in both Colorado and California. Read more about this recognition in our news release.
Cannabis is a hot topic in the news. On October 17, 2018, our friends to the north made headlines when cannabis was officially legalized for adult use. As the November 6 midterm elections draw closer in the United States, we’ve compiled a round-up of ballot initiatives across the country that will ask voters to weigh in on a variety of marijuana and industrial hemp initiatives.
Tilray became the first US IPO on Nasdaq on July 19th by a marijuana company. The company priced 9 million shares at $17 apiece and by the end of the day, closing at $22.39, a jump of slightly more than 32 percent on day one. As the date of posting this blog and the second day of trading, the price has hit a high of over $31, another jump of approximately 38 percent.
What does this mean?
Clearly the national securities exchanges (i.e. NYSE and Nasdaq) in the United States are getting increasingly comfortable with the listing of plant-touching businesses operating in Canada. What they are not comfortable with, are plant-touching businesses operating in the United States. As a result, plant-touching businesses operating in the United States – except for Colorado – are only able to list on either a Canadian exchange (i.e. the CSE) or on the over-the-counter-bulletin (i.e. OTCQB or OTCQX).
Tilray’s total revenue in 2017 was only $20.5 million but its resulting valuation on the public market is a multi-billion dollar valuation. Thus this company has taken advantage of the United States robust public markets that NO plant-touching operating business in the United States can even list with because of the fact that marijuana is still illegal at the federal level.
I wonder what the valuation of these Canadian companies would look like if our much stronger United States’ companies were afforded the same opportunities and there was a change in federal law in the United States? There are companies in Colorado that have operated for almost 10 years and have annual revenues in excess of $100 million…I have a feeling there would be a substantial market adjustment for many of these public companies.
On May 31, Husch Blackwell Cannabis team members Steve Levine and Marshall Custer will present on Marijuana and Industrial Hemp Industries: The Impact on Colorado’s Economy at the Denver Metro Chamber of Commerce. They will provide industry and legal insight related to the burgeoning marijuana and industrial hemp industries in Colorado. The program will also explore how not only operators are capitalizing on opportunities but also how ancillary businesses are also thriving. The program will be held from 7 to 9 a.m. at the Chamber.
Attorney General Sessions rescinded, effective January 4, 2018, previous enforcement priorities of the DOJ related to marijuana – including the Cole Memo. The Sessions Memo dictates that federal prosecutors should follow the “Principles of Federal Prosecution” originally set forth in 1980 and subsequently refined over time in chapter 9-27.000 of the U.S. Attorney’s Manual. Sessions goes on to state in his memo that “These principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” It is important to note that Sessions has not previously set any specific enforcement priorities with respect to marijuana, nor has this memo created any new enforcement priorities of the DOJ. Rather Sessions has removed the foundational guidance that states have relied on to regulate the production and distribution of marijuana pursuant to state law and the will of each states’ citizens. The Cole Memo actually set 8 enforcement priorities for the DOJ with respect to marijuana, which Sessions has now unilaterally rescinded.
Husch Blackwell is pleased to announce the opening of a new law office in Sacramento, California, on January 2, 2018.
The office, located about two blocks from the state Capitol. The new location will allow us to better serve the emerging cannabis industry in California and be a base to serve other firm clients with California needs.
Join Us at the Cannabis Caucus Husch Blackwell is a lead sponsor of the Northern California Quarterly Cannabis Caucuses. The four caucuses in 2018 will bring together industry professionals, policymakers, regulators and movement leaders to network and discuss the advance of the cannabis industry nationally.
The first-quarter caucus will be held January 9 from 6:30 – 9 p.m. at Dashe Cellars in Oakland. The caucus is free for NCIA members and $50 for non-members. If you would like to attend the caucus and are not a NCIA member, use our promo code HUSCH75 at registration to receive a 75 percent discount.
As you probably heard, Denver Police, along with several agencies including the Aurora Police Department, the Marijuana Enforcement Division and Denver Department of Excise and Licenses, closed 8 Denver-area marijuana centers and stores on December 14, 2017. The Department of Excise and Licenses suspended 26 licenses including retail stores, medical centers, cultivations and manufacturing (all under related ownership). 13 people were also arrested on criminal allegations related to the sale of marijuana in excess of allowable amounts.
PLEASE be aware that enforcement actions are occurring. This was a concerted effort among multiple agencies over a year-long investigation period.
Poor training and lack of supervision of staff can result in the immediate closing of facilities, suspension of licenses, and criminal charges. Now is a great time to review your internal policies and procedures and ensure each staff member is aware of and adhering to company policy and following all laws and regulations.
The deadline for compliance with new edible restrictions and labeling requirements is fast-approaching. Infused product manufacturers (medical and retail) may no longer produce, transfer, or donate any edible marijuana products in the shape of a human, animal, or fruit or shapes that bear the likeness or contain characteristics of a realistic or fictional human, animal, or fruit, including artistic, caricature, or cartoon renderings. Also beginning on October 1, 2017, no medical marijuana center or retail marijuana store may sell any non-compliant edible product. Any marijuana business with non-compliant edible products must follow waste disposal rules.
Also beginning on October 1, 2017, each container holding medical and retail marijuana product must be labeled with the potency of THC and CBD. The potency must be expressed in milligrams and either be:
- in a font size that is not less than 10 point font and at least two font sizes larger than the surrounding label text, and must be bold, and enclosed within an outlined shape such as a circle or square; or
- highlighted with a bright color such as yellow.
These new potency labeling regulations apply to medical and retail establishments. Operators have been aware of these rules for some time and should be in compliance ahead of the October 1 deadline. We suggest operators use the next few weeks to double check inventory for old stock of non-compliant product.
On June 27, 2017, a three-judge panel for the 10th U.S. Circuit Court of Appeals vacated a district court ruling that nixed Denver-based Fourth Corner Credit Union’s bid to receive a master account with the Federal Reserve Bank of Kansas City. Fourth Corner has been waiting since the end of 2015 for such ruling. The ruling effectively allows for the credit union to continue with its lawsuit against the Federal Reserve in an attempt to obtain its master account so it can function as a state-legal credit union in Colorado.
What does this mean?
The opinion relied on the fact that the case is not about Fourth Corner violating federal drug laws. U.S. Circuit Judge Robert E. Bacharach wrote: “The district court dismissed the amended complaint, reasoning that Fourth Corner would use the master account to violate federal drug laws. This ruling was erroneous,” Essentially, the district court relied on suspicions about what Fourth Corner might do and such standard is not sufficient to approve a motion to dismiss.
Fourth Corner still has a long road to haul until it can reach a resolution, but this ruling is a positive step towards normalization of state-legal marijuana in Colorado.