The ABA Free CLE Series - r....
Transcript of The ABA Free CLE Series - r....
![Page 1: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/1.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
The ABA Free CLE Series
Earn up to 18 free credits each year through the
monthly ABA Free CLE Series featuring leading
legal practitioners.
Exclusively available to ABA members
![Page 2: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/2.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
Watch the
presentation
Follow who’s presenting
Make the most of today’s webinar
Control your volume
Send questions to faculty
Download the program materials
![Page 3: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/3.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
To Receive CLE Credit for this Program
• You must attend the entire program; partial credit is
not available.
• Click on the evaluation link at the end of the program.
• Wait for the online request for credit form.
• Enter the email address you want you CLE
certificates sent to.
• Fill out the online request for credit form completely.
• Select a combination of MCLE jurisdictions you want
CLE credit in.
• Enter the participation verification code.
• After submission, your CLE certificates will be
emailed to you.
![Page 4: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/4.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
The ABA Free CLE Series
Earn up to 18 free credits each year through the
monthly ABA Free CLE Series featuring leading
legal practitioners.
Exclusively available to ABA members
![Page 5: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/5.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
Welcome The Wild World of Cannabis:
A Quick Trip Through the Civil Law Issues
of Medical and Legal Marijuana
Tsan Abrahamson, Partner, Cobalt LLP
John Minan, Professor of Law, University of San Diego
Scott Rhodes, Managing Attorney, Jennings Strouss
Hilary Bricken, Attorney, Harris Moure
Sean O’Connor, Assistant Dean for Law, Business & Technology Initiatives & Professor of Law,
University of Washington School of Law
Henry Wykowski, Partner, Wykowski and Associates
Julie A. Hill, Associate Professor, The University of Alabama School of Law
Dwight Merriam, Partner, Robinson+Cole
Katharine Liao, Associate, DLA Piper
![Page 6: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/6.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
Please submit your faculty questions
Send questions to faculty
Tsan Abrahamson, Partner, Cobalt LLP
John Minan, Professor of Law, University of San Diego
Scott Rhodes, Managing Attorney, Jennings Strouss
Hilary Bricken, Attorney, Harris Moure
Sean O’Connor, Professor, University of Washington
Henry Wykowski, Partner, Wykowski and Associates
Julie A. Hill, Associate Professor, The University of Alabama
Dwight Merriam, Partner, Robinson+Cole
Katharine Liao, Associate, DLA Piper
![Page 7: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/7.jpg)
www.americanbar.org/cle/free_cle.html
John Minan
University of San Diego
Overview of the Current
Regulatory Structure
![Page 8: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/8.jpg)
www.americanbar.org/cle/free_cle.html
Federal Law
The 1970 Comprehensive Drug Abuse Prevention and
Control Act, codified as amended at 21 U.S.C. §§ 801-
971.
•Congress made it unlawful to manufacture, distribute,
dispense, or possess any controlled substance, including
marijuana, except as authorized by the Controlled
Substances Act (CSA).
•Controlled substances are classified into five schedules (I,
II, III, IV, and V) under the CSA. Congress classified
marijuana as a schedule I substance based on the finding
of marijuana’s high potential for abuse, the absence of an
accepted medical use, and the lack of an accepted safety
standard for use in medically supervised treatment.
![Page 9: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/9.jpg)
www.americanbar.org/cle/free_cle.html
U.S. Department of Justice
Enforcement Guidelines
October 19, 2009. DOJ memo on the exercise of
prosecutorial discretion.
•Stated federal priority: “The prosecution of significant
traffickers of illegal drugs, including marijuana.
•Persons acting in clear and unambiguous compliance are
not an enforcement priority.
June 29, 2011. DOJ memo clarifying enforcement policy.
•Jurisdictions authorizing “multiple large-scale, privately-
operated industrial marijuana cultivation centers” are not
shielded from federal enforcement and prosecution.
![Page 10: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/10.jpg)
www.americanbar.org/cle/free_cle.html
U.S. Department of Justice
Enforcement Guideline Updated
August 29, 2013. DOJ memo responding to states
legalizing small amounts of marijuana and regulating
“production, processing, and sale.”
•Cooperative federalism: States with strong and effective
regulatory and enforcement systems to control the
cultivation, distribution, sale, and possession of marijuana
are “less likely” to threaten federal priorities.
•In such instances, enforcement of state law by state and
local law enforcement and regulatory bodies should remain
the primary means of addressing marijuana-related activity.
![Page 11: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/11.jpg)
www.americanbar.org/cle/free_cle.html
Conclusion: Santa at Risk?
![Page 12: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/12.jpg)
www.americanbar.org/cle/free_cle.html
Scott Rhodes
Jennings Strouss
Ethics
![Page 13: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/13.jpg)
www.americanbar.org/cle/free_cle.html
Ethics and Cannabis
• The Issue:
– How can lawyers practice ethically in a world
where cannabis use (medical or recreational)
is both legal and illegal?
![Page 14: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/14.jpg)
www.americanbar.org/cle/free_cle.html
Model Rules
• Model Rule 1.2(d): A lawyer shall not counsel a client to engage, or
assist a client, in conduct that the lawyer knows is criminal or
fraudulent, but a lawyer may discuss the legal consequences of any
proposed course of conduct with a client and may counsel or assist a
client to make a good faith effort to determine the validity, scope,
meaning, or application of the law.
• Model Rule 8.4: The definition of “misconduct” could be relevant to
lawyers practicing in regard to cannabis:
a) violate or attempt to violate the Rules of Professional Conduct, knowingly
assist or induce another to do so, or do so through the acts of another;
b) commit a criminal act that reflects adversely on the lawyer’s honesty,
trustworthiness or fitness as a lawyer in other respects;
c) engage in conduct that is prejudicial to the administration of justice.
![Page 15: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/15.jpg)
www.americanbar.org/cle/free_cle.html
ABA Position
• The following ABA Board of Governors resolution,
proposed by the King County (WA) Bar Association, was
withdrawn without a vote:
“RESOLVED, That the American Bar Association urges
lawyer disciplinary authorities not to take disciplinary
action against lawyers who counsel and assist clients
about compliance with state and territorial laws legalizing
the possession and use of marijuana.”
![Page 16: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/16.jpg)
www.americanbar.org/cle/free_cle.html
ABA Position (2)
• 1984 ABA Board Resolution that passed:
“The American Bar Association should recognize that
persons who suffer from serious illnesses for which
marijuana has a medically recognized therapeutic value
have a right to be treated with marijuana under the
supervision of a physician. The American Bar
Association should also support federal legislation to
establish a program under which physicians can treat
such patients with marijuana, under controls adequate to
prevent any diversion or other improper use of medicinal
marijuana.”
![Page 17: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/17.jpg)
www.americanbar.org/cle/free_cle.html
The Dilemma…
Can lawyers ethically advise clients
about issues related to marijuana
(other than merely stating there is a
conflict of laws)?
![Page 18: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/18.jpg)
www.americanbar.org/cle/free_cle.html
Arizona’s Approach
• Arizona Medical Marijuana Act was approved by
voters in the 2010 general election.
• Arizona was the 16th jurisdiction to adopt a
medical marijuana law.
• At the time, only Maine had issued an ethics
opinion on medical-marijuana-related legal
services.
![Page 19: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/19.jpg)
www.americanbar.org/cle/free_cle.html
Arizona Ethics Opinion 11-01
• Lawyers can provide counsel to clients, but with caveats:
1) Advice or assistance may be given only if “no court decisions
have held that the provisions of the Act relating to the client’s
proposed course of conduct are preempted, void or otherwise
invalid”;
2) “the lawyer reasonably concludes that the client’s activities or
proposed activities comply fully with state law requirements”;
3) “the lawyer advises the client regarding possible federal law
implications of the proposed conduct if the lawyer is qualified to
do so, or recommends that the client seek other legal counsel
regarding those issues and appropriately limits the scope of the
representation.”
![Page 20: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/20.jpg)
www.americanbar.org/cle/free_cle.html
Focus on ER 1.2 (d)
• Reasoning:
“While these issues [involving federal and state
law] are being decided by prosecutors and
courts, it is important that lawyers have the
ability to counsel and assist their clients about
activities that are in compliance with the Act—
and traditionally at the heart of the lawyer’s role
—by assisting clients…”
![Page 21: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/21.jpg)
www.americanbar.org/cle/free_cle.html
Since Opinion 11-01
• No attorney discipline actions.
Polk v. Hancock, No. 1 CA-SA 13-0292, 2014 WL 623701
(Ariz. Ct. App. Feb. 18, 2014), review granted (Dec. 2,
2014):
– Provisions in plea agreements requiring abstention from
medical marijuana must be tailored to the offense and
reviewed on a case-by-case basis.
– Decision under review by the Arizona Supreme Court.
![Page 22: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/22.jpg)
www.americanbar.org/cle/free_cle.html
Other Jurisdictions
• General trend toward following Arizona’s approach:
– Recent Illinois Opinion 14-07 (10/14)
– Alaska informal opinion (not official)
• Movement toward rule-making instead of ethics opinions.
• Efforts to amend Ethical Rules in Colorado, Washington,
and Nevada have not (yet) succeeded – CO and NV
added comments to ER 1.2(d) (WA under review):
Crux of new comments – Lawyers may advise clients
consistent with state law but must also advise of conflict
with federal law and potential consequences.
![Page 23: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/23.jpg)
www.americanbar.org/cle/free_cle.html
Other Jurisdictions (cont’d)
• Connecticut and Maine disagree, at least in part:
– Maine: Each lawyer must make own ethical decision.
Me. Ethics Op. 199 (first opinion on the issue).
– Connecticut: permissible to counsel clients only on
licensing and regulatory aspects of medical
marijuana. Ct. Inf. Ethics Op. 2013-02
![Page 24: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/24.jpg)
www.americanbar.org/cle/free_cle.html
Other Jurisdictions (cont’d)
• Some jurisdictions where marijuana has been legalized
have not issued ethics opinions or amended their rules.
– Prosecutorial discretion approach:
• Florida
• California
![Page 25: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/25.jpg)
www.americanbar.org/cle/free_cle.html
Other Issues
• Personal Use: – North Dakota State Bar Ass'n Ethics Comm. Op. 14-
02 (8/12/14): A lawyer’s personal use of medical
marijuana is “a criminal act that reflects adversely on
the lawyer's honesty, trustworthiness or fitness as a
lawyer in other respects.” [ER 8.4(b).]
– The opinion concerns an attorney’s valid prescription
to use marijuana and who uses in Minnesota.
– North Dakota has not legalized medicinal marijuana.
![Page 26: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/26.jpg)
www.americanbar.org/cle/free_cle.html
Other Issues (cont’d)
• Personal Use (cont’d):
– But see Colorado Opinion 124 (2012):
• Finding no necessary nexus between legal
personal medicinal use and lawyer’s honesty,
trustworthiness of fitness as a lawyer. [ER 8.4(b).]
• In June 2013, this opinion was extended to a
lawyer’s recreational use, after Colorado legalized
recreational use.
– The personal use issue is under consideration in
Washington and Nevada.
![Page 27: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/27.jpg)
www.americanbar.org/cle/free_cle.html
Other Unresolved Issues
• If lawyers ethically can counsel clients regarding
marijuana issues, do non-lawyers commit UPL when
they do the same thing?
• Lawyer impairment issues, including reporting
obligations.
• Lawyer DUI offenses involving legal marijuana use.
• Can a lawyer hold marijuana clients’ funds in the
lawyer’s trust account?
• Lawyer ownership/investment in marijuana-related
businesses.
![Page 28: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/28.jpg)
www.americanbar.org/cle/free_cle.html
Other Unresolved Issues
• “Problem clients” — Those whose marijuana
businesses turn out to be illegal: Will lawyers be
prosecuted as direct participants? Accomplices?
Co-conspirators?
• Scope of required counseling of clients about
possible federal issues:
– Criminal issues: Certain
– Regulatory issues? (e.g., banking)
– Taxation?
![Page 29: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/29.jpg)
www.americanbar.org/cle/free_cle.html
Hilary Bricken
Representing the
Marijuana Business
Harris Moure
![Page 30: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/30.jpg)
www.americanbar.org/cle/free_cle.html
Medical Versus Recreational
Marijuana
• What are the differences?
• Laws
• Regulations
• Eligibility to be a business
• Business structures
• Why does the difference matter to clients?
• How are various states treating medical marijuana
currently?
• What is the future of medical marijuana in states with
recreational marijuana regimes?
• Can there or should there be two industries?
![Page 31: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/31.jpg)
www.americanbar.org/cle/free_cle.html
What Federal Enforcement Looks Like
and How to Prepare Your Client
• Do the Federal memos even matter for clients?
• How to advise accordingly.
• Clients should be made aware that U.S. Attorneys are
executive officers vested with prosecutorial discretion
• Lack of uniformity in enforcement across the board
• In states
• And nationally
• Raids versus “landlord letters.”
![Page 32: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/32.jpg)
www.americanbar.org/cle/free_cle.html
Day-to-Day Life as a
Marijuana Business
• Constant compliance with State and local regulations
• The Federal conflict manifests with variable enforcement
and effects of federal marijuana laws about which all
clients should be aware:
• Banking
• Insurance
• Securities
• Bankruptcy
• Taxes
• Bureau of Reclamation/Federally regulated electricity
• Municipal litigation
![Page 33: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/33.jpg)
www.americanbar.org/cle/free_cle.html
Preparing for Clients to
Avoid Conflicts
Consultations and Fee Agreements:
• Full disclosure is warranted
• Tailor your representation accordingly
• All fee agreements should contain a disclaimer about
the federal conflict
• Avoid business planning with the client if you can help
it because of the risk of unethical or criminal
“assistance”
• Explain what various bars saying about representing
marijuana businesses
![Page 34: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/34.jpg)
www.americanbar.org/cle/free_cle.html
Marijuana Regulatory Regimes
Dealing with the Feds and dealing with the State
• Typical barriers to entry for licensees/registrants: • Residency requirements
• Liquidity requirements
• Permits and licensing
• Distance requirements
• Real property requirements
• Security
• Traceability
• Competency
• Experience
• Operational plans
• Investment
• State and local taxes
• Dealing with multiple regulatory agencies
![Page 35: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/35.jpg)
www.americanbar.org/cle/free_cle.html
Sean O’Connor
Food & Drug Law Issues
University of Washington
School of Law
![Page 36: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/36.jpg)
www.americanbar.org/cle/free_cle.html
Overview
• 3 major Food & Drug Law issues
• Cannabis products as:
– Food
– Drug
– Dietary supplement
• All are regulated
![Page 37: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/37.jpg)
www.americanbar.org/cle/free_cle.html
Impetus for FDA Laws
• “Filled milk” scandals (early 20th century)
• “Patent medicines” (same)
– aka “snake oil”
• Thalidomide problems (mid-20th century)
• Three major federal statutes:
– Food, Drug, and Cosmetics Act
– Public Health Act
– Dietary Supplement Health and Education Act
![Page 38: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/38.jpg)
www.americanbar.org/cle/free_cle.html
Overarching Themes
• Purity and Potency
– Foods and drugs should not contain
dangerous fillers
– Must include the amount of any active
ingredient claimed
• Safety and Efficacy
– Drugs and biologics must be approved for
marketing based on cost-benefit analysis
between safety and efficacy, including by
comparison with existing alternatives
![Page 39: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/39.jpg)
www.americanbar.org/cle/free_cle.html
Cannabis as Food
• Cannabis edibles are food and must comply with
state and federal health, safety, and labeling
requirements
• But because both medical and recreational
cannabis edibles are really being sold for the
active ingredient, then they do not fit within the
“other than food” exception for drug regulation
(FDA Warning Letters)
![Page 40: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/40.jpg)
www.americanbar.org/cle/free_cle.html
Cannabis as Drug
• Medical: any medical claims must be pre-
approved by the FDA
– Requires “New Drug Approval” (NDA)
process based on clinical trials just as for
pharmaceuticals (many years and $$$)
• Recreational: Products sold as alternatives
to “street drugs” must be approved by the
FDA through the NDA process as well
• FDA has been issuing Warning Letters
(but surprisingly few)
![Page 41: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/41.jpg)
www.americanbar.org/cle/free_cle.html
Cannabis as Dietary
Supplement
• While controversial, FDA regulation of
dietary supplements likely provides best
path for cannabis products
– Requires only purity and potency (already
built into WA State’s recreational I-502 rules)
– Prohibits medical claims; relies on consumers
to discover alleged benefits from other
sources
– Legal framework is 1994 Dietary Supplement
Health and Education Act
![Page 42: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/42.jpg)
www.americanbar.org/cle/free_cle.html
Conclusions
• State-sanctioned medical and recreational
marijuana distributors seem curiously under-
informed about FDA regulatory regimes
• Many distributors appear to be out of
compliance
• FDA is not aggressively enforcing
– perhaps relying on DOJ/DEA to enforce primary CSA
violations
• But growth of markets and DOJ/DEA reduction
of enforcement may put focus on FDA to protect
public health
![Page 43: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/43.jpg)
www.americanbar.org/cle/free_cle.html
Tsan Abrahamson
Building Your Cannabis Brand:
The Straight Dope on Trademark and Trade Dress Issues
Cobalt Law
![Page 44: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/44.jpg)
www.americanbar.org/cle/free_cle.html
What We’ll Cover
• Trademark: What Is It?
• Picking A “Good” Mark
• Acquiring Rights the Old-Fashioned Way
• Parody Versus “Brandalizing”
• Special State Law Issues
• Licensing Your Brand
![Page 45: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/45.jpg)
www.americanbar.org/cle/free_cle.html
What is a Trademark?
(you’ve heard it before)
THE LEGAL: Any word, name, symbol,
device, hologram, sound, or smell that
(uniquely) identifies the source of the goods
or services offered.
THE MARKETING: Your Brand
![Page 46: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/46.jpg)
www.americanbar.org/cle/free_cle.html
The Distinctiveness Line
Fanciful/
Arbitrary Suggestive Descriptive Generic
APPLE
CANNABIS-
PATIENT NETWORK
CANNABIS SCIENCE
MEDIBLES (??)
AMERICAN CANNABIS
CONSULTING
APPLE
KUSH
INDICA
SATIVA
NORTHER LIGHTS
APPLE
COMPASSION INC
CANNEDIBLES
TEAPOT
APPLE CANSTRACT
![Page 47: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/47.jpg)
www.americanbar.org/cle/free_cle.html
3 Ways to Secure Rights
Each with Limitations
Use, Policing and Enforcement
Required
![Page 48: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/48.jpg)
www.americanbar.org/cle/free_cle.html
Common Law Rights
• Gained by use and ALWAYS
available with lawful use.
• Must “prove” rights with each
action.
![Page 49: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/49.jpg)
www.americanbar.org/cle/free_cle.html
Federal Registration
• Prima Facie evidence of distinctiveness
• Prima Facie evidence of ownership
• Constructive National Rights
• Constructive Exclusive Rights of the mark
as a whole
• BUT WAIT… there are limitations to
Federal Registration for cannabis products
and services
![Page 50: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/50.jpg)
www.americanbar.org/cle/free_cle.html
DON’T TRY THIS:
• Secure registration for your client’s non-
cannabis goods (e.g. confections)
• Use that legitimate registration to protect your
client’s cannabis infused edible goods.
YOUR CLIENT COULD LOSE ITS STATE
LICENSE TO SELL!
Some state laws specifically prohibit using a
cannabis name identical to a non-cannabis
product
![Page 51: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/51.jpg)
www.americanbar.org/cle/free_cle.html
State Registration
• Notice of Use of the Mark in the State
• Constructive State Rights Vary by State
![Page 52: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/52.jpg)
www.americanbar.org/cle/free_cle.html
It’s Not Parody, It’s Brandalism
![Page 53: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/53.jpg)
www.americanbar.org/cle/free_cle.html
Licensing = Rights
• DO check the state law
• DO register if law requires it
• DO use “trade secret” to protect recipes in
licensing rather than just copyright
• DO avoid “naked” licensing claims by policing
• DO work with trustworthy companies
• DO your homework
• DO NOT OVERCONTROL or you’ll have a
franchise!
![Page 54: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/54.jpg)
www.americanbar.org/cle/free_cle.html
Henry Wykowski
Wykowski and Associates
Tax Issues
![Page 55: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/55.jpg)
www.americanbar.org/cle/free_cle.html
The IRS
• Taxation Presents the Most Significant
Challenge to the Industry
• Internal Revenue Code § 280E punitively
disallows ordinary and necessary business
expenses related to the sale of cannabis.
• I.R.C. Code § 280E:
“No Deduction … shall be allowed for any
amount paid … in carrying on any trade or
business if such business … consists of
trafficking on controlled substances …”
![Page 56: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/56.jpg)
www.americanbar.org/cle/free_cle.html
The Practical Effect of 280E:
• Gross Sales: $1,000,000.00
• Cost of Goods Sold: 650,000.00
• Net Income: $350,000.00
• Expenses: 200,000.00
• Net Profit: $150,000.00
• Under 280E the expenses are disallowed,
resulting in Net Profit of $350,000.00.
![Page 57: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/57.jpg)
www.americanbar.org/cle/free_cle.html
What You Can Do to Protect Your Clients
• Assume that they will be audited
• Existing businesses:
• Have a knowledgeable professional review their accounting to ensure:
1) They are taking full advantage of classification of cost of goods sold.
2) Develop a formula that allocates expenses between “trafficking” and “non-trafficking” activities.
![Page 58: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/58.jpg)
www.americanbar.org/cle/free_cle.html
If They Are Starting Up
• Retain experienced assistance in setting up their accounting system:
1) Cost of goods sold.
2) Section 280E Formula.
3) Establish them in a way to defend their position in an audit that the IRS will not want to risk challenging.
![Page 59: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/59.jpg)
www.americanbar.org/cle/free_cle.html
• Get Experienced Help Immediately
• Attorney vs. Accountant
• Advise Them Not Respond to the Letter Themselves
• IRS agents are well trained.
• The Potential Exists for Criminal Investigations
and Charges
If They Receive an Audit
Letter
![Page 60: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/60.jpg)
www.americanbar.org/cle/free_cle.html
• What the IRS will look at in an audit:
– Substantiation
– Gross Sales
– Cost of Goods Sold
– Expenses
– 280E Allocation
What the IRS Looks For
![Page 61: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/61.jpg)
www.americanbar.org/cle/free_cle.html
Marijuana, Banks, and Federalism
Julie Anderson Hill
The University of Alabama School of Law
![Page 62: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/62.jpg)
www.americanbar.org/cle/free_cle.html
Marijuana & Banks
![Page 63: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/63.jpg)
www.americanbar.org/cle/free_cle.html
Marijuana & Banks
“We abide by all federal laws, and the
distribution and sale of marijuana is illegal, so
we don’t bank the sale of medical or
recreational marijuana.”
Cristie Drumm
Spokeswoman
Wells Fargo Bank
![Page 64: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/64.jpg)
www.americanbar.org/cle/free_cle.html
Federal Control Over
State Banks
• Federal Criminal Law
– Controlled Substances Act
– Anti-Money Laundering Laws
![Page 65: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/65.jpg)
www.americanbar.org/cle/free_cle.html
Federal Control Over
State Banks
• Risk Regulation
– Federal Deposit & Share Insurance
– Federal Reserve Regulation
• Member Banks
• Bank Holding Companies
• Payment Systems
![Page 66: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/66.jpg)
www.americanbar.org/cle/free_cle.html
DOJ Guidance
• Set priorities for federal enforcement of the
Controlled Substances Act.
![Page 67: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/67.jpg)
www.americanbar.org/cle/free_cle.html
FinCEN Guidance
![Page 68: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/68.jpg)
www.americanbar.org/cle/free_cle.html
Limitations of Guidance
“[I]f a financial institution … offers services to a
marijuana-related business whose activities do not
implicate any of the eight priority factors, prosecution
for [money-laundering offenses] may not be
appropriate.”
FinCEN
![Page 69: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/69.jpg)
www.americanbar.org/cle/free_cle.html
Limitations of Guidance
FinancialIns tu ons
FiledMarijuanaSARS
NoFiledMarijuanaSARS
105
13,249
![Page 70: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/70.jpg)
www.americanbar.org/cle/free_cle.html
Other Issues
• Issues under Article 9
– May an Article 9 secured creditor take/transfer
a security interest in inventory?
– May a seller/creditor repossess the inventory?
• UCC Issues under Article 2
– Warranty of Merchantability
– Express Warranty
– Warranty of Fitness for a Particular Purpose
• May a business file for bankruptcy?
![Page 71: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/71.jpg)
www.americanbar.org/cle/free_cle.html
Dwight Merriam
Robinson+Cole
Real Estate/Land Use
![Page 72: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/72.jpg)
www.americanbar.org/cle/free_cle.html
Real Estate and Land Use
Issues
•The “Known Unknowns” and the “Unknown
Unknowns” of Medical Marijuana
•How “illegal” is it now under federal law?
•What limitations are there on possession
and use on federal lands?
•What about the federal and state crime-
free, drug-free school zone and housing
laws?
![Page 73: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/73.jpg)
www.americanbar.org/cle/free_cle.html
The Landlord
• From the landlord’s perspective
Addendum prohibiting drug activity in violation
of federal law LEASE ADDENDUM FOR CRIME-FREE/DRUG-FREE HOUSING
In consideration of the execution or renewal of a lease of the dwelling unit
identified in the lease, Owner and Resident agree as follows:
1. Resident, any members of the resident's household or a guest or other
person under the resident's control shall not engage in illegal activity,
including drug-related illegal activity, on or near the said premises. "Drug-
related illegal activity" means the illegal manufacture, sale, distribution,
purchase, use or possession with intent to manufacture, sell, distribute, or
use of a controlled substance (as defined in Section 102 or the Controlled
Substance Act [21 U.S.C. 802]) or possession of drug paraphernalia.
•
![Page 74: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/74.jpg)
www.americanbar.org/cle/free_cle.html
•MEDICAL MARIJUANA: The parties agree, that it shall be a breach
of this Lease for Tenant to grow, cultivate or raise marijuana on or
in the property or for Tenant to sell, dispense or become a
dispenser of marijuana, regardless of whether Tenant has or is licensed
to do so and regardless of whether Tenant has been granted the right
to supply or provide marijuana is a violation of this lease and will
subject Tenant to eviction and or any other remedy available to
Landlord pursuant to this lease. It shall also be a breach of this Lease
for Tenant to use or smoke marijuana on the property even if Tenant
has a prescription for its medical use or if Tenant is legally registered
for such use. Tenant shall be required to use or smoke medical
marijuana off the premises and a violation of this shall subject Tenant
to eviction and or any other remedy available to Landlord pursuant to
this Lease.
The Landlord
![Page 75: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/75.jpg)
www.americanbar.org/cle/free_cle.html
– Insurance
– Security issues
– Electricity and water usage
– Mold, smoke, odors, pests
– Is tenancy of a medical cannabis patient a
“material fact” subject to disclosure?
– No duty to allow tenant/patient
• Not protected under ADA, FHAA
• No requirement to provide a “reasonable
accommodation”
The Landlord
![Page 76: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/76.jpg)
www.americanbar.org/cle/free_cle.html
• What to do if the tenant asks for a
“reasonable accommodation” to possess
and use medical marijuana on the
premises?
– Release from the lease without penalty
– Accommodate the tenant, but require the
tenant to pay the cost of mitigation (e.g.
exhaust fans)
The Landlord
![Page 77: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/77.jpg)
www.americanbar.org/cle/free_cle.html
– Parking
• Patients medicating in the parking lot
– Traffic
– Quiet enjoyment
• Suits by other tenants
• Versus good faith
– If one tenant’s quiet enjoyment is disturbed by the MM
tenant’s use, which lease will landlord enforce?
• Gross negligence
– Sometimes negotiated as a exclusion from tenant’s
obligation to indemnify and hold landlord harmless
The Landlord
![Page 78: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/78.jpg)
www.americanbar.org/cle/free_cle.html
• Limit liability
– LLC
– Tax planning
• Section 280E tax on the gross, not net, income
largely to punish drug dealers
The Landlord
![Page 79: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/79.jpg)
www.americanbar.org/cle/free_cle.html
• For the Buyer or Tenant
– Review declaration of covenants and
restrictions
• No violation of federal law
• Requirement of “first class” business operations
• No consumption on premises
The Buyer or Tenant
![Page 80: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/80.jpg)
www.americanbar.org/cle/free_cle.html
• Banking
– February 2014 Treasury and Justice
Department Guidelines
– Banks must review state license applications
– Look for red flags suggesting illicit activity
– File “suspicious activity reports” on MM clients • “If I misreport, I’m liable as a bank,” said Bill Uffelman,
president of the Nevada Bankers Association. “So I’m putting
my license to do business on the line so that you can do
business. That’s a hard mouthful for bankers to swallow.”
The Owner or Tenant
![Page 81: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/81.jpg)
www.americanbar.org/cle/free_cle.html
• Land use
– Separation/distancing requirements
– Limits on numbers of growers and
dispensaries
– Use on site?
– Security
– What districts?
– See Los Angeles regulations for the most
comprehensive
The Landlord or Owner
![Page 82: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/82.jpg)
www.americanbar.org/cle/free_cle.html
Katharine Liao
DLA Piper
Employment Law
![Page 83: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/83.jpg)
www.americanbar.org/cle/free_cle.html
Reefer madness at work?
• Over twenty states allow the medicinal use of marijuana
• Four states allow the recreational use of medical
marijuana
• What does this mean for employers?
– On-the-clock use
– Off-the-clock use but under the influence while working
– Off-the-clock use but testing positive at work
![Page 84: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/84.jpg)
www.americanbar.org/cle/free_cle.html
State law expressly states that employers do
not need to accommodate medical
marijuana possession/use on Company
premises during working hours.
State law silent on the matter
State Laws
![Page 85: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/85.jpg)
www.americanbar.org/cle/free_cle.html
WA
OR
NV
AZ
UT
ID
MT
WY
CO
NM
AK HI
TX
OK
KS
NE
SD
ND
MN
IA
MO
AR
LA
MS AL GA
FL
SC
NC TN
KY
IL
WI
MI
IN OH
VA WV
PA
NY
ME
VT
NH MA
CT
RI
NJ
MD
DE
CA
![Page 86: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/86.jpg)
www.americanbar.org/cle/free_cle.html
Case law provides that employers may
discipline employees for being under the
influence of marijuana
State law expressly allows employers to
discipline employees for being under the
influence of marijuana
State Laws
![Page 87: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/87.jpg)
www.americanbar.org/cle/free_cle.html
WA
OR
NV
AZ
UT
ID
MT
WY
CO
NM
AK HI
TX
OK
KS
NE
SD
ND
MN
IA
MO
AR
LA
MS AL GA
FL
SC
NC TN
KY
IL
WI
MI
IN OH
VA WV
PA
NY
ME
VT
NH MA
CT
RI
NJ
MD
DE
CA
![Page 88: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/88.jpg)
www.americanbar.org/cle/free_cle.html
POSITIVE TEST
ALONE NOT ENOUGH
•Arizona
•Delaware
•Minnesota
ZERO TOLERANCE
•California
•Montana
•Oregon
•Washington
What about off-duty use resulting in
a positive test result at work?
![Page 89: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/89.jpg)
www.americanbar.org/cle/free_cle.html
Recent Cases
• Colorado (Coats v. Dish Network, LLC )
– This case will determine whether an employer acted lawfully
when it terminated a quadriplegic who suffered from debilitating
muscle spasms and possessed a valid medical marijuana
prescription.
– The termination was based on the employee's positive test for
marijuana use even though he was never under the influence of
the drug on company premises.
– CO Supreme Court has heard arguments and a decision
expected in 2015.
– The outcome of this case would likely impact employer policies
regarding termination on basis of a positive drug test.
![Page 90: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/90.jpg)
www.americanbar.org/cle/free_cle.html
Recent Cases
• New Mexico
– Appellate court held that an employer and its workers'
compensation carrier must reimburse the employee for medical
marijuana costs. Vialpando v. Ben's Auto. Servs. & Redwood
Fire & Cas., No. 32,920, 2014 WL 2420112 (N.M. Court of
Appeals, May 19, 2014)
• Michigan
– Appellate court held employees who carried registered medical
marijuana identification cards and used the drug in accordance
with the Michigan Medical Marijuana Act (MMMA), but were
terminated after testing positive for marijuana, were entitled to
unemployment benefits – even when defendant is a state
agency. Braska v. Challenge Mfg. Co., No. 313932, 2014 WL
5393501 (Mich. Ct. App., Oct. 23, 2014).
![Page 91: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/91.jpg)
www.americanbar.org/cle/free_cle.html
Is It A Disability?
• In states that only allow medical marijuana use, there is
likely a health reason behind the use, which regardless
of the marijuana use, constitutes a disability.
• Some states expressly recognize this in statutes.
– New York: New York recognizes certified patients as having a
"disability" under New York's Human Rights Law
– Nevada: Employers must attempt to make reasonable
accommodations for the medical needs of these employees
provided they do not pose a threat of harm or danger, cause
undue hardship or prevent the employees from fulfilling their job
responsibilities.
![Page 92: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/92.jpg)
www.americanbar.org/cle/free_cle.html
Workplace Policies
• Make sure the policy prohibits use of
illegal drugs under federal or state law
• If applicable, provide notice of random or
post-accident drug testing
• No blanket rule requiring termination if
there is a positive marijuana drug test
result, depending on the state
• Focus on safety in the workplace
![Page 93: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/93.jpg)
www.americanbar.org/cle/free_cle.html
Please submit your faculty questions
Send questions to faculty
Tsan Abrahamson, Partner, Cobalt LLP
John Minan, Professor of Law, University of San Diego
Scott Rhodes, Managing Attorney, Jennings Strouss
Hilary Bricken, Attorney, Harris Moure
Sean O’Connor, Assistant Dean for Law, Business &
Technology Initiatives & Professor of Law, University of
Washington School of Law
Henry Wykowski, Partner, Wykowski and Associates
Julie A. Hill, Associate Professor, The University of
Alabama School of Law
Dwight Merriam, Partner, Robinson+Cole
Katharine Liao, Associate, DLA Piper
![Page 94: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/94.jpg)
www.americanbar.org/cle/free_cle.html
Participation Verification Code
5 T 1 4 F S S 2 Copy the code above. It is required to
receive CLE credit for this program.
![Page 95: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/95.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
Please submit your faculty questions
Send questions to faculty
Tsan Abrahamson, Partner, Cobalt LLP
John Minan, Professor of Law, University of San Diego
Scott Rhodes, Managing Attorney, Jennings Strouss
Hilary Bricken, Attorney, Harris Moure
Sean O’Connor, Assistant Dean for Law, Business &
Technology Initiatives & Professor of Law, University of
Washington School of Law
Henry Wykowski, Partner, Wykowski and Associates
Julie A. Hill, Associate Professor, The University of
Alabama School of Law
Dwight Merriam, Partner, Robinson+Cole
Katharine Liao, Associate, DLA Piper
![Page 96: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty](https://reader034.fdocuments.in/reader034/viewer/2022051810/601bd845b0216c55102138f0/html5/thumbnails/96.jpg)
Register for more FREE CLE www.americanbar.org/cle/free_cle.html
CLE Credit Request Instructions
Please stay online…
The program evaluation link will appear shortly.
Click on the link to take the program evaluation.
After submitting the evaluation, an online request
for CLE credit will appear. Fill out this form to
receive CLE credit for this program.