California marijuana business lawyers

March 8, 2023

Cannabis Companies to Open Doors in Riverside, California

Recreational marijuana has been legal in California since 2016 – but Riverside is only just now on the cusp of allowing cannabis businesses for the first time ever. Riverside cannabis lawyer

As our Riverside cannabis lawyers can explain, city council voted 5-2 to green light 14 marijuana shop permits. The city has first passed a moratorium on cannabis companies in 2017 – with the exception of marijuana testing labs. This was despite the fact that Riverside voters supported Proposition 64 (which legalized recreational cannabis) by a 53 percent majority. A year later, the council agreed on an outright prohibition of commercial cannabis operations – except for labs.

Then two years ago, the city caught wind of a citizen-led effort to undercut the municipal ban on marijuana sales. Signatures to move the petition forward were never formally submitted, but the city did start weighing whether it should initiate its own permit program and regulatory framework. (Likely, they wanted to sidestep the reality that it was probably going be done whether they wanted it or not, and best to have some control over the final outcome.)

The city is actively studying how best to support permit seekers who have been disproportionately impacted by anti-cannabis legislation in the past. The initial outlay caps cannabis retailers at 14, but there’s no such limit for the number of labs, manufacturing companies, or distribution firms. Voters will need to consider whether they’re willing to accept taxation for the measure. A vote is expected in November 2024.

One councilmember against the initiative said he doesn’t believe marijuana sales in the city are an inevitability, worried over police and other public services burdening more duties, and lamented the fact that a gateway drug was going to be so easily accessible – particularly for young people. Just recently, the sheriff’s office arrested several older adult teens in Riverside for selling vape pens with concentrated cannabis to minors using a mobile delivery service.

But those who support legal cannabis say that a well-regulated market has proven to offset many of these concerns. Continue reading

February 20, 2023

Can California Cannabis Patents Survive Illegality Doctrine?

By Cannabis Law Group

The federal Controlled Substances Act has long been the primary thorn in the side of the U.S. cannabis industry at-large. Despite state-legal marijuana cultivation, production, sales, and possession, its status as a Schedule I narcotic by federal law has had all kinds of adverse impacts. Among these: Companies struggle to protect their California cannabis patents, thanks to something known as the illegality doctrine. Los Angeles cannabis patents

Basically, the illegality doctrine is a principle arising out of English common law (first articulated by American courts way back in 1775) that basically says courts don’t have jurisdiction over claims that arise from acts that are illegal. So for example, if someone is unlawfully selling heroin and robbed, the victim may have no recourse for restitution of the stolen heroin or trafficking funds – because they were illegal in the first place.

With regard to cannabis company patents, there have been a flood of new state-legal marijuana brands and products on the market in recent years. But protecting those unique patents and trademarks has proven extremely challenging because of the illegality doctrine. Patents and trademarks are protected under federal law – which also considers the underlying substance they’re trying to protect as illegal.

However, as our Los Angeles marijuana business lawyers can explain, that may not be the last word on it.

Take, for instance, the case last year of Gene Poole Technologies, Inc. v. Coastal Harvest, LLC. This was a decision handed down by the U.S. District Court for the Eastern Division in California. This was a noteworthy case because up until then, no federal court had addressed whether it would allow state-legal cannabis companies to pursue patent protections. Here, the court held that the illegality doctrine was not a bar to enforcing a California cannabis product patent.

The outcome of this case wasn’t a guarantee, particularly given that in a number of other non-patent cannabis cases in federal court, the effectiveness of the illegality doctrine as a defense has been a bit of a mixed bag. Continue reading

February 15, 2023

DEA Declares Delta-8-THC-O & Delta-9-THC-O Illegal, Not Hemp

By Cannabis Law Group

Los Angeles cannabis business lawyer Despite being widely labeled as hemp-derived novel cannabinoids, Delta-8 THC-O and Delta-9-THC-O have been declared illegal by the U.S. Drug Enforcement Administration. In a letter to a law firm dated Feb. 13, 2023, the agency stated in no uncertain terms that these popular products – referred to collectively under the title THCO – are legally considered “controlled substances.” This directly contradicts with previous federal court rulings that determined delta-8 products could be considered “hemp” and thus lawful under the 2018 Farm Bill.

Note: Delta-8-THC-O and Delta-9-THC-O are different than delta-8-THC and delta-9-THC. While the latter both exist naturally in the hemp plant, THC acetate (better known as THC-O) doesn’t. That’s the underlying basis for the DEA’s position.

THC acetate is most typically a component of products like edibles and vapor cartridges. As Los Angeles cannabis business lawyers, we want to ensure any companies that currently produce, transport, stock, and sell these products take immediate note. It’s not immediately clear how this will impact the market, so it’s a smart idea to immediately consult with a cannabis lawyer on how best to proceed and ensure you’re on the right side of the law.

How the Farm Bill Factors

The 2018 Farm Bill opened the door to a number of cannabinoid products that are known to also have intoxicating properties. This has drawn the attention and ire of some politicians and interest groups. The additional scrutiny has led to legal challenges that have wound up in court. Continue reading

February 14, 2023

California Marijuana Sales & Use May Still Pose Landlord Legal Challenges

By Cannabis Law Group

Marijuana cultivation, processing, sale, and possession is legal for adults in California. Unfortunately, that doesn’t mean all legal challenges have been abated. In some cases, landlords – commercial and residential – may continue to face certain legal challenges. Los Angeles marijuana business lawyer

As longtime Los Angeles marijuana lawyers, we’re committed to protecting the rights of Southern California cannabis businesses – and the ancillary operations that serve and/or rely on them.

Central to protecting everyone involved is a carefully-written lease agreement – one that takes into consideration all relevant state laws and local ordinances, as well as potential liabilities for each party. Working carefully with a marijuana business lawyer can go a long way.

January 21, 2023

California Cannabis Delivery Rules Evolving

By Cannabis Law Group

As of Jan. 1, 2023, cannabis delivery in California rules have expanded to allow authorized vehicles to carry more pot products – and under fewer restrictions – than was previously allowed. Also, by next year, cities will be expected to take certain measures to improve access to medicinal marijuana by guaranteeing delivery options for patients and caregivers. California cannabis delivery lawyer

While this is good news for many cannabis companies, our Los Angeles marijuana business consulting lawyers urge leadership to initiate meticulous review of internal standards in contrast with the state’s most up-to-date standards. Marijuana delivery companies should do this with the aid of an experienced legal team, just to ensure all products and processes – from labeling to employee screening to vehicle maintenance to product testing to insurance coverage to order fulfillment – are above-board and perfectly aligned with state law. Doing so can go a long way toward maintaining public trust, securing customer loyalty, and avoiding costly delays and product losses if any aspect of your operation comes into question.

The new California cannabis delivery standards stem from number of bills signed by Gov. Gavin Newsom last fall. Among those:

SB 1186 , the Medicinal Cannabis Patients’ Right of Access Act, expands medical cannabis delivery availability in communities that would otherwise ban it. The new law requires that by January 2024, cities must adopt new ordinances to allow for medical cannabis delivery to patients and their primary caregivers. For some communities, this is going to mean rewriting laws to allow for non-storefront retail licensing within their jurisdiction. This was a very hotly-contested bill when it was first introduced. The law bars local governments from de facto bans on medical marijuana delivery services (done through severe restrictions on things like hours of operation or frequency of sales or physical retail location requirements.) State grant money is available for local government agencies that need some assistance complying with the law.
Expanding cannabis delivery allowable amounts and processes. Prior to the start of this year, authorized cannabis delivery vehicles were only allowed to carry $5,000 worth of cannabis at any time – and no more than $3,000 of that could be “un-ordered,” or not spoken for by a specific customer. Now, as of Jan. 1st, regulations handed down by the California Department of Cannabis Control (DCC) allow up to $10,000 in cannabis to be in an authorized cannabis delivery vehicle at any given time, and up to $5,000 of that can be un-ordered, meaning it isn’t sp0ken for by a particular customer when they load it up. This is what is sometimes referred to as the “ice cream truck model.” The provisions also give a green light to permanent curbside pickup options, and allows cannabis products to be distributed directly from the premises where they’re being stored (simplifying the supply chain and keeping costs in check).

Different Cannabis Delivery Models

January 15, 2023

California Marijuana Gummy Manufacturing Profitable – But Not Without Legal Risks

By Cannabis Law Group

Whereas other sectors of the California cannabis industry have been struggling, THC gummy manufacturers have been thriving (at least where they’re above-board and not being hit with multi-million dollar penalties for trying to side step state cannabis laws). Los Angeles marijuana business lawyer

Sales of pot-infused edibles have tripled over the last four years – up to almost $1.4 billion nationally, with increases largely fueled by buyers who aren’t keen on smoking or inhaling their THC fix and are looking for greater variety in options. To excel, many California gummy manufacturers are having to find a niche market: Fruity flavors, fast-acting ingredients, high potency for a decent price, etc. Consumers have their choice of a broad variety of cannabis-infused products – from cookies and chips to suckers and other candies. But gummies seem to be preferred. Fruit chews are the most popular, with caramels and taffy chews coming in No. 2.

Gummies are also very popular when it comes to minor cannabinoid products (those made not with THC, but CBD, CBN, and CBG). Edibles account for nearly one-third of all CBD products – and our Los Angeles marijuana business attorneys know that a significant portion of those are gummies.

But producers and manufactures of marijuana gummy products need to be extremely careful that they are following the letter of the law in the course of doing business. The California Department of Cannabis Control has stringent rules when it comes to process, potency, labels, and sales of cannabis products. On top of that, companies that flagrantly disregard state law may be inviting the eye of federal authorities. Although the U.S. Justice Department is no longer hyper-fixated on the marijuana industry in states where it’s legal to buy/sell/possess, the tenuous peace made possible with the Cole Memo precedent only extends as a courtesy to companies that are following state standards.

Los Angeles Pot Gummy Operator Fined $128 Million

Failure to toe the line on state laws recently led to one Los Angeles County cannabis company being fined an unprecedented $128 million. Continue reading

January 5, 2023

California Cannabis Laws in 2023

By Cannabis Law Group

Cannabis has been legal in California (in some form or another) since 1996. But since then, the patchwork of city, county, and state laws (to say nothing of the slowly-evolving federal laws) has understandably led to some confusion about exactly what is legal where – and for whom. California cannabis lawyer Los Angeles

There has been some speculation about whether cannabis might finally be made legal at the federal level in 2023. While that seems unlikely, our legal team will be continuously monitoring any developments, as it could impact how issues pertinent to our cannabis business clients are approached at the state and local level as well.

Here, we’re outlining some of the common questions that arise from individuals, businesses, employers, property owners, etc.

December 26, 2022

Potential Complications for California Cannabis Company Real Estate Lending & Commercial Leases

By Cannabis Law Group

Over the next five years, it’s expected that the cannabis industry is going to double from its current size. Inevitably, this amount of fast-paced growth is going to demand a lot of funding – and space. Of particular concern are the property acquisitions and real estate investments that will be necessary to expand operations of cultivation and distribution facilities, as well as retail stores. Los Angeles cannabis lawyer

But as our Los Angeles cannabis company lawyers can explain, such deals are going to be a bit more complicated compared to other types of commercial contracts and lending. The fact that marijuana remains illegal under federal law inevitably has landlords, lenders, and financial institutions wary of engaging. The potential for sizable profit margins is certainly a draw, but concerns about forfeiture and fines can’t be entirely glossed over.

There is certainly a great deal of opportunity for real estate financing and leasing operations, but there is undeniably a greater complexity when it comes to opening the doors to marijuana-related businesses. Lenders and landlords need to proceed with calculated care and caution. Contracting with a longtime cannabis lawyer can help cannabis companies, investors, property owners, and financial institutions to make smart decisions that will best protect their assets and further their interests.

December 10, 2022

Federal Prosecutors Drop Cannabis Company Cash Forfeiture Case

By Cannabis Law Group

In a case that may signal good news for future interstate cannabis transactions, federal prosecutors in Kansas have agreed to drop a civil forfeiture case pertaining to pot shop profits being ferried across state lines. Los Angeles marijuana lawyers

To explain the significance of this, we have to step back a bit to examine the historical context. Cannabis companies run into all kinds of legal stumbling blocks in the simple course of doing business. Matters like banking, transportation, real estate purchases/rental agreements, security, insurance, employment, etc. – all of these things are more complicated than they would be for typical businesses. Despite state-level laws that legalize marijuana cultivation, production, sales, and possession (such as California’s Proposition 64), the U.S. Controlled Substances Act still classifies cannabis as a Schedule I narcotic. This has resulted in much confusion about practical applications for state-legal cannabis companies just trying to conduct regular business.

One legal concern that has cropped up in the past couple years deals with the transport cannabis company cash – particularly when it involves crossing state borders. Because of federal banking regulations, cannabis companies tend to deal primarily in cash, which can pose some practical challenges. Moving that cash from one point to another is not as simple as a digital transfer. It may require physical transport. But in the course of doing so, several companies found themselves smack in the center of federal civil forfeiture cases wherein the government seized the cash, on the basis of it being tied to illegal drug trafficking.

Civil forfeitures, also sometimes called civil asset forfeiture or judicial forfeiture, is a highly controversial process whereby law enforcement/government agencies to seize – and keep – property and other assets that belong to persons suspected of committing a crime. Forfeitures can happen as part of a criminal case, but in civil forfeitures, no crime need be proven in a court of law in order for the government to keep those assets. Some have likened it to “highway robbery,” except it’s fully legal. The laws were written to target criminal organizations, fugitives, terrorists, etc., but have been used in many cases against state-legal cannabis companies.

As Los Angeles marijuana business lawyers can explain, these scenarios involving cannabis companies have puzzled legal scholars because they fall into something legal gray area – thanks to the patchwork of conflicting state and federal pot laws. Continue reading

December 6, 2022

California Pot Purveyor Pushes Back Against Product Potency Lawsuit

By Cannabis Law Group

The potency of marijuana products has become a point of contention for a California pot purveyor who is facing customer litigation over its pre-rolled joints. California THC potency lawsuit

The two Southern California customers claim that the products they purchased from the company are reported to have a very high level of THC. Tetrahydrocannabinol, of course, is the compound in pot that gives users that feeling of being high. Plaintiffs accuse the defendant cannabis company of false advertising, negligent representation, and unfair competition.

As our Los Angeles marijuana lawyers can explain, the California Department of Cannabis Control expects cannabis companies to label their products with accurate information regarding the THC content within. That can be expressed either in milligrams or as a percentage. Per state cannabis regulations, labeled content is required to be within plus-or-minus 10 percent of the actual amount.