Cannabis Law Group's Medical Marijuana Legal Blog

March 26, 2022

Feds Fund Research on Cannabis Regulation Models

Research dedicated to federal marijuana regulation models is being funded by the National Institute on Drug Abuse. Of course, this isn’t the first time NIDA pushed to study marijuana, particularly as more states have been enacting legalization laws. However, this one specifically expressed interest in the various regulatory models in place across the U.S. cannabis lawyer Los Angeles

The study solicitation encouraged study applicants to have a focus on the evolution of cannabis law and policy in the U.S., as well as globally, and the impact that has on public health. In particular, it’s looking for researchers who can help analyze the quality of various regulatory schemes for cannabis product sales, with a special focus on which elements or combos are concretely shown to minimize potential harm to public health.

It’s worth pointing out that this seems to indicate the agency is no longer fighting against an end to prohibition, but rather leaning in to the general consensus that is likely inevitable at some point. The agency outright conceded that cannabis product policies and legislation in the U.S. and around the world have outpaced the public health knowledge we have on the subject.

It doesn’t help that because of marijuana’s status as a Schedule I narcotic, the process for conducting studies on it is onerous. All researchers must comply with the standard 5 milligrams of THC per unit when conducting studies on human subjects. (That rule was put in place last year.) Continue reading

March 15, 2022

Online Hemp Sales Could Invite Impending Federal Crackdown

By Cannabis Law Group

Online sales of hemp products – specifically delta-9 THC products that are derived from hemp – are likely to see a federal regulatory crackdown in the coming months. Los Angeles marijuana lawyer

Congress is currently mulling the 2023 Farm Bill, while state lawmakers across the country are slated to hold their yearly sessions. Many are expecting hemp extract sales and shipments – particularly those happening online and across state lines – are likely to get attention from both federal and state lawmakers.

As our Los Angeles marijuana business lawyers can explain, the concern with delta-9 products is that they possess intoxicated properties, yet aren’t being taxed, overseen by safety regulators, and are being shipped across state lines with little oversight.

For those who may be unfamiliar, delta-9 products are different than delta-8. Delta-8 THC products are manufactured in labs. Lawmakers have set limits on delta-8 products. So now, some hemp manufacturers have concentrated the delta-9 THC that already exists in hemp plants, allowing them to make tinctures, edibles, and vapes that are intoxicating – and then sell those online. Delta-9 is the THC compound created when raw hemp is heated, but in smaller amounts than what one might find in a cannabis extract. Continue reading

March 7, 2022

Could California’s Interstate Cannabis Bill Save State-Legal Bud Businesses?

By Cannabis Law Group

Could a California interstate cannabis bill save state-legal marijuana businesses? Los Angeles cannabis attorney

Senate Bill 1326 would give the state governor the authority to enter into agreements between our state and one or more other states for the purpose of allowing state-legal marijuana businesses to do business with each other.

If it passes and is successful that could open the doors to some enticing prospects. As our Los Angeles marijuana business lawyers can explain, it could allow medical-only facilities to ensure ample supply without licensing additional production locally (a potentially big money-saver, given California’s astronomical cannabis taxes). It *might* also mean there is a potential for interstate exports (though that’s purely speculation at this point).

Such an agreement might allow California to ship some of its supply south to Oregon – news that has many Golden State growers excited, given the state’s current oversupply issues. Continue reading

February 25, 2022

Understanding New California Cannabis Trade Sample and Medical Marijuana Donation Laws

By Cannabis Law Group

Laws pertaining to cannabis trade samples and medical marijuana donations have been recently updated in California. Marijuana businesses would be wise to review this changes with their Los Angeles cannabis lawyer to ensure their company processes and practices are aligned with the letter and intent of these laws. Los Angeles cannabis business lawyer

Let’s start with trade samples. These are samples of cannabis plants or products that are sent to cannabis licensees by producers, processors, wholesalers, and holders of hemp certificates to create brand and product awareness. It’s considered a solid means to generate more business. Trade samples allow products to be sampled, tasted, and smelled by licensed business buyers. An example would be marijuana producers who sell immature plants to other producers. Prospective buyers may want to know what kind of strain those immature plants are going to ultimately produce. A trade sample can show them. Similarly, producers could send samples to retailers to convince them to stock their product. Other industries have engaged in this for eons, but there has been some question about how those in the California cannabis industry could not only do it lawfully, but without having to pay the hefty taxes associated with retail sales.

Now, with the passage of AB 141 (a large piece of legislation that went into effect Jan. 1, 2022), cannabis products can be designated as trade samples from one licensee to another for marketing purposes. This will allow them to bypass cannabis taxes they’d otherwise have to pay. Exempted exchanges will include all harvested cannabis that has been or will be designated as a trade sample, as well as all cannabis that is used to manufacture a cannabis product that is/will be designated as a trade sample. Furthermore, the cannabis excise tax won’t apply to product that is designated as trade and simply given to another licensee absent consideration. Continue reading

February 17, 2022

California’s Promise to Clear Cannabis Convictions Hasn’t Gone as Planned

By Cannabis Law Group

When voters in California legalized recreational use cannabis six years ago, a major component included a legal pathway through which courts could clear most past marijuana convictions – or at least lower the charges to something less severe. Riverside marijuana conviction lawyer

This made good sense for several reasons:

Most marijuana convictions were for non-violent, low-level offenses.
Minorities and the economically disadvantaged were greatly disproportionately impacted by marijuana laws.
To right the injustice of people now making good money (it’s a multi-billion dollar industry in California) for the same activity that previously sent others to prison.

But despite this and a 2018 law passed with the intention of speeding up the process for tens of thousands of Californians still stuck grappling with felony and misdemeanor marijuana convictions on their record, our Riverside marijuana lawyers know that the process has been slow-going. This fact was confirmed by a recent Los Angeles Times investigation.

It’s worth noting that the process was never going to be fully automatic. But at this point, there are still an estimated 34,000 people in the state with marijuana crimes on their record that haven’t been processed for the clean slate they deserve. There were twice that many before last August, which is when the Times started raising questions about why it was taking so long (presumably lighting a fire under officials to prioritize the effort).

It appears the primary bottleneck in the process that involves 58 prosecutors’ offices and the state Department of Justice is the courts. Some counties have been working with a fair amount of diligence to clear records for people in their communities. In total, 117,000 cases have been processed in California. Others, however, have been incredibly slow. For example, in San Bernardino and Riverside Counties, not a single case has been processed. Others, like Kern County, are only at 18 percent. Continue reading

February 9, 2022

Ancillary Cannabis Company Calls California Traffic Stops “Highway Robbery” in Federal Lawsuit

By Cannabis Law Group

Targeted by repeated traffic stops and seizures over the last year by federal and state law enforcement officers in California and other states, an ancillary cannabis company says cops are committing “highway robbery” by seizing millions in cash from armored vehicles transporting funds between dispensaries and financial institutions. The logistics company, Empyreal, has filed a federal lawsuit seeking to recoup losses and end the practice. Our Los Angeles marijuana business lawyers understand an initial request for a restraining order has been denied.

This lawsuit is being closely watched by cannabis company legal advocates as it could have a direct impact on their bottom line and ability to engage in financial transactions.

The plaintiff, with more than 25 years in banking, launched her logistics/armored vehicle business four years ago in Colorado. Since then, it’s expanded to operation in 28 states. Her goal, she told Colorado News Online, was to address some of the challenges that cannabis companies face with financial transactions. Although many states now allow medicinal and even recreational marijuana, THC products are still considered illegal under federal law. That makes federally-backed banks – bound to comply with the U.S. Anti-Money Laundering Act and Bank Secrecy Act – wary of doing business with cannabis companies. For the 700-or-so banks that will accept money from marijuana dispensaries, there is a large compliance list that involves things like background checks, verification of money origins and destinations, and other stringent guidelines. Plaintiff said she only works with banks that are meticulous about meeting all the strict requirements.

Meanwhile, particularly in states where possession of marijuana for any reason is still criminal. Kansas is one of those. State law enforcement officials there report that in the last three years, its officers have seized more than $8 million from all motorists (not just those ferrying marijuana-related funds through the state). That accounts for half of all civil forfeitures, which is a process by which law enforcement agencies can seize money, vehicles, real estate, weapons, and other personal property they suspect may have been involved in criminal activity. It is not necessary for the cops to arrest anyone or secure a conviction in order to seize the money/property. In Kansas, half of all forfeitures were done with no criminal case being filed. All they had to do was demonstrate a connection between the property and a crime – and show a lawful reason for making the stop. (As any attorney will tell you, follow behind any driver long enough and you’ll find some minor traffic infraction that can be used as cause to pull them over.)

The lawsuit alleges that the company’s vehicles have been stopped by law enforcement in Kansas and California a total of five times since last May – twice resulting in cash seizures of more than $1 million, money that was later turned over to the FBI. Continue reading

January 28, 2022

Marijuana Mortgages in California? Yes, They Are a Thing.

By Cannabis Law Group

As legal recreational marijuana businesses continue to put roots in communities throughout California, employees and owners of these companies are increasingly looking to buy homes. But can they qualify? Los Angeles marijuana lawyer

Los Angeles cannabis business lawyers can explain that residential mortgage for marijuana business owners may not be as tricky as commercial loans or rental agreements for marijuana companies. But owners and employees of marijuana companies have struggled to get approved for a mortgage loan because they are not allowed to factor income from the dispensary or other marijuana-related revenue. That all goes back to marijuana’s continued classification as a highly-restricted Schedule I narcotic at the federal level. Residential mortgages are federally-backed loans. That has meant that cannabis owners and their employees must clear numerous hurdles to qualify for a mortgage.

That said, as the industry grows (and the workforce with it), there are some options still on the table for these workers. It’s important for workers to understand home loan restrictions and alternative financing options.

Recently, one wholesale mortgage lender, Encinitas, quietly released the news that it would be accepting borrowers with cannabis-related income applying for home loans. Restrictions for at-home grow operations or farms would still remain in place. The terms are generous, though the interest rate you pay for such a deal is quite high. Continue reading

January 20, 2022

California Marijuana Businesses To Be Bolstered By $100 Million in State Funds

By Cannabis Law Group

The state has issued $100 million in funding assistance to help bolster legal marijuana businesses in California, an effort aimed to speed up license permitting in areas where it’s stalled. Los Angeles marijuana business attorney

The Department of Cannabis Control, managed by state officials, designated the funds be sent to 17 cities and counties where there are a disparate number of provisional marijuana business licenses (as opposed to full year licenses). As our Los Angeles marijuana business lawyers can explain, those provision licenses were intended to help quickly prop up the adult-use market, but the entire category was set to expire Jan. 1, 2022. That deadline has since been extended, allowing more municipalities time to kick-start the permitting process, while also meeting stringent environmental requirements.

The $100 million in grant money is intended to further accelerate progress – in turn squeezing out black market operators. The thinking goes that the more competitive, state-legal operations there are in a district, the fewer opportunities there will be for underground pot purveyors.

Applications to receive money through the Local Jurisdiction Assistance Grant Program, opened four months ago. Municipalities that were awarded the additional funding were those that had significant license processing backlogs. Funding is also available to implement social equity programs.

Goals for funding were outlined as followed:

Hire or designate additional staff to help wade through the sizable workloads necessary to transition businesses into a well-regulated local market.
Create streamlined license processing with dedicated IT systems.
Complete thorough environmental assessments to ensure water is protected and energy is renewable.

January 10, 2022

California Marijuana Laws Entangling Tech Companies

By Cannabis Law Group

Our Los Angeles marijuana business lawyers know it’s not only companies selling cannabis that are being caught up in the regulatory quagmire of state and federal marijuana laws. Los Angeles cannabis company attorney

In recent months, there have been numerous reports of technology software companies servicing the cannabis industry facing financial consequences for that partnership. Firms have been dumped by payment processors, classified as “high risk” by credit card brands and banks (requiring higher fees to handle payments), and overall faced difficulty in the course of day-to-day businesses.

As the legalized cannabis market continues to mature, we’re seeing regulatory headaches continue for ancillary businesses like tech companies, particularly when it comes to handling banking and payment processing. This is true even for companies that never touch a single marijuana plant or product. Businesses working with cannabis growers, producers, and retailers at every leg of the supply chain have found themselves suddenly grappling with growing red tape.

The irony for some of these tech companies is that a primary part of the service they provide to the cannabis industry is the ability to more easily maintain and track regulatory compliance. Some of those who are working high up the compliance chain for these firms have literally helped to write the laws for cities across California. And even they are struggling to maintain operations and meet compliance standards. Continue reading

December 29, 2021

California Cannabis Tax Compliance, Banking Continue to be Challenges in 2022

By Cannabis Law Group

Heading into the new year, California cannabis company tax compliance and banking will continue to be challenges. Marijuana retailers, growers, product makers and others in the industry would be wise to work closely with an experienced Los Angeles cannabis business attorney to help them navigate these ongoing difficulties. Los Angeles marijuana banking and tax attorney

Recently, the Internal Revenue Service (IRS) issued tips for cannabis compliance. The federal agency noted that while it’s outside of the agency’s power to resolve many of the unique business predicaments that arise from federal prohibition, it wants to help support cannabis companies in becoming tax compliant. Even though marijuana continues to be classified as a Schedule I narcotic by federal authorities, these businesses are still required to shell out federal taxes.

In September, the agency released tips for tax compliance for cannabis businesses. Among those:

Know your investors. Thousands of people are fighting to get into the industry, but working with investors may have some tax implications and repercussions for cannabis companies. Unregistered and “silent” financing and ownership arrangements, with investors sometimes being referred to as “beneficial owners,” get the benefits of ownership but avoid having the property title or activity in their name. That creates numerous challenges for the IRS, and it may result in issues for proper tax filing and accurate reporting of gross receipts. Also, cannabis business owners should be wary of nefarious investors who attempt to put their funds into a business like this, but jeopardize the entire operation with allegations of money laundering.
Make sure you’re licensed. You can’t get federal licensing, but make sure you have proper state and local licensing for your operation.
Timely file and pay your taxes. Even if your business operates with cash, you’re still responsible to file and pay your taxes on time. IRS code doesn’t parse out which income stems from legal vs. illegal sources. All income must be reported. Note that because you’re dealing with a Schedule I narcotic, you must abide by Section 280E – even if your business is 100 percent state legal. That section doesn’t bar you from reducing gross receipts by properly calculating the cost of goods sold to ascertain gross income, though you may not be able to deduct things like selling or advertising expenses. There aren’t any exemptions from employment tax. It may be beneficial to make quarterly payments. Late payments can result in interest and penalties. Non-filers are a priority enforcement for the IRS. So too are those who use cryptocurrency; it’s imperative to use a reputable exchanger.
Report cash transactions. Your business may not use traditional banking, but you still need to report all cash transactions. Any company receiving $10,000 or more in cash (which is most California marijuana businesses) need to file Form 8300 within 15 days of receiving that payment. Failure to be diligent about this can cause major headaches for your business.
Maintain good records. This is mission critical for a cannabis business. Keeping meticulous records – all receipts, canceled checks, any shred of documentation that can support income, deduction, or credit should be kept in some form. Keep these records even for expenses that aren’t legally deductible because it’s going to make it easier to prepare your returns and also answer a question quickly if one arises.