Dale Schafer Law News – 6/30/22

#cannabisindustry – “Ostrowitz said, “I’m grateful to have this litigation behind me and move onward to the next chapter. Also if it can serve as a cautionary tale, I would tell other entrepreneurs that in this litigious society this can happen to anyone, even if you play by all the rules. If I could go back in time and give my young entrepreneur self any advice, it would be to create a “litigation” savings account and put aside at least 5% of each paycheck, and hope you never have to use it.””

https://www.greenmarketreport.com/cannaregs-lawsuit-comes-to-a-quiet-end/

#californiacannabis – “Claremont residents will be asked to approve a cannabis tax in November after the City Council voted this week to place the question on the ballot.

If approved by more than 50% of voters, the ballot measure would allow the city to impose a tax on cannabis and hemp businesses in the future….

The proposed tax for retail businesses, including storefronts and delivery services, would range from 4% to 7% of gross receipts. For all other businesses, including cultivation and distribution, the proposed tax is up to 4% of gross receipts or up to $10 per square foot of space, according to a report prepared for council….

This would give the council flexibility to adjust to changing market conditions and trends, according to David McPherson, compliance director at Hdl, the company hired to help Claremont with its cannabis tax measure.

However, once the cannabis tax rate range is locked in, any changes or adjustments would have to go back to voters, according to City Attorney Alisha Patterson.”

https://www.dailybulletin.com/2022/06/29/claremont-sends-cannabis-tax-measure-to-november-2022-ballot/

#californiacannabis – “At its next city council meeting Tuesday, the council plans to discuss whether to ask voters, again, to adopt a special tax on cannabis businesses, the first step to allowing pot shops and manufacturers to operate in the city in the upcoming November election.

The council decided to table the discussion at its last meeting and will discuss the issue Tuesday.

“It’s apparent that residents support the tax and [implicitly] support commercial cannabis in Huntington Beach,” said Dan Kalmack, a Huntington Beach council member, Wednesday to Spectrum News. “We’ve had all but no opposition in our many public meetings on the matter. We’re still working on the how, not the if.””

https://spectrumnews1.com/ca/orange-county/local-politics/2022/06/29/huntington-beach-to-discuss-future-of-cannabis-after-measure-fails

Courtesy of MJBiz Daily

#cannabisindustry – ““Every state is its own story, with a different regulatory structure,” said Kevin Bush, chief financial officer for Denver-based Sweet Leaf Madison Capital.

George Mancheril, CEO of Bespoke Financial, a Los Angeles commercial lender that works with cannabis companies, said marijuana stands out as one of the only industries where businesses are experiencing deflation.

Mancheril expects that most companies in mature markets won’t have a banner year but should be able to slog through and survive until the end of 2023 or 2024.”

https://mjbizdaily.com/how-would-a-recession-impact-the-cannabis-industry/

#cannabisindustry – “In the cannabis industry, many regulations cause inordinate costs for businesses but don’t benefit the public much. This includes location restrictions for retailers. No real social harm results from retailers being near libraries and parks, but these and other similar policies unduly burden cannabis businesses with higher real estate costs and make licensing unnecessarily competitive, driving costs up further. Legislators presumably adopt these policy in place to keep kids and other vulnerable populations away from cannabis dispensaries. But hundreds of thousands of people (including kids) walk and drive the major streets where cannabis retailers are located. So these regulation are not even effective in achieving their presumed goal….

The costs of regulation for both a regulator and the industry shouldn’t exceed the social costs that would result in the absence of regulation. So, the costliest types of regulations (known as command and control or “hard law”) should be reserved for scenarios where a lack of regulation leads to significant social harm. Is the method of regulation even effective at achieving those benefits? If it’s not, then it’s definitely not necessary. And perhaps another method would cost less or at least be more effective.”

https://harrisbricken.com/cannalawblog/advocating-for-better-cannabis-business-regulations/

Dale Schafer Law News – 6/29/22

#californiacannabis – “The City of Coachella is changing how it regulates some of its cannabis businesses. The changes adopted by the city council last week will affect manufacturing, testing, distribution and cultivation businesses, but not retail establishments.

Rules adopted in 2016 required commercial cannabis businesses to have at least five acres to operate. But Development Services Director Gabriel Perez said many new applicants have asked for exemptions to that requirement…..

Both the five-acre requirement and the conditional use permit requirement were lifted on a 3-0 vote from city council. Mayor Steven Hernandez and Councilmembers Neftali Galarza and Denise Delgado voted yes. Mayor Pro Tem Josephine Gonzalez and Councilmember Megan Beaman Jacinto were not present….

Another proposed change to city regulations would have expanded cannabis retail zoning outside of Coachella’s current “sub-zones,” which are in downtown, along Avenue 48 and Grapefruit Boulevard and by Dillon Road….

But the council did not approve having cannabis retail, mainly marijuana dispensaries, spread throughout the city. Hernandez expressed concern that doing so would be unfair to current businesses, some of whom might feel they have to relocate to maintain high visibility. He also noted that councilmembers were not supportive of seeing cannabis on Cesar Chavez Boulevard, a main commercial area.”

https://www.desertsun.com/story/news/local/coachella/2022/06/28/coachella-relaxes-commercial-cannabis-business-requirements/7708538001/

Courtesy of the Times of San Diego

#californiacannabis – San Diego – “The San Diego County Board of Supervisors on Tuesday approved a proposal to place a marijuana business tax on the November ballot.

Supervisors will discuss the exact wording of the measure at an August meeting. If passed by voters, the tax would affect marijuana businesses in the county’s unincorporated areas.”

https://timesofsandiego.com/politics/2022/06/28/county-voters-to-decide-in-november-if-marijuana-businesses-should-pay-taxes/

Dale Schafer Law News – 6/28/22

#cannabisindustry – “According to a recent Headset analysis, from March 2019 to April 2022, Flower market share dropped from 78.8% to 42.5% in Canada, and 41% to 40.4% in the U.S. Regardless, flower sales are twice as large as the next highest grossing categories, which are pre-rolls in Canada and vapor pens in the U.S. At the same time, the price of flower is decreasing in both countries. From January 2021 to March 2022, the average EQ price of flower in the U.S. dropped by -22% and -17% in Canada.

Retailers should use category, pricing, and discounting data when planning their assortment and marketing strategies, and brands should use this data when thinking about what types of products to make, the competitive landscape and how to price those products, especially given categories like flower are more saturated than, say, topicals.”

https://www.cannabisbusinesstimes.com/article/why-a-data-driven-mindset-is-crucial-at-this-stage-of-the-cannabis-industry-q-and-a-with-headsets-jocelyn-sheltraw/

Dale Schafer Law News – 6/25/22

#cannabis – “EDGAR at Part 86 requires that Institutions of Higher Education (IHEs) receiving federal funds or financial assistance must develop and implement a program to prevent the unlawful possession, use, or distribution of illicit drugs and alcohol by students and employees.5 Some of the requirements of this program involve the annual reporting of: standards of conduct; a description of sanctions for violating federal, state and local law and campus policy; a description of the health risks associated with Alcohol and Other Drug (AOD) use; a description of treatment options; and a biennial review of the program’s effectiveness and the consistency of the enforcement of sanctions.6

Appendix A to the announcement of the Regulations describes the controlled substances covered by this Act. Included on the list of substances are methamphetamine, heroin, cocaine, cocaine base, PCP, LSD, fentanyl, fentanyl analogue and marijuana. The major category of marijuana is broken down further to include hashish and hashish oil in varying quantities.7

IHEs are required to certify that they have an AOD prevention program in order to remain eligible for certain forms of federal funding and assistance. This certification is included commonly in the “Representations and Certifications” section of an application or proposal.8

There also exist certain requirements to demonstrate compliance with the Regulations. On request, IHEs must provide a copy of their biennial report to the U.S. Department of Education or its representative. The Secretary of Education, or their designee, may review the report and supporting documentation as necessary and, where an IHE is noncompliant, may take action ranging from providing technical assistance to help the campus come into compliance to terminating all forms of federal financial assistance. IHEs may also be subject to related requirements under state and federal law and judicial rulings.9″

https://www.jdsupra.com/legalnews/general-counsel-s-corner-cannabis-and-6190609/

#californiacannabis – “Several items within Anderson’s 16-point proposition would ensure cannabis businesses located in unincorporated communities answer to the same requirements as those located within the city of San Diego, such as increasing the setback of cannabis facilities near sensitive land uses like childcare centers and schools from 600 feet to 1,000 feet. Billboards would also have a minimum 1,000 foot setback from sensitive use locations and the list of what constitutes sensitive use spaces would expand to include locations frequently accessed by children and young adults such as public libraries and parks….

Nearly half the measures would require the county department of Planning and Development Services to conduct community research and return to the board within a year with options for direction.

Among those items: design related sections of the plan include limiting how many cannabis businesses can be placed in each community based on geography and population size. The plan called for a design guideline checklist with criteria which “could prohibit such designs that include, but are not limited to, bright colors and misleading facility names” while preserving community character.”

https://thealpinesun.com/county-rolls-new-measures-into-cannabis-permitting-program/

#californiacannabis – “Santee’s proposed tax measure includes a 6 percent rate for retail, 3 percent for distribution, 4 percent for manufacturing and 2 percent for testing labs. Additionally, the measure could feature up to a $10 per square foot rate for commercial cultivation. Both medicinal and recreational cannabis would be allowed.”

https://www.sandiegouniontribune.com/communities/east-county/santee/story/2022-06-25/santee-continues-to-discuss-allowing-cannabis-businesses-in-city

El Dorado County took a look at this issue and determined that a small (10,000 SQ ft) cultivation premise uses approximately the same amount of water as a single family residence.

#cannabisindustry – “A team of researchers affiliated with the University of California, Berkeley and with the State of California, North Coast Regional Water Quality Control Board decided to test that question. They assessed irrigation patterns among licensed cannabis farms in northern California.

Their research has confirmed that licensed outdoor marijuana farms do not put undue strain on limited water resources, according to data published in the Journal of Environmental Management. In fact, it only consumes a fraction of the water used by other commercial crops.”

https://www.theleafonline.com/c/cultivation-2/2022/06/cannabis-less-water-than-others-2021/

Dale Schafer Law News – 6/25/22

#cannabis – “EDGAR at Part 86 requires that Institutions of Higher Education (IHEs) receiving federal funds or financial assistance must develop and implement a program to prevent the unlawful possession, use, or distribution of illicit drugs and alcohol by students and employees.5 Some of the requirements of this program involve the annual reporting of: standards of conduct; a description of sanctions for violating federal, state and local law and campus policy; a description of the health risks associated with Alcohol and Other Drug (AOD) use; a description of treatment options; and a biennial review of the program’s effectiveness and the consistency of the enforcement of sanctions.6

Appendix A to the announcement of the Regulations describes the controlled substances covered by this Act. Included on the list of substances are methamphetamine, heroin, cocaine, cocaine base, PCP, LSD, fentanyl, fentanyl analogue and marijuana. The major category of marijuana is broken down further to include hashish and hashish oil in varying quantities.7

IHEs are required to certify that they have an AOD prevention program in order to remain eligible for certain forms of federal funding and assistance. This certification is included commonly in the “Representations and Certifications” section of an application or proposal.8

There also exist certain requirements to demonstrate compliance with the Regulations. On request, IHEs must provide a copy of their biennial report to the U.S. Department of Education or its representative. The Secretary of Education, or their designee, may review the report and supporting documentation as necessary and, where an IHE is noncompliant, may take action ranging from providing technical assistance to help the campus come into compliance to terminating all forms of federal financial assistance. IHEs may also be subject to related requirements under state and federal law and judicial rulings.9″

https://www.jdsupra.com/legalnews/general-counsel-s-corner-cannabis-and-6190609/

#californiacannabis – “Several items within Anderson’s 16-point proposition would ensure cannabis businesses located in unincorporated communities answer to the same requirements as those located within the city of San Diego, such as increasing the setback of cannabis facilities near sensitive land uses like childcare centers and schools from 600 feet to 1,000 feet. Billboards would also have a minimum 1,000 foot setback from sensitive use locations and the list of what constitutes sensitive use spaces would expand to include locations frequently accessed by children and young adults such as public libraries and parks….

Nearly half the measures would require the county department of Planning and Development Services to conduct community research and return to the board within a year with options for direction.

Among those items: design related sections of the plan include limiting how many cannabis businesses can be placed in each community based on geography and population size. The plan called for a design guideline checklist with criteria which “could prohibit such designs that include, but are not limited to, bright colors and misleading facility names” while preserving community character.”

https://thealpinesun.com/county-rolls-new-measures-into-cannabis-permitting-program/

#californiacannabis – “Santee’s proposed tax measure includes a 6 percent rate for retail, 3 percent for distribution, 4 percent for manufacturing and 2 percent for testing labs. Additionally, the measure could feature up to a $10 per square foot rate for commercial cultivation. Both medicinal and recreational cannabis would be allowed.”

https://www.sandiegouniontribune.com/communities/east-county/santee/story/2022-06-25/santee-continues-to-discuss-allowing-cannabis-businesses-in-city

El Dorado County took a look at this issue and determined that a small (10,000 SQ ft) cultivation premise uses approximately the same amount of water as a single family residence.

#cannabisindustry – “A team of researchers affiliated with the University of California, Berkeley and with the State of California, North Coast Regional Water Quality Control Board decided to test that question. They assessed irrigation patterns among licensed cannabis farms in northern California.

Their research has confirmed that licensed outdoor marijuana farms do not put undue strain on limited water resources, according to data published in the Journal of Environmental Management. In fact, it only consumes a fraction of the water used by other commercial crops.”

https://www.theleafonline.com/c/cultivation-2/2022/06/cannabis-less-water-than-others-2021/

Dale Schafer Law News – 6/24/23

#cannabispolitics – “After a dip during the peak of the pandemic in 2020, federal law enforcement agents and their partners arrested 25% more people for cannabis-related crimes in 2021, during the first year of the Biden Administration.

But while a post-pandemic bump in arrests would have been fair to expect, the biggest jump in cannabis arrests in a decade was not. The nation’s oldest cannabis reform organization NORML noted the 6,606 marijuana-related arrests in 2021 represented the most since the 8,500 arrested in 2011.

This followed Joe Biden’s February 2021 promise he would pursue decriminalization and mass expungements for people with prior cannabis convictions. A month after that promise, word got out that some staff may have been a little too honest with Joe about their past marijuana use, dozens of young White House staffers were asked to resign. So the hopes of cannabis policy reformers were squashed quickly, but the new soaring arrest numbers are certainly salt in the wound.”

https://www.laweekly.com/federal-cannabis-arrests-jump-25-under-biden/

#cannabispolitics – “A former councilman from the city of Adelanto has been convicted of taking a $10,000 bribe to help a cannabis business open and hiring someone to burn down his restaurant for an insurance payout.

After a six-day trial, Jermaine Wright, 46, was found guilty Wednesday by a federal jury of one count of bribery of programs receiving federal funds and one count of attempted arson of a building affecting interstate commerce, according to the U.S. attorney’s office for the Central District of California…..

Wright is scheduled to be sentenced in September. He faces up to 30 years in federal prison.”

https://www.latimes.com/california/story/2022-06-23/former-adelanto-councilman-found-guilty-of-taking-bribe

Dale Schafer Law News – 6/24/23

#cannabispolitics – “After a dip during the peak of the pandemic in 2020, federal law enforcement agents and their partners arrested 25% more people for cannabis-related crimes in 2021, during the first year of the Biden Administration.

But while a post-pandemic bump in arrests would have been fair to expect, the biggest jump in cannabis arrests in a decade was not. The nation’s oldest cannabis reform organization NORML noted the 6,606 marijuana-related arrests in 2021 represented the most since the 8,500 arrested in 2011.

This followed Joe Biden’s February 2021 promise he would pursue decriminalization and mass expungements for people with prior cannabis convictions. A month after that promise, word got out that some staff may have been a little too honest with Joe about their past marijuana use, dozens of young White House staffers were asked to resign. So the hopes of cannabis policy reformers were squashed quickly, but the new soaring arrest numbers are certainly salt in the wound.”

https://www.laweekly.com/federal-cannabis-arrests-jump-25-under-biden/

#cannabispolitics – “A former councilman from the city of Adelanto has been convicted of taking a $10,000 bribe to help a cannabis business open and hiring someone to burn down his restaurant for an insurance payout.

After a six-day trial, Jermaine Wright, 46, was found guilty Wednesday by a federal jury of one count of bribery of programs receiving federal funds and one count of attempted arson of a building affecting interstate commerce, according to the U.S. attorney’s office for the Central District of California…..

Wright is scheduled to be sentenced in September. He faces up to 30 years in federal prison.”

https://www.latimes.com/california/story/2022-06-23/former-adelanto-councilman-found-guilty-of-taking-bribe

Dale Schafer Law News – 6/23/22

#californiacannabis – ““There’s two challenges. One is on the regulatory side, and that has a lot to do with smoking, but also public health concerns. And then the other one really is what is the business model? How does it work? Because you have to pay rent on that space. I think that’s the key challenge for lounges,” Dominic Corva, co-director of the Humboldt Institute for Interdisciplinary Marijuana Research at Cal Poly Humboldt, said.

The regulatory challenge Corva referred to is about California anti-indoor smoking regulation meant to protect employees from working in smoke-filled environments, though the regulations were initially targeted at cigarette smoke….

“There aren’t any rules and regulations that directly regulate cannabis consumption indoors, so you have to follow those tobacco laws until the state adopts indoor cannabis consumption laws. What we have to adhere to is just making sure that we don’t violate any of the indoor consumption laws,” Ray Markland, High Tides’ manager, said. “The actual space (for smoking) has to be a separate confined space, we have to have a complaint HVAC system, that system has a minimum number of air changes per hour, we have to make sure that we monitor and keep track of the data from that so that way our employees aren’t subjected to having to work in that environment.”….

While not all areas are receptive to the idea of cannabis lounges — 57% of California’s cities and counties have outright banned all types of cannabis businesses — Corva noted that Humboldt County’s culture and world-famous legacy of cannabis cultivation, legal and illegal, mean that cannabis consumption locally lacks the stigma frequently associated with other parts of California.”

https://www.times-standard.com/2022/06/22/eureka-on-site-cannabis-lounges-navigate-challenging-laws-health-concerns/

#cannabisindustry – Federal Protection – “The text released on Tuesday didn’t include the sweeping protections, however. Instead, it simply maintained an existing rider preventing the Justice Department from using its appropriated federal funds to interfere in the implementation of state medical cannabis programs only, not extending those protections to all state marijuana programs including recreational laws….

That more limited language has been annually renewed in federal law each year since 2014.”

https://www.marijuanamoment.net/state-marijuana-protections-not-included-in-justice-department-funding-bill-despite-lawmakers-pleas/

Dale Schafer Law News – 6/23/22

#californiacannabis – ““There’s two challenges. One is on the regulatory side, and that has a lot to do with smoking, but also public health concerns. And then the other one really is what is the business model? How does it work? Because you have to pay rent on that space. I think that’s the key challenge for lounges,” Dominic Corva, co-director of the Humboldt Institute for Interdisciplinary Marijuana Research at Cal Poly Humboldt, said.

The regulatory challenge Corva referred to is about California anti-indoor smoking regulation meant to protect employees from working in smoke-filled environments, though the regulations were initially targeted at cigarette smoke….

“There aren’t any rules and regulations that directly regulate cannabis consumption indoors, so you have to follow those tobacco laws until the state adopts indoor cannabis consumption laws. What we have to adhere to is just making sure that we don’t violate any of the indoor consumption laws,” Ray Markland, High Tides’ manager, said. “The actual space (for smoking) has to be a separate confined space, we have to have a complaint HVAC system, that system has a minimum number of air changes per hour, we have to make sure that we monitor and keep track of the data from that so that way our employees aren’t subjected to having to work in that environment.”….

While not all areas are receptive to the idea of cannabis lounges — 57% of California’s cities and counties have outright banned all types of cannabis businesses — Corva noted that Humboldt County’s culture and world-famous legacy of cannabis cultivation, legal and illegal, mean that cannabis consumption locally lacks the stigma frequently associated with other parts of California.”

https://www.times-standard.com/2022/06/22/eureka-on-site-cannabis-lounges-navigate-challenging-laws-health-concerns/

#cannabisindustry – Federal Protection – “The text released on Tuesday didn’t include the sweeping protections, however. Instead, it simply maintained an existing rider preventing the Justice Department from using its appropriated federal funds to interfere in the implementation of state medical cannabis programs only, not extending those protections to all state marijuana programs including recreational laws….

That more limited language has been annually renewed in federal law each year since 2014.”

https://www.marijuanamoment.net/state-marijuana-protections-not-included-in-justice-department-funding-bill-despite-lawmakers-pleas/

Dale Schafer Law News – 6/22/22

#cannabisindustry – “Federal anti-money laundering (AML) laws – including the Bank Secrecy Act (BSA) and its implementing regulations – are the primary impediment to banks serving the cannabis industry. These laws establish various recordkeeping and reporting requirements for national banks, federal savings associations, and agencies of foreign banks. Under the BSA, a financial institution must file a Suspicious Activity Report (SAR) when it knows, suspects, or has reason to suspect that a transaction involves funds derived from illegal activity. This would seemingly include any transaction involving funds derived from manufacturing, distributing, or dispensing cannabis, which is illegal under the federal Controlled Substances Act (CSA).

Nevertheless, federal regulators have set up an informal framework for banking cannabis through a series of guidance memoranda, which attempt to clarify when a bank must file a SAR regarding its cannabis customers. The first such memorandum came in 2013 when the Department of Justice issued the “Cole Memo.” In response to the Cole Memo and the growing number of states legalizing cannabis under state law, the Financial Crimes Enforcement Network (FinCEN) issued guidance that sought to “clarif[y] how financial institutions can provide services to marijuana-related businesses consistent with their BSA obligations” (FinCEN Guidance) in 2014.

The FinCEN Guidance requires that a financial institution engaging a cannabis-related business conduct substantial and, importantly, continuing due diligence to determine whether that business is (1) complying with state law, (2) interfering with any of the eight priorities listed in the Cole Memo, or (3) otherwise engaging in “suspicious activity,” including a list of “red flags” enumerated in the Guidance. Depending on what the institution uncovers in its due diligence, it must then file one of three cannabis-specific SARs and continue filing SARs throughout its relationship with the cannabis-related business.

Because the FinCEN Guidance is an informal guidance document that lacks the force of law, it does not immunize a financial institution from federal prosecution for banking cannabis. But many financial institutions have relied on it to provide banking services to cannabis companies. Indeed, 518 banks and 188 credit unions were providing such services as of December 2021. While those numbers seem substantial, many financial institutions have remained on the sidelines. As the American Bankers Association has explained, “without congressional action,” the “majority of financial institutions will not take the legal, regulatory, or reputational risk associated with banking cannabis-related businesses…”

https://www.natlawreview.com/article/cannabis-banking-will-safe-banking-act-finally-pass

Courtesy of the Dana Point Times

#californiacannabis – “In response to a citizen initiative currently being circulated that looks to repeal Dana Point’s prohibition against cannabis retail operations, roughly two dozen people gathered on Monday night, June 20, to attend a town hall discussion regarding the impact of marijuana on the community.

Paul Wyatt, a former councilmember, moderated the panel that featured multiple speakers, including Foundry Treatment Center CEO Ben Cort, Family Medicine and Addiction Specialist Dr. Daniel Headrick and Scott Chipman, leader of San Diegans for Safe Neighborhoods….

The petition has until Aug. 12 to gather signatures from 10% of registered voters and receive verification by the Orange County Registrar of Voters to qualify for the upcoming General Election.”

https://www.danapointtimes.com/town-hall-on-proposed-cannabis-ballot-measure-hits-on-impacts-to-the-community/

#cannabisindustry – “The U.S. Supreme Court on Tuesday declined to take up a pair of cases concerning workers’ compensation for medical marijuana.

This comes about a month after the Justice Department encouraged the high court to reject the cannabis cases, in part because it argued that broader marijuana policy choices were better left up to Congress or the executive branch.

The new decision—denying certiorari—means that fewer than four justices felt the legal challenges merited consideration by the high court. It doesn’t necessarily mean that a majority agrees with lower court rulings in the disputes, however.”

https://www.marijuanamoment.net/u-s-supreme-court-denies-medical-marijuana-workers-compensation-cases/