The Duane Morris Cannabis Webinar Series-IP, Trademark and Branding, and Marketing

Duane Morris is presenting a series of monthly webinars throughout 2018 to discuss issues affecting the cannabis industry. Each session will cover a specific subject and feature a “Hot Topics” segment to cover recent developments in the industry.

Join us for the second session on Tuesday, February 27, 2018, covering topics impacting the cannabis industry.

Cannabis 102: Intellectual Property, Trademark and Branding, and Marketing

  • Trademarks and Branding Cannabis Products
  • Patenting Cannabis and Cannabis Products
  • Trade Secrets: Advantages and Challenges
  • A Company’s Perspective with Guest Speaker: Gary Traynor, VP of Operations and Sales, LeafGoods, LLC

Presenters

  • Christiane Schuman Campbell, Partner, Duane Morris LLP
  • Vicki G. Norton, Ph.D., Partner and Co-Chair, Life Sciences and Biotechnology Group, Duane Morris LLP
  • Gretchen L. Temeles, Ph.D., Associate, Duane Morris LLP

REGISTER

For more information, as well as upcoming dates and topics, visit the webinar event page.

Patricia Heer

SCOTUS Could Take Up 280E

There may be no greater thorn in the side of a cannabis producer, processor or retailer than section 280E of the Internal Revenue Code.  Section 280E prohibits businesses engaged in trafficking substances prohibited under the Controlled Substances Act (CSA) from claiming certain deductions and credits on their federal income-tax returns.

In October 2017, a Colorado cannabis retailer, the Green Solution Retail, Inc. petitioned the U.S. Supreme Court to review a decision which held that federal laws, specifically the Anti-Injunction Act and the Declaratory Judgment Act, preclude challenges to the IRS assessments of taxes, as such challenges to disputed sums must be determined in a suit for a refund or deficiency.  Green Solution argues in its petition that its claims against the IRS are not challenging the IRS’s assessment or seeking to restrain it, but rather its claims are challenging the IRS’ administrative authority to make determinations as to whether Green Solution is criminally culpable under the CSA.  Green Solution pleads that it is concerned about the IRS sharing information it gains as part of the assessment with the Department of Justice (DOJ) potentially triggering criminal repercussions for the dispensary under the CSA.  Last week, the Government filed its response to Green Solution’s petition, urging the Supreme Court to deny the request for review.  The Government takes the position that any investigation by the IRS of Green Solution’s activities is part and parcel of its assessment of the retailer’s allowable deductions and tax liability.  Consequently, the Government argues that such a challenge to the IRS’s assessment activities is barred by the Acts.

This is not the only case against government entities involving  cannabis issues before the courts.  A case commenced by Marvin Washington and other plaintiffs seeking to hold the Controlled Substances Act unconstitutional is scheduled to be heard next week (in connection with the Government’s request that the court dismiss that case).  Could these two cases be the pressure at the judiciary level that result in a reevaluation of the social and political positions on federal drug laws criminalizing cannabis? While Justice Neil Gorsuch, during his tenure on the Tenth Circuit, ruled against owners of another dispensary that were fearful of the IRS sharing information with the DOJ in connection with an IRS audit, Justice Gorsuch also stated in that decision that the federal government was sending mixed messages about distribution of cannabis and he was skeptical about the IRS not divulging information with the DOJ.

 

Contingency Fees and Commercial Litigation Hit the Cannabis Space

Seth Goldberg
Seth A. Goldberg

As the values of transactions in the cannabis industry grow, commercial litigation is certain to follow.  One reason for this is that lawyers may be more inclined to represent clients on a contingency fee basis.  Where the value of a cannabis transaction is small, the expense of litigation may not be worthwhile for an individual or business feeling cheated, and any settlement or judgment would likely not cover the costs of an attorneys’ contingency fee.  However, where the value of a cannabis transaction is sufficiently high, say the upper six-figures or more, a lawyer may be more inclined to take the case for a contingency fee because the lawyer’s percentage of any recovery is likely to be greater than the costs the lawyer will incur in litigating the matter.  A contingency fee arrangement may also be utilized to the advantage of a party that believes threatened or actual litigation might shift the leverage in negotiations and result in more attractive commercial terms.

A recently filed action captioned Silver v. High Street Capital et al., 2:18-cv-00020 (E.D. PA. 1/3/18), appears to result from the type of high value transaction that might warrant a contingency fee in a commercial litigation.  The plaintiff, industry consultant Harris Silver alleges that, in connection with their bid to obtain a license to grow and process cannabis pursuant to Pennsylvania’s Medical Marijuana Program, defendant High Street Capital and other defendants associated with High Street promised Silver a lucrative compensation package, including (a) $180,000 to prepare the license application; (b) a $150,000 cash bonus upon the granting of a license and a 4% non-dilutable equity stake in any licensee; and (c) a salaried position with the licensee.  Silver claims that notwithstanding his work on the High Street application, for which a permit was granted, the High Street defendants never paid Silver the valuable consideration that was contingent on the permit being granted.  Thus, based on a host of factual allegations detailing various communications he had with the High Street defendants, and other allegations detailing his efforts on their behalf, Harris asserted claims against the High Street defendants for breach of contract, common law fraud, promissory estoppel, unjust enrichment, securities fraud and civil conspiracy. Continue reading Contingency Fees and Commercial Litigation Hit the Cannabis Space

David Feldman Presenting at Women Grow Conference in Denver

David Feldman Duane Morris’ David Feldman will be presenting at the Women Grow 2018 Leadership Summit in Denver on February 2, 2018. David’s presentation, on a panel entitled, “Know the Law,” will focus on the origins of US federal criminalization of cannabis and current challenges under continuing federal restrictions.

Women Grow was created to connect, educate, inspire and empower the next generation of cannabis industry leaders by creating programs, community and events for aspiring and current business executives. Founded in 2014 in Denver, Women Grow is a for-profit entity that serves as a catalyst for women to influence and succeed in the cannabis industry as the end of marijuana prohibition occurs on a national scale.

“Cannabis 101” Webinar Replay Available

A video replay of the webinar Cannabis 101: Update on the Federal Enforcement & State Regulatory Environment is available to view.

The webinar covers the topics:

  • Attorney General Jeff Sessions’ Memo Rescinding the Cole Memo—What Has Changed?
  • How Federal Enforcement Works from the Perspective of a Former Federal Prosecutor
  • Federal Legislative Update—Congressional Attempts to Protect the Cannabis Industry
  • State Regulatory Actions and How Courts Are Interpreting Cannabis Regulations

Watch above in the embedded viewer, or go to the event page to watch the replay.

Patricia Heer

FDA Accepting Comments on CBD for UN Commission Meeting

The Food and Drug Administration (FDA) is accepting comments to help formulate the United States’ position on the World Health Organization’s recommendations on certain drug substances, including cannabis extracts and cannabidiol (CBD), in preparation of a meeting of the United Nations Commission on Narcotic Drugs (Commission) to be held on March 2018.

In November 2017, after the WHO Expert Committee for Drug Dependence (Expert Committee) met, the Expert Committee issued its recommendations for scheduling various substances under international control, pursuant to international treaties such as the 1971 Convention on Psychotropic Substances (1971 Convention) and the 1961 Single Convention on Narcotic Drugs (1961 Convention).  The Expert Committee did not include CBD among those substances, stating instead that “there is no evidence that CBD as a substance is liable to similar abuse and similar ill-effects as substances in 1961 or 1971 Conventions.”  The Expert Committee concluded that the current information does not justify scheduling of CBD.

The Expert Committee went on, however, to note that CBD is produced for pharmaceutical purposes as an extract of cannabis, and cannabis extracts and tinctures are included in the 1961 Convention.  In that regard, cannabis extracts are listed in Schedule I of the 1961 Convention which contains drugs subject to the least stringent controls, unlike Schedule I of the US Controlled Substances Act (CSA) which contains substances subject to the most stringent controls.  The requirements for substances identified on Schedule I of the 1961 Convention, such as cannabis extracts, include import and export authorization, licensing of manufacturers/ distributors, recordkeeping requirements, medical use prescriptions, annual estimates of needs, quotas and statistical reporting, and limitations on use for medical and scientific purposes.  As part of its recommendations report, the Expert Committee advised that it will conduct a pre-review of cannabis extracts and tinctures at its next meeting in May 2018, and it recommend that it also carry out at that meeting a critical review of cannabis extracts and preparations that contain almost exclusively CBD. Continue reading FDA Accepting Comments on CBD for UN Commission Meeting

NJ Governor Murphy Signs Executive Order Expanding New Jersey’s Medical Marijuana Program

Just a week in office, Governor Phil Murphy has taken the first step in process of bringing much needed reform to New Jersey’s medical marijuana program. He signed an Executive Order today calling for his Commissioner of Health and the Board of Medical Examiners to report back in 60 days concerning expansion of the currently limited medical marijuana program consisting of five operating centers.

Gov. Phil Murphy signs executive order
Gov. Phil Murphy signs executive order

New Jersey’s existing medical marijuana program is problematic and ineffective for a number of reasons. The current program allows for a very limited number of qualifying patient conditions, has an overly burdensome regulatory process and associated administrative fees that discourage both doctor and patient participation, has an arbitrary and unnecessary limit on the amount of dispensaries permitted to operate in the state. It also places illogical limits on the types of medical cannabis strains permitted to be sold in each dispensary.

Stay tuned for more developments.

Patricia Heer

Rohrabacher-Blumenauer Protections Extended Through Stopgap

On January 22, 2018, Congress came to an agreement on a resolution that continues funding the government, including the Department of Justice, through February 8, 2018.  The funding resolution leaves in place protections for state medical marijuana programs from prosecutions by the Department of Justice by restricting its funding.  The protections are found in legislation now sponsored by Reps. Dana Rohrabacher and Earl Blumenauer (formerly by Sam Farr instead of Blumenauer) that became law as part of the omnibus spending bill (and are known as the Rohrabacher- Farr Amendment, or the Rohrabacher-Blumenauer Amendment). 

The Amendment provides that  none of the funds made available to the Department of Justice in the Appropriations Act may be used to prevent states from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.  In light of recent steps taken by the administration to rescind the Cole Memo and review the FinCEN guidelines that have put the cannabis industry on alert, cannabis businesses can find some comfort, albeit temporary, in Congress’ continuing limitation on the funding extended for the Department of Justice.

The Duane Morris Cannabis Webinar Series

Duane Morris is presenting a series of monthly webinars throughout 2018 to discuss issues affecting the cannabis industry. Each session will cover a specific subject and feature a “Hot Topics” segment to cover recent developments in the industry.

Join us for the kickoff session on Monday, January 29, 2018, covering topics impacting the cannabis industry.

Cannabis 101: Update on the Federal Enforcement & State Regulatory Environment

  • Attorney General Jeff Sessions’ Memo Rescinding the Cole Memo—What Has Changed?
  • How Federal Enforcement Works from the Perspective of a Former Federal Prosecutor
  • Federal Legislative Update—Congressional Attempts to Protect the Cannabis Industry
  • State Regulatory Actions and How Courts Are Interpreting Cannabis Regulations

Presenters

  • Jennifer Fisher, Partner, Duane Morris LLP
  • George D. Niespolo, Partner and Co-Chair, White-Collar Criminal Defense, Corporate Investigations and Regulatory Compliance Division, Duane Morris LLP
  • Jerry Levy, Partner, Duane Morris LLP

REGISTER

For more information, as well as upcoming dates and topics, visit the webinar event page.