Category Archives: General

California Cannabis Banking Bill – Moving Along with 35-1 Senate Vote in Favor – Brad A. Molotsky, Esq.

The CA Senate voted 35-1 to allow banks and credit unions to accept cash deposits from marijuana retailers.

Per reporting from the Star Tribune, those banks would be permitted to issue special checks to the retailers that could only be used for certain purposes, including paying taxes and California-based vendors.

State lawmakers are of the view that such banks would make it easier for licensed cannabis retailers to pay their taxes, which fell far short of expectations in the first year after legalization.

“This is as close as we can get until the federal government changes its policy,” said Sen. Bob Hertzberg, a Van Nuys Democrat and the author of the bill that now goes to the Assembly.

Per the Marijuana Law Reporter, Marijuana has been legal in California since January 2018, but it’s still illegal under federal law under the Controlled Substances Act.

-Brad A. Molotsky, Esquire

California Industrial Hemp Registration is Now Open

On April 30, 2019, the California Department of Food and Agriculture (CDFA) made available registration applications to cultivate industrial hemp. The CDFA’s approved regulations require, among other things, a prospective cultivator to register with the county agricultural commissioner where the cultivator is located and pay a $900 registration fee.

However, even though applications are now live, several counties throughout California still restrict or prohibit the cultivation of hemp. The CDFA has identified the following counties as restricting hemp cultivation: Amador, Calaveras, Glenn, Humboldt, Lassen, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Orange, Placer, Sacramento, San Bernardino, San Joaquin, Santa Barbara, Shasta, Sierra, Siskiyou, Sonoma, Tehama, Trinity, Tulare, Tuolumne, Yolo, and Yuba.

It remains unclear how these current regulations will be affected by the Agricultural Improvement Act of 2018 (2018 Farm Bill). Under the 2018 Farm Bill, the CDFA is required to submit its hemp-production plan to the United States Department of Agriculture (USDA) for approval but as of the date of this post the USDA has not issued regulations relating to that review. Additionally, it is unclear how this program will operate in the interim under the 2014 Farm Bill. We will continue to watch as this program develops alongside the USDA’s 2018 Farm Bill program.

Duane Morris Cannabis Industry Group Ranked as a National Leader by Chambers and Partners

Duane Morris congratulates our Cannabis Industry Group on being ranked as a National Leader in Cannabis Law by Chambers and Partners.

Seth Goldberg
Seth A. Goldberg
David Feldman
David Feldman

Seth Goldberg and David Feldman are also ranked as national leading attorneys in Cannabis Law.

Continue reading Duane Morris Cannabis Industry Group Ranked as a National Leader by Chambers and Partners

What Investors Need to Know Before Entering the Cannabis Real Estate Market

With 10 states plus the District of Columbia legalizing cannabis for recreational use and medical marijuana legal in another 23 states, cannabis sales are projected to grow from $10.8 billion today to about $100 billion over the next five years, according to the National Institute for Cannabis Investors.

As a result, investors in cannabis-related industrial real estate can expect exceptional returns on investment (ROI). In a 2018 survey by Denver-based PropTech developer Apto, 76 percent of commercial real estate brokers handling cannabis deals in all states where the drug is legal in some form reported cannabis deals pricing above market.

[…]

Cannabis real estate values are likely to continue rising due to the supply-demand imbalane, says Clint Callan, a Bay Area-based partner at the national law firm of Duane Morris LLP. “With cannabis, there are only so many spaces and opportunities available, which runs up the price,” he adds.

To read the full text of this article in which Duane Morris partner Clint Callan is quoted,  please visit the National Real Estate Investor website.

USDA Issues Guidance on Importation of Hemp Seeds

USDA has issued its first guidance since the passage of the 2018 Farm Bill. Because the Farm Bill removed hemp from the Controlled Substances Act, the importation of hemp seeds will now be regulated by USDA as an agricultural product, not DEA.  USDA stated that by removing hemp from the CSA, the Act “removed hemp and hemp seeds from DEA authority for products containing THC levels not greater than 0.3 percent. Therefore, DEA no longer has authority to require hemp seed permits for import purposes.” Importation of hemp seeds from international sources will now be permitted if accompanied by the appropriate phytosanitary certification and will be subject to inspection by Customs and Border Patrol.

The reference to DEA authority is significant and confirms that DEA no longer has jurisdiction over hemp or products derived from hemp such as CBD oil.  DEA  needs to update its own guidance documents in light of the 2018 Farm Bill. USDA is working on regulations to implement the state cultivation program provisions of the Farm Bill.  They are expected to be in place in time for the 2020 growing season.

Immigrants Can Be Denied U.S. Citizenship for Working in Regulated Marijuana Industry

Last week the U.S. Citizenship and Immigration Services (USCIS) issued guidance indicating that working in the marijuana industry, or even just possessing cannabis, could be grounds to reject a citizenship application—regardless of whether it is done in a state where it is legal. This guidance also would apply to permanent residents or “green card” holders seeking citizenship. The policy guidance is set forth in the USCIS Policy Manual and seeks to clarify that violations of federal controlled substance law, including violations involving marijuana, are “generally a bar to establishing good moral character for naturalization, even where that conduct would not be an offense under state law.” The policy guidance also clarifies that an applicant who is involved in certain marijuana-related activities may lack good moral character if found to have violated federal law, even if such activity has been decriminalized under applicable state laws.

Reports by various news outlets indicate that some lawful immigrants have already been denied naturalization by USCIS because of their employment in the cannabis industry. According to USCIS, as long as marijuana remains illegal under federal law, the agency won’t grant special considerations to individuals whose marijuana activities may be decriminalized under state or local law. The position of USCIS is that “marijuana remains illegal under federal law as a Schedule I controlled substance regardless of any actions to decriminalize its possession, use, or sale at the state and local level, federal law does not recognize the decriminalization of marijuana for any purpose, even in places where state or local law does.”

As we know, the U.S. Customs & Border Patrol has prevented some Canadian citizens from entering the U.S. because of their involvement in the cannabis industry. It remains unclear how strict USCIS will be in enforcing the latest policy guidance on citizenship. For the time being, participation in the cannabis industry will continue to constitute a potential bar to a determination of good moral character for naturalization eligibility, even where such activity is not a criminal offense under state law.

Duane Morris Partner Jennifer Briggs Fisher Named Cannabis Attorney of the Year

Jennifer Briggs Fisher, partner and a team lead of Duane Morris’ Cannabis Industry Group, has been named Cannabis Attorney of the Year by Bonaventure Equity. The award was presented at the Cannabis Dealmakers Summit on April 18 in San Diego.

Ms. Fisher regularly works with cannabis companies and ancillary businesses in California and throughout the nation, as well as in Canada, to provide compliance advice on a wide range of issues related to legal cannabis and hemp business activities. She is an experienced litigator, provides advice on regulatory and compliance issues and has represented corporations and individuals involved in a broad range of complex and high stakes civil, criminal, legislative and administrative proceedings.

David Feldman

NYC to Ban Pre-Employment Cannabis Testing

Last week, the New York City Council overwhelmingly approved a new local law to prohibit city employers from testing potential employees for marijuana use. This weekend Mayor Bill de Blasio indicated he will sign the bill. There are certain exceptions, permitting marijuana testing for police, construction workers, child care workers and some others. It also does not prohibit testing of current employees or firing someone for cannabis use. The bill, which would not take effect until one year after the Mayor signs it, applies to any employers in the city, even if their headquarters is elsewhere. The few Republicans who did not support the bill argued that employers should have the freedom to decide whom they wish to hire.

It appears no measure like this that has passed elsewhere, even in states that have legalized adult use of cannabis. Some states’ laws do prohibit discrimination against employees solely because they use medical marijuana. New York’s current proposed cannabis legalization bill, for example, would treat possessing a medical cannabis card as a disability, entitling the holder to certain benefits and protections. This bill, however, also prohibits testing of those using cannabis recreationally.

NYC has been readying itself for the expected passage of legal adult use cannabis in the State at some point this year. While previously opposed to legalization, the Mayor now supports it. Following an embarrassing New York Times story, the Mayor also recently banned the NYPD from arresting folks solely for using marijuana in public. Only traffic tickets can be issued now. Will the Big Apple lead the way in supporting the legal use of cannabis? This new law appears to be an important step in that direction.

David Feldman

Senior Trump Officials Support Congressional Action on Cannabis

In the last week both the US Attorney General and the Treasury Secretary have encouraged Congress to take action towards easing US cannabis prohibition. Yesterday, in testimony before Congress, AG William Barr seemed to support the currently pending Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, while still opposing legalization. He was concerned about the continuing conflict between federal and state laws in the area, saying: “The situation that I think is intolerable and which I’m opposed to is the current situation we’re in, and I would prefer one of two approaches rather than where we are. Personally, I would still favor one uniform federal rule against marijuana but, if there is not sufficient consensus to obtain that, then I think the way to go is to permit a more federal approach so states can make their own decisions within the framework of the federal law and so we’re not just ignoring the enforcement of federal law…I would much rather that approach—the approach taken by the STATES Act—than where we currently are.”

Separately, many have been disappointed by the lack of action by Secretary Steven Mnuchin’s Treasury Department. In February 2018 he said that addressing the challenge of cannabis businesses’ access to commercial banking was at the “top of the list” of his priorities. Since then the Department has taken no action on the issue. On Tuesday of this week, Mnuchin announced in Congressional testimony, essentially, that his hands are tied and he believes he cannot solve the cannabis banking problem administratively. He urged Congress to address the issue with new laws “on a bipartisan basis.” Mnuchin spoke of the need to build “cash rooms” at Treasury to hold taxes that cannabis companies pay in cash. The SAFE Banking Act of 2019, which would effectively eliminate most restrictions on banks taking cannabis companies as customers, has passed the House Financial Services Committee and is expected to pass the full House as well. It’s fate in the US Senate is less clear. The STATES Act also would address the banking issue.

Politically, it appears we are closer than ever to Congressional action in this area. Every Presidential candidate, including all the Democrats, Trump and his current Republican contender Bill Weld, favors some form of legalization or allowing states to decide on the matter. Between the growing public support for legalization, the taxes and jobs pouring into cannabis-legal states and the desire to right the wrongs of the War on Drugs, it is becoming both more politically acceptable and politically expedient to support easing of federal criminal restrictions. The current holdup? The US Senate, where Lindsey Graham and Mitch McConnell continue to appear to desire to stonewall further legalization efforts. Stay tuned.