Duane Morris partner Seth Goldberg will take part in a webcast, “Valuation Trends and Investment Opportunities in the Cannabis Industry,” to be held on June 29, 2017, from 11:00 a.m. to 12:00 noon PDT. Please visit the Expert Webcasts website for more information or to register.
Duane Morris partners Seth Goldberg, a team lead for Duane Morris’ Cannabis Law Practice Group, was a panelist for an ACG webinar, “Cannabis: Investing in One of the Fastest “Growing” Segments of the Life Sciences Industry” on May 9, 2017. You may view the webinar below.
Just one week after the DEA and FDA reiterated the federal government’s willingness to allow broader research into the health benefits of cannabis, the Ninth Circuit Court of Appeals issued a decision barring the DOJ from using federal funds to prosecute individuals and businesses conducting activities in compliance with state medical cannabis laws and regulations.
In U.S. v. McIntosh, No. 15-10117, (9th Cir. 2016), the Court determined that a rider (§ 542) to the appropriations act that funded the government through September 30, 2015, which provided that funds made available under that act could not be used “to prevent  States from implementing their own State laws that authorize the use, distribution, possession. of cultivation of medical marijuana,” was to be read as prohibiting the federal government from prosecuting individuals and businesses acting pursuant to those state laws and regulations because such prosecution would effectively prevent the states from implementing their cannabis laws and regulations.
As the Court explained, “DOJ, without taking any legal action against the Medical Marijuana States, prevents them from implementing their laws that authorize the use, distribution, possession, or cultivation of medical marijuana by prosecuting individuals for use, distribution, possession, or cultivation of medical marijuana that is authorized by such laws. By officially permitting certain conduct, state law provides for nonprosecution of individuals who engage in such conduct. If the federal government prosecutes such individuals, it has prevented the state from giving practical effect to its law.”
The Court was also careful to warn industry participants that cannabis-related conduct falling outside a state’s cannabis laws and regulations would not be protected from federal prosecution: “We conclude that § 542 prohibits the federal government only from preventing the implementation of those specific rules of state law that authorize the use, distribution, possession, or cultivation of medical marijuana. DOJ does not prevent the implementation of rules authorizing conduct when it prosecutes individuals who engage in conduct unauthorized under state medical marijuana laws. Individuals who do not strictly comply with all state-law conditions regarding the use, distribution, possession, and cultivation of medical marijuana have engaged in conduct that is unauthorized, and prosecuting such individuals does not violate § 542.”
Duane Morris’ Seth Goldberg was quoted in the Philadelphia Business Journal on the opportunities and risk facing entrepreneurs in the development medical marijuana industry in Pennsylvania.
While the upfront costs to entrepreneurs wanting to enter the market are expected to run into the millions of dollars, the payoff could be substantial. The ArcView Group, a market research firm that studies the cannabis industry, estimates the Pennsylvania medical marijuana market will start out with annual sales at about $125 million and grow at a rate of about 180 percent per year in the program’s first few years.
“There will also be huge opportunities for entrepreneurs who want to create ancillary businesses that are integral to the core growing and dispensing businesses,” said Seth Goldberg, a Philadelphia attorney with Duane Morris who specializes in commercial and health care matters.
On April 17, 2016, Pennsylvania became the 24th state to legalize the use of marijuana for medicinal purposes when Pennsylvania Governor Tom Wolf signed into law Senate Bill 3, known as the “Medical Marijuana Act” (the “Act”). While the Act will become effective on May 17, 2016, its implementation will not be fully realized until various reports and regulations contemplated in the Act are developed. The Act will be administered by the Pennsylvania Department of Health (the “Department”).
The Act limits the use of medical marijuana to patients suffering from one of the 17 “Serious Medical Conditions” identified in the Act, which are: cancer; HIV/AIDS; amyotrophic lateral sclerosis; Parkinson’s disease; multiple sclerosis; epilepsy; inflammatory bowel disease; damage to the nervous tissue of the spinal cord with objective neurological indication of intractable spasticity; neuropathies; Huntington’s disease; Crohn’s disease; post-traumatic stress disorder; intractable seizures; glaucoma; sickle cell anemia; severe chronic or intractable pain of neuropathic origin or severe or intractable pain in which conventional therapeutic intervention and opiate therapy is contraindicated or ineffective; and autism.
The Act also restricts the forms in which medical marijuana may be dispensed to patients and caregivers to pill, oil, topical cream/ointment, vaporization, nebulization, tincture or liquid, and it makes smoking and incorporating into edible form unlawful. Continue reading “Pennsylvania Medical Marijuana Act: Key Components and Potential Risks”
Earlier this year, I wrote that 2015 might be the year that medical marijuana legislation is passed in Pennsylvania. This was because in 2014 the PA Senate approved such legislation, and, although the legislation sat in the PA House through the end of the term, the election of Governor Tom Wolf removed the additional hurdle of a veto by former Governor Tom Corbett were the PA House to pass the legislation.
On May 12, 2015, the PA Senate again passed a medical marijuana bill. It obviously remains to be seen what the PA House will do, but given Governor Wolf’s indication that he would not veto such legislation should it reach his desk, and reports that up to 88% of PA residents are in favor of legalized medical marijuana, the odds of legalization in 2015 seem to be improving. Continue reading “PA Senate Passes Medical Marijuana Legislation Again”
An article in The Philadelphia Inquirer reported about the reluctance of major banks to participate in the marijuana industries in those states that have legalized marijuana for recreational and/or medicinal purposes because marijuana is still a Schedule 1 controlled substance under the federal Controlled Substance Act. I have previously written that lawyers in those states share similar concerns because the rules of ethics prohibit lawyers from assisting clients in illegal activities.
The conflict between state legalization and federal criminalization of marijuana thus appears to be depriving the businesses and individuals, such as investors, growers, manufacturers, dispensaries, physicians, patients, and consumers, currently or potentially participating in the emerging marijuana industry from the two resources – lawyers and bankers – that are arguably the most important to the establishment and sustained growth of an emerging, regulated industry. This is especially concerning given the importance to all citizens of the careful implementation of marijuana legislation. Continue reading “Bankers, Lawyers, and the Conflict Between State and Federal Marijuana Laws”
On January 26, 2015, in a bipartisan effort, Pennsylvania senators Mike Folmer (R) and Daylin Leach (D) reintroduced to the General Assembly of Pennsylvania a bill (Senate Bill No. 3) providing for the medical use of cannabis in the Commonwealth of Pennsylvania. Senate Bill No. 3 comprises a comprehensive set of regulations that include (1) licensing and administrative procedures for growers, processors, dispensers, patients and health care professionals; (2) enforcement and penalties; and (3) fees and surcharges.
Recent comments by Pennsylvania’s newly inaugurated Governor, Tom Wolf, and last year’s passage by the PA Senate of a similar bill (Senate Bill No. 1182) by a 43-7 vote, suggest that Pennsylvania may be one of the states (the recent trend suggests there will be others) that enacts Medical Marijuana legislation in 2015. As Governor Wolf stated on the same day that Senate Bill No. 3 was introduced, “I commend the bipartisan effort to allow Pennsylvania doctors to prescribe medical marijuana… We should not deny a physician’s ability to recommend medical marijuana treatment for Pennsylvanians suffering from seizures, those affected by PTSD, cancer patients affected by chemotherapy, and Pennsylvanians suffering from many other ailments and conditions that could benefit from this effective, doctor-prescribed treatment.”
On August 19, 2013, the U.S. Department of Justice issued its current Guidance Regarding Marijuana Enforcement, which effectively deferred enforcement under the Controlled Substances Act, 21 U.S.C. § 811 et. seq. (the “CSA”) with respect to medical marijuana to those states “that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale, and possession of marijuana.”
On December 13, 2014, Congress passed government spending bill, H.R. 83 (the “Act”), which included provisions that appear to further insulate the participants in the medical marijuana industry in states that have legalized medical marijuana from enforcement under the CSA. In particular, the Act provides that the funds made available to the Department of Justice pursuant to the Act may not be used to prevent those states that have enacted medical cannabis legislation “from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Continue reading “Congress Passes Legislation Providing Protection to States that Have Legalized Medical Marijuana”