Tag Archives: CSA

Patricia Heer

Will the Scope of US Trustee’s Policy on Cannabis-Related Bankruptcy Filings be Limited?

The Court of Appeals for the Ninth Circuit revived a chapter 13 debtor’s bankruptcy case holding that the bankruptcy court below made no specific finding that the debtor violated the Controlled Substance Act (“CSA”) to support dismissal of the case.

In In re Olson, 2018 WL 989263 (B.A.P. 9th Cir. Feb. 5, 2018), the debtor, a 92 year old landlord, rented a storefront to a cannabis dispensary. The landlord filed bankruptcy to stay a lawsuit that the tenant dispensary commenced against her. The bankruptcy court dismissed the bankruptcy case based on the ground that the landlord’s rental income constituted illegal proceeds and, thus, the landlord violated the CSA. On appeal, the Bankruptcy Appellate Panel overturned the dismissal holding that the bankruptcy court had not detailed sufficiently its findings with respect to the offending lease to support a conclusion that the landlord violated the CSA. The Panel held that the bankruptcy court could not rely just on the CSA itself to dismiss the case. Continue reading Will the Scope of US Trustee’s Policy on Cannabis-Related Bankruptcy Filings be Limited?

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.


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