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Register for more FREE CLE www.americanbar.org/cle/free_cle.html The ABA Free CLE Series Earn up to 18 free credits each year through the monthly ABA Free CLE Series featuring leading legal practitioners. Exclusively available to ABA members
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Page 1: The ABA Free CLE Series - r. Crc.com/upload/Merriam-Final-slides-for-Cannabis-Presentation-1-12_2015.pdfMake the most of today’s webinar Control your volume Send questions to faculty

Register for more FREE CLE www.americanbar.org/cle/free_cle.html

The ABA Free CLE Series

Earn up to 18 free credits each year through the

monthly ABA Free CLE Series featuring leading

legal practitioners.

Exclusively available to ABA members

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Watch the

presentation

Follow who’s presenting

Make the most of today’s webinar

Control your volume

Send questions to faculty

Download the program materials

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To Receive CLE Credit for this Program

• You must attend the entire program; partial credit is

not available.

• Click on the evaluation link at the end of the program.

• Wait for the online request for credit form.

• Enter the email address you want you CLE

certificates sent to.

• Fill out the online request for credit form completely.

• Select a combination of MCLE jurisdictions you want

CLE credit in.

• Enter the participation verification code.

• After submission, your CLE certificates will be

emailed to you.

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Register for more FREE CLE www.americanbar.org/cle/free_cle.html

The ABA Free CLE Series

Earn up to 18 free credits each year through the

monthly ABA Free CLE Series featuring leading

legal practitioners.

Exclusively available to ABA members

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Welcome The Wild World of Cannabis:

A Quick Trip Through the Civil Law Issues

of Medical and Legal Marijuana

Tsan Abrahamson, Partner, Cobalt LLP

John Minan, Professor of Law, University of San Diego

Scott Rhodes, Managing Attorney, Jennings Strouss

Hilary Bricken, Attorney, Harris Moure

Sean O’Connor, Assistant Dean for Law, Business & Technology Initiatives & Professor of Law,

University of Washington School of Law

Henry Wykowski, Partner, Wykowski and Associates

Julie A. Hill, Associate Professor, The University of Alabama School of Law

Dwight Merriam, Partner, Robinson+Cole

Katharine Liao, Associate, DLA Piper

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Please submit your faculty questions

Send questions to faculty

Tsan Abrahamson, Partner, Cobalt LLP

John Minan, Professor of Law, University of San Diego

Scott Rhodes, Managing Attorney, Jennings Strouss

Hilary Bricken, Attorney, Harris Moure

Sean O’Connor, Professor, University of Washington

Henry Wykowski, Partner, Wykowski and Associates

Julie A. Hill, Associate Professor, The University of Alabama

Dwight Merriam, Partner, Robinson+Cole

Katharine Liao, Associate, DLA Piper

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John Minan

University of San Diego

Overview of the Current

Regulatory Structure

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Federal Law

The 1970 Comprehensive Drug Abuse Prevention and

Control Act, codified as amended at 21 U.S.C. §§ 801-

971.

•Congress made it unlawful to manufacture, distribute,

dispense, or possess any controlled substance, including

marijuana, except as authorized by the Controlled

Substances Act (CSA).

•Controlled substances are classified into five schedules (I,

II, III, IV, and V) under the CSA. Congress classified

marijuana as a schedule I substance based on the finding

of marijuana’s high potential for abuse, the absence of an

accepted medical use, and the lack of an accepted safety

standard for use in medically supervised treatment.

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U.S. Department of Justice

Enforcement Guidelines

October 19, 2009. DOJ memo on the exercise of

prosecutorial discretion.

•Stated federal priority: “The prosecution of significant

traffickers of illegal drugs, including marijuana.

•Persons acting in clear and unambiguous compliance are

not an enforcement priority.

June 29, 2011. DOJ memo clarifying enforcement policy.

•Jurisdictions authorizing “multiple large-scale, privately-

operated industrial marijuana cultivation centers” are not

shielded from federal enforcement and prosecution.

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U.S. Department of Justice

Enforcement Guideline Updated

August 29, 2013. DOJ memo responding to states

legalizing small amounts of marijuana and regulating

“production, processing, and sale.”

•Cooperative federalism: States with strong and effective

regulatory and enforcement systems to control the

cultivation, distribution, sale, and possession of marijuana

are “less likely” to threaten federal priorities.

•In such instances, enforcement of state law by state and

local law enforcement and regulatory bodies should remain

the primary means of addressing marijuana-related activity.

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Conclusion: Santa at Risk?

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Scott Rhodes

Jennings Strouss

Ethics

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Ethics and Cannabis

• The Issue:

– How can lawyers practice ethically in a world

where cannabis use (medical or recreational)

is both legal and illegal?

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Model Rules

• Model Rule 1.2(d): A lawyer shall not counsel a client to engage, or

assist a client, in conduct that the lawyer knows is criminal or

fraudulent, but a lawyer may discuss the legal consequences of any

proposed course of conduct with a client and may counsel or assist a

client to make a good faith effort to determine the validity, scope,

meaning, or application of the law.

• Model Rule 8.4: The definition of “misconduct” could be relevant to

lawyers practicing in regard to cannabis:

a) violate or attempt to violate the Rules of Professional Conduct, knowingly

assist or induce another to do so, or do so through the acts of another;

b) commit a criminal act that reflects adversely on the lawyer’s honesty,

trustworthiness or fitness as a lawyer in other respects;

c) engage in conduct that is prejudicial to the administration of justice.

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ABA Position

• The following ABA Board of Governors resolution,

proposed by the King County (WA) Bar Association, was

withdrawn without a vote:

“RESOLVED, That the American Bar Association urges

lawyer disciplinary authorities not to take disciplinary

action against lawyers who counsel and assist clients

about compliance with state and territorial laws legalizing

the possession and use of marijuana.”

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ABA Position (2)

• 1984 ABA Board Resolution that passed:

“The American Bar Association should recognize that

persons who suffer from serious illnesses for which

marijuana has a medically recognized therapeutic value

have a right to be treated with marijuana under the

supervision of a physician. The American Bar

Association should also support federal legislation to

establish a program under which physicians can treat

such patients with marijuana, under controls adequate to

prevent any diversion or other improper use of medicinal

marijuana.”

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The Dilemma…

Can lawyers ethically advise clients

about issues related to marijuana

(other than merely stating there is a

conflict of laws)?

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Arizona’s Approach

• Arizona Medical Marijuana Act was approved by

voters in the 2010 general election.

• Arizona was the 16th jurisdiction to adopt a

medical marijuana law.

• At the time, only Maine had issued an ethics

opinion on medical-marijuana-related legal

services.

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Arizona Ethics Opinion 11-01

• Lawyers can provide counsel to clients, but with caveats:

1) Advice or assistance may be given only if “no court decisions

have held that the provisions of the Act relating to the client’s

proposed course of conduct are preempted, void or otherwise

invalid”;

2) “the lawyer reasonably concludes that the client’s activities or

proposed activities comply fully with state law requirements”;

3) “the lawyer advises the client regarding possible federal law

implications of the proposed conduct if the lawyer is qualified to

do so, or recommends that the client seek other legal counsel

regarding those issues and appropriately limits the scope of the

representation.”

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Focus on ER 1.2 (d)

• Reasoning:

“While these issues [involving federal and state

law] are being decided by prosecutors and

courts, it is important that lawyers have the

ability to counsel and assist their clients about

activities that are in compliance with the Act—

and traditionally at the heart of the lawyer’s role

—by assisting clients…”

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Since Opinion 11-01

• No attorney discipline actions.

Polk v. Hancock, No. 1 CA-SA 13-0292, 2014 WL 623701

(Ariz. Ct. App. Feb. 18, 2014), review granted (Dec. 2,

2014):

– Provisions in plea agreements requiring abstention from

medical marijuana must be tailored to the offense and

reviewed on a case-by-case basis.

– Decision under review by the Arizona Supreme Court.

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Other Jurisdictions

• General trend toward following Arizona’s approach:

– Recent Illinois Opinion 14-07 (10/14)

– Alaska informal opinion (not official)

• Movement toward rule-making instead of ethics opinions.

• Efforts to amend Ethical Rules in Colorado, Washington,

and Nevada have not (yet) succeeded – CO and NV

added comments to ER 1.2(d) (WA under review):

Crux of new comments – Lawyers may advise clients

consistent with state law but must also advise of conflict

with federal law and potential consequences.

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Other Jurisdictions (cont’d)

• Connecticut and Maine disagree, at least in part:

– Maine: Each lawyer must make own ethical decision.

Me. Ethics Op. 199 (first opinion on the issue).

– Connecticut: permissible to counsel clients only on

licensing and regulatory aspects of medical

marijuana. Ct. Inf. Ethics Op. 2013-02

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Other Jurisdictions (cont’d)

• Some jurisdictions where marijuana has been legalized

have not issued ethics opinions or amended their rules.

– Prosecutorial discretion approach:

• Florida

• California

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Other Issues

• Personal Use: – North Dakota State Bar Ass'n Ethics Comm. Op. 14-

02 (8/12/14): A lawyer’s personal use of medical

marijuana is “a criminal act that reflects adversely on

the lawyer's honesty, trustworthiness or fitness as a

lawyer in other respects.” [ER 8.4(b).]

– The opinion concerns an attorney’s valid prescription

to use marijuana and who uses in Minnesota.

– North Dakota has not legalized medicinal marijuana.

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Other Issues (cont’d)

• Personal Use (cont’d):

– But see Colorado Opinion 124 (2012):

• Finding no necessary nexus between legal

personal medicinal use and lawyer’s honesty,

trustworthiness of fitness as a lawyer. [ER 8.4(b).]

• In June 2013, this opinion was extended to a

lawyer’s recreational use, after Colorado legalized

recreational use.

– The personal use issue is under consideration in

Washington and Nevada.

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Other Unresolved Issues

• If lawyers ethically can counsel clients regarding

marijuana issues, do non-lawyers commit UPL when

they do the same thing?

• Lawyer impairment issues, including reporting

obligations.

• Lawyer DUI offenses involving legal marijuana use.

• Can a lawyer hold marijuana clients’ funds in the

lawyer’s trust account?

• Lawyer ownership/investment in marijuana-related

businesses.

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Other Unresolved Issues

• “Problem clients” — Those whose marijuana

businesses turn out to be illegal: Will lawyers be

prosecuted as direct participants? Accomplices?

Co-conspirators?

• Scope of required counseling of clients about

possible federal issues:

– Criminal issues: Certain

– Regulatory issues? (e.g., banking)

– Taxation?

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Hilary Bricken

Representing the

Marijuana Business

Harris Moure

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Medical Versus Recreational

Marijuana

• What are the differences?

• Laws

• Regulations

• Eligibility to be a business

• Business structures

• Why does the difference matter to clients?

• How are various states treating medical marijuana

currently?

• What is the future of medical marijuana in states with

recreational marijuana regimes?

• Can there or should there be two industries?

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What Federal Enforcement Looks Like

and How to Prepare Your Client

• Do the Federal memos even matter for clients?

• How to advise accordingly.

• Clients should be made aware that U.S. Attorneys are

executive officers vested with prosecutorial discretion

• Lack of uniformity in enforcement across the board

• In states

• And nationally

• Raids versus “landlord letters.”

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Day-to-Day Life as a

Marijuana Business

• Constant compliance with State and local regulations

• The Federal conflict manifests with variable enforcement

and effects of federal marijuana laws about which all

clients should be aware:

• Banking

• Insurance

• Securities

• Bankruptcy

• Taxes

• Bureau of Reclamation/Federally regulated electricity

• Municipal litigation

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Preparing for Clients to

Avoid Conflicts

Consultations and Fee Agreements:

• Full disclosure is warranted

• Tailor your representation accordingly

• All fee agreements should contain a disclaimer about

the federal conflict

• Avoid business planning with the client if you can help

it because of the risk of unethical or criminal

“assistance”

• Explain what various bars saying about representing

marijuana businesses

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Marijuana Regulatory Regimes

Dealing with the Feds and dealing with the State

• Typical barriers to entry for licensees/registrants: • Residency requirements

• Liquidity requirements

• Permits and licensing

• Distance requirements

• Real property requirements

• Security

• Traceability

• Competency

• Experience

• Operational plans

• Investment

• State and local taxes

• Dealing with multiple regulatory agencies

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Sean O’Connor

Food & Drug Law Issues

University of Washington

School of Law

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Overview

• 3 major Food & Drug Law issues

• Cannabis products as:

– Food

– Drug

– Dietary supplement

• All are regulated

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Impetus for FDA Laws

• “Filled milk” scandals (early 20th century)

• “Patent medicines” (same)

– aka “snake oil”

• Thalidomide problems (mid-20th century)

• Three major federal statutes:

– Food, Drug, and Cosmetics Act

– Public Health Act

– Dietary Supplement Health and Education Act

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Overarching Themes

• Purity and Potency

– Foods and drugs should not contain

dangerous fillers

– Must include the amount of any active

ingredient claimed

• Safety and Efficacy

– Drugs and biologics must be approved for

marketing based on cost-benefit analysis

between safety and efficacy, including by

comparison with existing alternatives

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Cannabis as Food

• Cannabis edibles are food and must comply with

state and federal health, safety, and labeling

requirements

• But because both medical and recreational

cannabis edibles are really being sold for the

active ingredient, then they do not fit within the

“other than food” exception for drug regulation

(FDA Warning Letters)

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Cannabis as Drug

• Medical: any medical claims must be pre-

approved by the FDA

– Requires “New Drug Approval” (NDA)

process based on clinical trials just as for

pharmaceuticals (many years and $$$)

• Recreational: Products sold as alternatives

to “street drugs” must be approved by the

FDA through the NDA process as well

• FDA has been issuing Warning Letters

(but surprisingly few)

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Cannabis as Dietary

Supplement

• While controversial, FDA regulation of

dietary supplements likely provides best

path for cannabis products

– Requires only purity and potency (already

built into WA State’s recreational I-502 rules)

– Prohibits medical claims; relies on consumers

to discover alleged benefits from other

sources

– Legal framework is 1994 Dietary Supplement

Health and Education Act

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Conclusions

• State-sanctioned medical and recreational

marijuana distributors seem curiously under-

informed about FDA regulatory regimes

• Many distributors appear to be out of

compliance

• FDA is not aggressively enforcing

– perhaps relying on DOJ/DEA to enforce primary CSA

violations

• But growth of markets and DOJ/DEA reduction

of enforcement may put focus on FDA to protect

public health

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Tsan Abrahamson

Building Your Cannabis Brand:

The Straight Dope on Trademark and Trade Dress Issues

Cobalt Law

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What We’ll Cover

• Trademark: What Is It?

• Picking A “Good” Mark

• Acquiring Rights the Old-Fashioned Way

• Parody Versus “Brandalizing”

• Special State Law Issues

• Licensing Your Brand

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What is a Trademark?

(you’ve heard it before)

THE LEGAL: Any word, name, symbol,

device, hologram, sound, or smell that

(uniquely) identifies the source of the goods

or services offered.

THE MARKETING: Your Brand

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The Distinctiveness Line

Fanciful/

Arbitrary Suggestive Descriptive Generic

APPLE

CANNABIS-

PATIENT NETWORK

CANNABIS SCIENCE

MEDIBLES (??)

AMERICAN CANNABIS

CONSULTING

APPLE

KUSH

INDICA

SATIVA

NORTHER LIGHTS

APPLE

COMPASSION INC

CANNEDIBLES

TEAPOT

APPLE CANSTRACT

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3 Ways to Secure Rights

Each with Limitations

Use, Policing and Enforcement

Required

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Common Law Rights

• Gained by use and ALWAYS

available with lawful use.

• Must “prove” rights with each

action.

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Federal Registration

• Prima Facie evidence of distinctiveness

• Prima Facie evidence of ownership

• Constructive National Rights

• Constructive Exclusive Rights of the mark

as a whole

• BUT WAIT… there are limitations to

Federal Registration for cannabis products

and services

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DON’T TRY THIS:

• Secure registration for your client’s non-

cannabis goods (e.g. confections)

• Use that legitimate registration to protect your

client’s cannabis infused edible goods.

YOUR CLIENT COULD LOSE ITS STATE

LICENSE TO SELL!

Some state laws specifically prohibit using a

cannabis name identical to a non-cannabis

product

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State Registration

• Notice of Use of the Mark in the State

• Constructive State Rights Vary by State

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It’s Not Parody, It’s Brandalism

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Licensing = Rights

• DO check the state law

• DO register if law requires it

• DO use “trade secret” to protect recipes in

licensing rather than just copyright

• DO avoid “naked” licensing claims by policing

• DO work with trustworthy companies

• DO your homework

• DO NOT OVERCONTROL or you’ll have a

franchise!

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Henry Wykowski

Wykowski and Associates

Tax Issues

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The IRS

• Taxation Presents the Most Significant

Challenge to the Industry

• Internal Revenue Code § 280E punitively

disallows ordinary and necessary business

expenses related to the sale of cannabis.

• I.R.C. Code § 280E:

“No Deduction … shall be allowed for any

amount paid … in carrying on any trade or

business if such business … consists of

trafficking on controlled substances …”

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The Practical Effect of 280E:

• Gross Sales: $1,000,000.00

• Cost of Goods Sold: 650,000.00

• Net Income: $350,000.00

• Expenses: 200,000.00

• Net Profit: $150,000.00

• Under 280E the expenses are disallowed,

resulting in Net Profit of $350,000.00.

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What You Can Do to Protect Your Clients

• Assume that they will be audited

• Existing businesses:

• Have a knowledgeable professional review their accounting to ensure:

1) They are taking full advantage of classification of cost of goods sold.

2) Develop a formula that allocates expenses between “trafficking” and “non-trafficking” activities.

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If They Are Starting Up

• Retain experienced assistance in setting up their accounting system:

1) Cost of goods sold.

2) Section 280E Formula.

3) Establish them in a way to defend their position in an audit that the IRS will not want to risk challenging.

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• Get Experienced Help Immediately

• Attorney vs. Accountant

• Advise Them Not Respond to the Letter Themselves

• IRS agents are well trained.

• The Potential Exists for Criminal Investigations

and Charges

If They Receive an Audit

Letter

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• What the IRS will look at in an audit:

– Substantiation

– Gross Sales

– Cost of Goods Sold

– Expenses

– 280E Allocation

What the IRS Looks For

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Marijuana, Banks, and Federalism

Julie Anderson Hill

The University of Alabama School of Law

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Marijuana & Banks

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Marijuana & Banks

“We abide by all federal laws, and the

distribution and sale of marijuana is illegal, so

we don’t bank the sale of medical or

recreational marijuana.”

Cristie Drumm

Spokeswoman

Wells Fargo Bank

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Federal Control Over

State Banks

• Federal Criminal Law

– Controlled Substances Act

– Anti-Money Laundering Laws

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Federal Control Over

State Banks

• Risk Regulation

– Federal Deposit & Share Insurance

– Federal Reserve Regulation

• Member Banks

• Bank Holding Companies

• Payment Systems

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DOJ Guidance

• Set priorities for federal enforcement of the

Controlled Substances Act.

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FinCEN Guidance

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Limitations of Guidance

“[I]f a financial institution … offers services to a

marijuana-related business whose activities do not

implicate any of the eight priority factors, prosecution

for [money-laundering offenses] may not be

appropriate.”

FinCEN

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Limitations of Guidance

FinancialIns tu ons

FiledMarijuanaSARS

NoFiledMarijuanaSARS

105

13,249

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Other Issues

• Issues under Article 9

– May an Article 9 secured creditor take/transfer

a security interest in inventory?

– May a seller/creditor repossess the inventory?

• UCC Issues under Article 2

– Warranty of Merchantability

– Express Warranty

– Warranty of Fitness for a Particular Purpose

• May a business file for bankruptcy?

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Dwight Merriam

Robinson+Cole

Real Estate/Land Use

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Real Estate and Land Use

Issues

•The “Known Unknowns” and the “Unknown

Unknowns” of Medical Marijuana

•How “illegal” is it now under federal law?

•What limitations are there on possession

and use on federal lands?

•What about the federal and state crime-

free, drug-free school zone and housing

laws?

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The Landlord

• From the landlord’s perspective

Addendum prohibiting drug activity in violation

of federal law LEASE ADDENDUM FOR CRIME-FREE/DRUG-FREE HOUSING

In consideration of the execution or renewal of a lease of the dwelling unit

identified in the lease, Owner and Resident agree as follows:

1. Resident, any members of the resident's household or a guest or other

person under the resident's control shall not engage in illegal activity,

including drug-related illegal activity, on or near the said premises. "Drug-

related illegal activity" means the illegal manufacture, sale, distribution,

purchase, use or possession with intent to manufacture, sell, distribute, or

use of a controlled substance (as defined in Section 102 or the Controlled

Substance Act [21 U.S.C. 802]) or possession of drug paraphernalia.

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•MEDICAL MARIJUANA: The parties agree, that it shall be a breach

of this Lease for Tenant to grow, cultivate or raise marijuana on or

in the property or for Tenant to sell, dispense or become a

dispenser of marijuana, regardless of whether Tenant has or is licensed

to do so and regardless of whether Tenant has been granted the right

to supply or provide marijuana is a violation of this lease and will

subject Tenant to eviction and or any other remedy available to

Landlord pursuant to this lease. It shall also be a breach of this Lease

for Tenant to use or smoke marijuana on the property even if Tenant

has a prescription for its medical use or if Tenant is legally registered

for such use. Tenant shall be required to use or smoke medical

marijuana off the premises and a violation of this shall subject Tenant

to eviction and or any other remedy available to Landlord pursuant to

this Lease.

The Landlord

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– Insurance

– Security issues

– Electricity and water usage

– Mold, smoke, odors, pests

– Is tenancy of a medical cannabis patient a

“material fact” subject to disclosure?

– No duty to allow tenant/patient

• Not protected under ADA, FHAA

• No requirement to provide a “reasonable

accommodation”

The Landlord

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• What to do if the tenant asks for a

“reasonable accommodation” to possess

and use medical marijuana on the

premises?

– Release from the lease without penalty

– Accommodate the tenant, but require the

tenant to pay the cost of mitigation (e.g.

exhaust fans)

The Landlord

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– Parking

• Patients medicating in the parking lot

– Traffic

– Quiet enjoyment

• Suits by other tenants

• Versus good faith

– If one tenant’s quiet enjoyment is disturbed by the MM

tenant’s use, which lease will landlord enforce?

• Gross negligence

– Sometimes negotiated as a exclusion from tenant’s

obligation to indemnify and hold landlord harmless

The Landlord

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• Limit liability

– LLC

– Tax planning

• Section 280E tax on the gross, not net, income

largely to punish drug dealers

The Landlord

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• For the Buyer or Tenant

– Review declaration of covenants and

restrictions

• No violation of federal law

• Requirement of “first class” business operations

• No consumption on premises

The Buyer or Tenant

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• Banking

– February 2014 Treasury and Justice

Department Guidelines

– Banks must review state license applications

– Look for red flags suggesting illicit activity

– File “suspicious activity reports” on MM clients • “If I misreport, I’m liable as a bank,” said Bill Uffelman,

president of the Nevada Bankers Association. “So I’m putting

my license to do business on the line so that you can do

business. That’s a hard mouthful for bankers to swallow.”

The Owner or Tenant

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• Land use

– Separation/distancing requirements

– Limits on numbers of growers and

dispensaries

– Use on site?

– Security

– What districts?

– See Los Angeles regulations for the most

comprehensive

The Landlord or Owner

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Katharine Liao

DLA Piper

Employment Law

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Reefer madness at work?

• Over twenty states allow the medicinal use of marijuana

• Four states allow the recreational use of medical

marijuana

• What does this mean for employers?

– On-the-clock use

– Off-the-clock use but under the influence while working

– Off-the-clock use but testing positive at work

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State law expressly states that employers do

not need to accommodate medical

marijuana possession/use on Company

premises during working hours.

State law silent on the matter

State Laws

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WA

OR

NV

AZ

UT

ID

MT

WY

CO

NM

AK HI

TX

OK

KS

NE

SD

ND

MN

IA

MO

AR

LA

MS AL GA

FL

SC

NC TN

KY

IL

WI

MI

IN OH

VA WV

PA

NY

ME

VT

NH MA

CT

RI

NJ

MD

DE

CA

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Case law provides that employers may

discipline employees for being under the

influence of marijuana

State law expressly allows employers to

discipline employees for being under the

influence of marijuana

State Laws

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WA

OR

NV

AZ

UT

ID

MT

WY

CO

NM

AK HI

TX

OK

KS

NE

SD

ND

MN

IA

MO

AR

LA

MS AL GA

FL

SC

NC TN

KY

IL

WI

MI

IN OH

VA WV

PA

NY

ME

VT

NH MA

CT

RI

NJ

MD

DE

CA

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POSITIVE TEST

ALONE NOT ENOUGH

•Arizona

•Delaware

•Minnesota

ZERO TOLERANCE

•California

•Montana

•Oregon

•Washington

What about off-duty use resulting in

a positive test result at work?

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Recent Cases

• Colorado (Coats v. Dish Network, LLC )

– This case will determine whether an employer acted lawfully

when it terminated a quadriplegic who suffered from debilitating

muscle spasms and possessed a valid medical marijuana

prescription.

– The termination was based on the employee's positive test for

marijuana use even though he was never under the influence of

the drug on company premises.

– CO Supreme Court has heard arguments and a decision

expected in 2015.

– The outcome of this case would likely impact employer policies

regarding termination on basis of a positive drug test.

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Recent Cases

• New Mexico

– Appellate court held that an employer and its workers'

compensation carrier must reimburse the employee for medical

marijuana costs. Vialpando v. Ben's Auto. Servs. & Redwood

Fire & Cas., No. 32,920, 2014 WL 2420112 (N.M. Court of

Appeals, May 19, 2014)

• Michigan

– Appellate court held employees who carried registered medical

marijuana identification cards and used the drug in accordance

with the Michigan Medical Marijuana Act (MMMA), but were

terminated after testing positive for marijuana, were entitled to

unemployment benefits – even when defendant is a state

agency. Braska v. Challenge Mfg. Co., No. 313932, 2014 WL

5393501 (Mich. Ct. App., Oct. 23, 2014).

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Is It A Disability?

• In states that only allow medical marijuana use, there is

likely a health reason behind the use, which regardless

of the marijuana use, constitutes a disability.

• Some states expressly recognize this in statutes.

– New York: New York recognizes certified patients as having a

"disability" under New York's Human Rights Law

– Nevada: Employers must attempt to make reasonable

accommodations for the medical needs of these employees

provided they do not pose a threat of harm or danger, cause

undue hardship or prevent the employees from fulfilling their job

responsibilities.

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Workplace Policies

• Make sure the policy prohibits use of

illegal drugs under federal or state law

• If applicable, provide notice of random or

post-accident drug testing

• No blanket rule requiring termination if

there is a positive marijuana drug test

result, depending on the state

• Focus on safety in the workplace

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Please submit your faculty questions

Send questions to faculty

Tsan Abrahamson, Partner, Cobalt LLP

John Minan, Professor of Law, University of San Diego

Scott Rhodes, Managing Attorney, Jennings Strouss

Hilary Bricken, Attorney, Harris Moure

Sean O’Connor, Assistant Dean for Law, Business &

Technology Initiatives & Professor of Law, University of

Washington School of Law

Henry Wykowski, Partner, Wykowski and Associates

Julie A. Hill, Associate Professor, The University of

Alabama School of Law

Dwight Merriam, Partner, Robinson+Cole

Katharine Liao, Associate, DLA Piper

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Participation Verification Code

5 T 1 4 F S S 2 Copy the code above. It is required to

receive CLE credit for this program.

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Register for more FREE CLE www.americanbar.org/cle/free_cle.html

Please submit your faculty questions

Send questions to faculty

Tsan Abrahamson, Partner, Cobalt LLP

John Minan, Professor of Law, University of San Diego

Scott Rhodes, Managing Attorney, Jennings Strouss

Hilary Bricken, Attorney, Harris Moure

Sean O’Connor, Assistant Dean for Law, Business &

Technology Initiatives & Professor of Law, University of

Washington School of Law

Henry Wykowski, Partner, Wykowski and Associates

Julie A. Hill, Associate Professor, The University of

Alabama School of Law

Dwight Merriam, Partner, Robinson+Cole

Katharine Liao, Associate, DLA Piper

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Register for more FREE CLE www.americanbar.org/cle/free_cle.html

CLE Credit Request Instructions

Please stay online…

The program evaluation link will appear shortly.

Click on the link to take the program evaluation.

After submitting the evaluation, an online request

for CLE credit will appear. Fill out this form to

receive CLE credit for this program.


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