Cannabis Law Blog

News & Insights for Cannabis Law and Business

Alternative dispute resolution (“ADR”) – such as mediation and arbitration  – has long been an attractive alternative to litigating disputes in court, especially for parties hoping to arrive at a swift resolution.  Now, given the unprecedented backlog in California courts caused by the COVID-19 pandemic, as well as uncertainty related to re-initiation of jury trials, ADR may become an increasingly favorable option – particularly for those in the cannabis industry.  According to the 2019 Annual Report and Financial Statements published by American Arbitration Association (“AAA”), cannabis-related cases have seen more growth (225%) than any other category of AAA’s 9,737 business-to-business…
In Granny Purps v. County of Santa Cruz, the Sixth District Court of Appeal green-lit a medical cannabis cultivator’s ability to pursue damages – to the tune of potentially $3.5M – from the County of Santa Cruz when it determined the County cannot rely on zoning ordinance to seize the cultivator’s plants grown in violation of local regulation. Specifically, the Sixth District found that, while the County is not compelled to return seized property if the property is illegal, the local ordinance at issue “ultimately regulates land use within the County; it does not (nor could it) render illegal a…
The viability of California’s cannabis delivery businesses continues to hang in the balance as trial in the landmark litigation between the Bureau of Cannabis Control (BCC) and over two dozen local municipalities was postponed at the eleventh hour. In her tentative ruling, issued the afternoon before the much-anticipated bench trial in County of Santa Cruz v. BCC (County of Fresno Super Court, Case No. 19CECG01224), Judge Rosemary McGuire questioned the ripeness of certain municipalities claims challenging implementation of California Code of Regulations, Title 16, section 5416(d) (Regulation 5416(d)), which allows delivery of cannabis to any jurisdiction within the state.…
*This post originally appeared as an article in the August 2020 edition of Happi Magazine. Beauty companies, including those using CBD or hemp-derived components, face an uptick in alleged false-labeling class actions. Whether the actions are justified or vexatious, one thing is certain: they are expensive to defend. By keeping the following labeling-related litigation trends in mind when considering and reviewing product labels and marketing, beauty companies can, hopefully, avoid becoming a litigation target.…
On June 29, 2020, Colorado adopted a statewide social equity program (SEP) for permitting cannabis operators.[1]  More specifically, House Bill 20-1424 (HB 20-1424) “defines social equity licensees, and modifies and expands the marijuana accelerator program to make it available for social equity licensees and retail marijuana stores.”[2]  The new law enables a social equity licensee to participate in the state’s accelerator program, which, as managed by the Colorado Office of Economic Development and International Trade, supports cannabis business development.[3]  Colorado’s accelerator licensing program, originally slated to go into effect July 1, 2020,[4] pairs…
On June 29, 2020, the Financial Crimes Enforcement Network (FinCEN) published updated guidance intended to “enhance the availability of financial services” for the hemp industry (the Guidance).  Even though the Agriculture Improvement Act of 2018 legalized hemp[1] at the federal level, some banks have hesitated to provide financing to the hemp industry because they are uncertain of their obligations under the Bank Secrecy Act or Anti-Money Laundering regulations (BSA/AML).  The Guidance was published to clarify those obligations, and follows closely on the new National Credit Union Administration guidance for federally-chartered credit unions issued on June 20, 2020. …
It would be an understatement to say that the COVID-19 pandemic impacted transactional activity for buyers and sellers across a range of industries, the hemp and cannabis merger and acquisition (“M&A”) space being no exception.  In particular, the current period of COVID-19 volatility in the hemp and cannabis space is marked by numerous consequential outcomes, namely: (1) a sharp decline in the number of deals; (2) decline in capital raises; and (3) overall decline in market valuations.…
As the novel coronavirus (COVID or COVID-19) continues to ravage the United States, the cannabis industry is feeling the pandemic’s negative impacts despite an initial spike in sales after cannabis operations were deemed essential under various state “stay-at-home” orders.[1]  This article details the most recent state-level responses activated in California and Illinois.…
This article originally appeared in Cannabis Business Executive​ on June 10, 2020. Claimed “illegality” of cannabusinesses continues to be a critical issue for them in their ability to enforce their rights in the courts. The ability to seek judicial relief may be especially important to some cannabusinesses that are struggling as a result of the COVID-19 pandemic (e.g., to seek bankruptcy relief, or to obtain compensation from customers or suppliers that breach contracts). In our December 2019 articles[i], we observed that a cannabusiness may find it difficult to pursue its Intellectual Property (IP) rights in certain jurisdictions…
Many Illinois cannabis contracts, including intellectual property licensing agreements, development agreements and supply agreements, contain force majeure clauses.  Depending upon the language of these clauses, the COVID-19 pandemic may be an event that triggers these clauses and provides a defense to nonperformance of the contract. Companies that are experiencing difficulties complying with or enforcing compliance with their contracts should carefully examine their contracts to determine if a force majeure clause may excuse performance. On March 20, 2020, Illinois Governor J.B. Pritzker issued a stay at home order for all Illinois residents.  (Executive Order 2020-10.)  On April 30, 2020,…
On April 6, 2020, the U.S. Drug Enforcement Agency (“DEA”) made history by descheduling  Epidiolex, GW Pharmaceuticals’ anti-epileptic oral solution containing cannabiodiol (“CBD”), thereby removing it from the purview of the Controlled Substances Act (“CSA”) even though it is derived from cannabis and not hemp.  The DEA’s recent descheduling continues the federal government’s trend of keeping the whole cannabis plant illegal as a Schedule I, while  permitting pharmaceutical derivations of cannabis. The DEA’s action on Monday is effective immediately. The FDA’s approval, which was the first approved medication to contain a purified form of CBD derived from cannabis, originally placed…
In an effort to stem the tide of COVID-19 transmission, many state and local governments have enacted “shelter-in-place” or “stay-at-home” orders to protect the health and well-being of citizens, and to establish a consistent approach to slow the spread of COVID-19.  Many of these orders identify certain services as essential, including food, prescriptions and healthcare, that can continue to operate despite the “stay-at-home” order.  In many jurisdictions, cannabis dispensaries have been labeled “essential” businesses, and identified under the headings for healthcare, consumer products or agriculture included in the respective order’s “critical” infrastructure or services. This article addresses cannabis-related exemptions in…
As with essentially all aspects of American life, COVID-19 threatens to be a massive disrupter in the cannabis industry. As most cannabis operators and ancillary services providers are well aware, securing cannabis-related investments in the pre-COVID-19 world presented substantial obstacles. With worldwide markets dropping and investors drawing on their purse strings, the cannabis industry will likely feel a tighter pinch on access to investment dollars. Alternatively put, the already-tight outlook for capital in the cannabis industry will likely be exacerbated by COVID-19, and could result in some companies in the industry failing altogether. However, the Fed’s recent interest rate cut…
On March 5, 2020, the Commissioner of the U.S. Food and Drug Administration (FDA) released a statement describing the agency’s continued evaluation of cannabidiol (CBD) products and signaling issuance of an enforcement policy against sellers and marketers of CBD products. Forthcoming Enforcement Policy. To date, FDA largely has enforced only against companies making egregious health claims, such as treatment for cancer or Alzheimer’s Disease. While FDA will continue to take actions against companies marketing products with aggressive therapeutic claims, FDA Commissioner Hahn reported that the agency will be taking a harder look at products that contain heavy metals, THC (greater…