Happy New Year from the Canna Law Blog!

Happy 2018 to the marijuana industry!Happy New Year’s Day to all of our readership! We want to again thank everyone for your continued interest in the blog and we hope that, if nothing else, our content is helpful and constructive when it comes to your cannabis business legal needs and curiosities.
2017 was an interesting year for the cannabis industry across the U.S., full of ups, downs, near misses, but mostly good progress. ICYMI, here are our top ten highlights from 2017:
Jeff Sessions backs off (sorta). 2017 was a somewhat scary time for the state-legal cannabis industry because one of the worst cannabis-haters of all time became the top prosecutor in the U.S. under President Trump. Yes, the industry was pretty paranoid about Sessions. We wrote many times (see here, here, and here) about Sessions and his attempts to energize the failed war on drugs by undoing the states’ democratic experiments with cannabis legalization. Ultimately though, Sessions took a bit of a u-turn in November when he basically kowtowed to the 2013 Cole Memo testifying in a House Judiciary Oversight committee hearing that: “Our policy is the same, really, fundamentally as the Holder-Lynch policy, which is that the federal law remains in effect and a state can legalize marijuana for its law enforcement purposes but it still remains illegal with regard to federal purposes.”
Constitutionality of Schedule I gets challenged in court. Former NFL player Marvin Washington is one of five plaintiffs that filed suit against Attorney General Jeff Sessions, the DOJ, and the DEA in 2017, alleging that classifying cannabis as a schedule I controlled substance under the 1970 Controlled Substances Act is so absurd as to be unconstitutional.  Currently, 29 states and the District of Columbia have legalized some form of medical cannabis use, and recent studies suggest cannabis actually helps get people off dangerous drugs, like cocaine, meth, and opioids (which are listed as less dangerous than cannabis). While we’d love to see this lawsuit undo cannabis prohibition altogether, it’s a long shot at best.
California finally regulated its cannabis marketplace. While it’s not going to be pretty or smooth, California finally convened legislation to combine and regulate its cannabis marketplace. (It also made huge strides in the cannabis trademarks department. If you want to know more about the Medicinal and Adult-Use Cannabis Regulation and Safety Act, see our blog posts here, here, here and here. California is hugely important to the overall progress of legalization, because it’s so large and so impactful to the U.S. economy. As of today at 6 a.m., legal sales have begun in The Golden State, and our California attorneys could not be more excited to witness history being made.
The FDA continued its campaign against CBD and it may start dabbling in state-legal marijuana health claims. It’s no secret that the FDA is in relatively hot pursuit of CBD makers who make medical claims about it (see here, here, and here), and 2017 was no exception. Essentially, the FDA has said that CBD is not a supplement exempt from drug trials under the Food Drug & Cosmetic Act and, as a result, if you want to medical claims about it (regarding either humans or animals) you have to put it through drug testing first. In addition, the FDA’s commissioner “hinted” that it may start to explore the validity of health claims made about actual medical cannabis.
Blockchain and cannabis may end up making a good marriage. 2017 really brought on an analysis of whether blockchain and cannabis commercialization could make good bedfellows. We wrote extensively about the melding of the two here and here. Without a doubt, blockchain could change the face of the industry and make everyone’s lives a little easier when it comes to reporting and business logistics.
Marijuana banking is slowly and steadily keeping on. This past summer, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued its newest Marijuana Banking Update. This update provides information regarding the number of banks and credit unions that are providing services to marijuana businesses and are complying with their Bank Secrecy Act compliance obligations and reporting those services to FinCEN. The data from the report showed that at the end of March 2017, nearly 300 banks and around 50 credit unions were providing banking services to marijuana related businesses. In Washington, there are 5 to 10 financial institutions that openly provide banking services to marijuana businesses, close to the same number in Colorado, and far fewer than that in Oregon and California.
Canada dropped its marijuana legalization bills. In April, making good on Prime Minister Justin Trudeau’s 2015 campaign promises, Canada’s Liberal Party-led government announced a suite of bills to legalize recreational marijuana use throughout Canada. While Canada is taking a predominantly different tack with recreational cannabis by having government-owned retail outlets, it’s still a huge development for cannabis legal reform that Canada decided to legalize on a federal level.
2017: the year of cannabis commercial litigation. With the maturation of the state-legal cannabis industry comes more litigation. 2017 really represented a significant ramp up with litigation, from RICO lawsuits, to counterfeit challenges with ancillary products, to a nuisance lawsuit filed against an Oregon cannabis farmer by a neighboring vineyard, we saw all kinds of fights emerge across the industry in multiple states. We also wrote endlessly about cannabis litigation and how to deal with it (some examples are here and here). Without a doubt these unique and interesting fights will continue as the industry continues to develop.
Bankruptcy still isn’t (and never was) an option for marijuana businesses. Back in 2014, we wrote that bankruptcy is not an option for marijuana businesses. That issue has been litigated here and there since then, but as of today, cannabis businesses are no better off than before. The hard reality is this: all bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code. Those courts have held that it would be impossible for a U.S. Trustee to control and administer a debtor’s assets (cannabis) without violating the federal Controlled Substances Act. All of this was confirmed in 2017 via an article authored by the Director and Trial attorney for the Executive Office for U.S. Trustees.
Congress continually renewed medical cannabis protections. If you don’t know what the Rohrbacher-Farr/Rohrbacher-Blumaneaur amendment is, go here. In the Ninth Circuit and elsewhere, it’s the single most important protection for medical marijuana businesses, as confirmed by this case. (The Amendment does NOT apply to recreational marijuana businesses or legislation). Fortunately, despite the fact that A.G. Sessions has requested that Congress repeal this amendment, Congress has continued to renew it throughout 2017. Currently, the amendment’s protections have been extended by Congress through January 19, 2018.
Happy 2018, everyone!


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