Oregon Cannabis Securities: Raising Money Right

BREAKING NEWS: California Opens Up for Commercial Hemp Cultivation

We have been closely following California’s commercial hemp cultivation licensing law since it was proposed last year as Senate Bill 1409 (see here, here, and here). In March, I wrote about some of the roadblocks to implementing SB-1409’s commercial hemp cultivation programs, and the lengthy review process of the California Department of Food and Agriculture (“CDFA”) regulation which would allow hemp cultivators to register with their county agricultural commissioners.

The CDFA’s regulation was recently approved, and as of April 30, 2019, the CDFA posted applications for registration for commercial hemp cultivation and hemp seed breeders (see here and here respectively).  It looks like these respective apps will not be submitted to the CDFA directly, but will instead be provided to county agricultural commissioners in the county in which a cultivator or seed breeder wishes to cultivate hemp. Applicants for commercial cultivation must provide basic information about themselves, as well information about the cultivation site, the purpose of the site (cultivation v. storage), GPS coordinates and other information regarding the site, a boundary map, and certain information about seed cultivars. The seed breeder application is relatively similar.

Despite the fact that these applications are now live, it’s not completely clear how they will be implemented. There are a number of counties in California that restrict or prohibit hemp cultivation. The memo attached to the application itself identifies a number of counties with restrictions: Amador, Calaveras, Glenn, Humboldt, Lassen, Marin, Mariposa, Mendocino, Merced, Modoc, Mono, Monterey, Napa, Nevada, Orange, Placer, Sacramento, San Bernardino, San Joaquin, Santa Barbare, Shasta, Sierra, Siskiyou, Sonoma, Tehama, Trinity, Tulare, Tuolumne, Yolo, and Yuba. Since the application is so new, we haven’t evaluated which of these counties fully prohibit cultivation, but it’s a safe bet that if any of them do fully prohibit it, their agricultural commissioners are probably not going to accept these applications.

But what about counties that don’t say anything or only have some minor restrictions? It’s not clear yet whether counties will try to delay implementing hemp cultivation by claiming that they need to establish local protocol for registration. Ultimately, each county may do something different, and it will take time before we know what the full effect of the law is.

It’s also not clear how this will be impacted by the federal Agricultural Improvement Act of 2018 (or “2018 Farm Bill”). I summarized parts that law in my previous post linked above, but notably for this post, hemp produced per the former 2014 Farm Bill will be permissible. The 2014 Farm Bill doesn’t explicitly allow commercial cultivation, and so it’s not clear how this will play out. What is clear is that once the U.S. Department of Agriculture begins accepting state hemp-production plans for review per the 2018 Farm Bill, California will need to send its plan for review by the USDA. This could affect registered hemp cultivators, but as per usual, it’s not clear how that will happen just yet.

Stay tuned to the Canna Law Blog for more details on California hemp laws.

source https://www.cannalawblog.com/breaking-news-california-opens-up-for-commercial-hemp-cultivation/

Cannabis and Immigration: Marijuana Activity a Conditional Bar to Obtaining U.S. Citizenship

On April 19, the U.S. Citizenship and Immigration Services (USCIS) announced that it would formally update its Policy Manual regarding how cannabis-related activity–even when it took place in states that have legalized the medical and recreational use of marijuana–would impact naturalization.

The Policy Manual is self-defined by the USCIS as its centralized online repository for immigration policies. It serves as a guide for immigration officers to follow when adjudicating applications and petitions.

Prohibited cannabis-related activity, as we explained previously, includes possession, prior use, as well as employment or investment in cannabis industry, each of which is deemed a violation of the federal Controlled Substances Act (CSA). In all, it’s a very broad array of exclusionary activity.

Lifetime bans on Canadians have increased public awareness that foreign nationals can be deemed inadmissible and refused entry into the U.S. based on their involvement in cannabis-related activity. It is not well-known, however, that such prohibitions may also affect lawful permanent residents of the U.S. (i.e. green card holders). The USCIS’s announcement on Friday, clarifying that cannabis-related activity (including activity that is legal under state law) creates a conditional bar on one’s eligibility to naturalize, is aimed at clarifying this misconception.

Naturalization is the process by which a green card holder can become a U.S. citizen upon meeting five core requirements: (1) be a green card holder for the statutory period (at least five years at the time of filing the naturalization application, or at least three years if the green card holder has been married to the same U.S. citizen spouse during that entire time); (2) be physically present in the U.S. for at least half of the applicable statutory period; (3) be continuously domiciled in the U.S. during the applicable statutory period; (4) possess “good moral character” (GMC); and, (5) demonstrate a willingness to actively support the Constitution of the U.S.

Of those prerequisites, the focus of this post is the GMC requirement. In order to demonstrate GMC, the applicant must demonstrate a lack of involvement in a series of unlawful activities ranging from felonies to a failure to register for Selective Service.

Murder and other felonies result in a permanent bar to naturalization, meaning that the applicant will forever fail the GMC requirement regardless of how far back in the past the criminal conduct took place.

Apart from felonies, the Policy Manual, in Part F, Chapter 5, includes a laundry list of criminal activities that result in a conditional bar to citizenship, meaning that such conduct within the statutory period will prevent an applicant from naturalizing. Cannabis-related activity is among those crimes.

It is important to note that the Policy Manual specifies that an applicant may be conditionally-barred from establishing GMC not just because of “a conviction” for a cannabis-related offense, but also for:

• An “admission” to having committed such an offense;
• An “admission to committing acts that constitute the essential elements of a violation of any controlled substance law”;
• A “conviction or admission that the applicant has been a trafficker in a controlled substance, or benefited financially from a spouse or parent’s trafficking”; and even
• “Possession of controlled substance related paraphernalia”.

Somewhere, Jeff Sessions is smiling. Failure to establish GMC for any of the above could not only result in a denial of the naturalization application, but also jeopardize the applicant’s ability to preserve the green card, and result in removal from the U.S.

The recent update to the Policy Manual also spells out the conditional bar to GMC applies even where the offense may have taken place in a state that has laws permitting “medical” or “recreational” use of marijuana because of its classification as a ‘Schedule I’ drug under the CSA. The updated Policy Manual language is crystal clear:

Such an offense under federal law may include, but is not limited to, possession, manufacture or production, or distribution or dispensing of marijuana. For example, possession of marijuana for recreational or medical purposes or employment in the marijuana industry may constitute conduct that violates federal controlled substance laws. Depending on the specific facts of the case, these activities, whether established by a conviction or an admission by the applicant, may preclude a finding of GMC for the applicant during the statutory period….Note that even if an applicant does not have a conviction or make a valid admission to a marijuana-related offense, he or she may be unable to meet the burden of proof to show that he or she has not committed such an offense.

A conditional bar is difficult to overcome because it requires the applicant to show “extenuating circumstance” about why a particular unlawful act was committed. Such extenuating circumstances must have occurred before or at the time the unlawful act was committed. The Policy Manual explicitly instructs officers to disregard any evidence of an applicant’s subsequent reform, or to evaluate any positive factors about the applicant’s character when making a decision on a naturalization application.

With its April 19, 2019 Policy Manual update, the USCIS has shown its zealous commitment to interpreting marijuana use under the 1971 federal CSA in spite of the tide of marijuana legalization that has swept nearly half the states in our union. It’s unfortunate, but green card holders and other affected parties should be warned.

source https://www.cannalawblog.com/cannabis-and-immigration-marijuana-activity-a-conditional-bar-to-obtaining-u-s-citizenship/

USDA Now Offers Plant Variety Protection for Seed-Propagated Hemp

Oregon Cannabis Delivery: How to Enter the Market

In the past year or so, we’ve seen an influx of cannabis delivery businesses enter the Oregon market– specifically in Portland. Those businesses are getting a lot of press, and we have received multiple inquiries from outfits looking to enter this space. Given this growing interest, we thought we would go over some of the basic steps a cannabis delivery company should take before jumping on the bandwagon.

In Oregon, marijuana items may only be delivered to a consumer’s home by an Oregon Liquor Control Commission (“OLCC”)-licensed retailer (“Retailer”) or a Retailer’s representative. A representative is “an owner, director, officer, manager, employee, agent, or other representative of a licensee, to the extent that the person acts in a representative capacity.”

Any person delivering marijuana items on behalf of a Retailer must:

1. be registered in the Cannabis Tracking System (“CTS”) as an “employee” of that Retailer with a valid marijuana worker permit number; and
2. be declared on the required transport manifest as recorded in CTS.

Although drivers must be listed as “employees” in CTS, they do not have to be actual employees of the Retailer. The OLCC requires that any driver who delivers marijuana items to consumers on behalf of the Retailer be listed as an “employee” for lack of a better term in CTS. (You won’t find any of this spelled out in the rules; it’s OLCC policy mostly.) However, it is worth nothing that the Retailer, as the licensee, will be liable for any violative acts or omissions by the driver.

Consequently, the OLCC allows private cannabis delivery companies to deliver marijuana items to Oregon consumers by partnering with Retailers, even if the delivery service does not have a brick-and-mortar presence. Although Oregon law does not expressly provide for this particular type of partnership between a private cannabis delivery company and a Retailer, the Retailer, as the licensee, must ensure compliance with all OLCC rules pertaining to the home delivery of marijuana items.

Nevertheless, cannabis delivery companies should familiarize themselves with OLCC rules as they are about to engage in retail delivery. The most pertinent OLCC rules include:

1. OLCC Approval. Prior to undertaking delivery service of marijuana items, Retailers must obtain approval from the OLCC by filing a Retailer Home Delivery Registration. Therefore, before a company enters into a business agreement with a Retailer, the company should do its due diligence and ensure, at a minimum, that the Retailer (a) possesses a valid OLCC license; and (b) has not been sanctioned for violations pursuant to the OLCC rules.
2. Location of Delivery. A driver may only deliver marijuana items in the jurisdiction in which the Retailer premise(s) is/are licensed. In addition, a delivery may be made only to a residence (i.e., home or apartment, but excluding any residence located on publicly-owned land), which means deliveries are strictly prohibited to dormitories, hotels, motels, bed & breakfasts, or other commercial businesses.
3. Receiving Orders. An order must (a) be placed before 8:00 PM on the day the delivery is to be made; (b) by the person who will receive the order; and (c) contain specific information, such as the requester’s name and date of birth.
4. Delivery Documentation. A Retailer must create a manifest in CTS for each delivery or series of deliveries and must document and retain certain information pertaining to the order and the requester.
5. Delivery Requirements. Deliveries must be made between 8:00 AM and 9:00 PM in a motor vehicle equipped with an alarm system. Every marijuana item must be kept in a lock-box securely inside the delivery vehicle, shielded from public view. Numerous restrictions are imposed on drivers, including: (a) not delivering marijuana items to an individual who is not 21 years of age or older and who is visibly intoxicated at the time of delivery; (b) not making deliveries more than once per day to the same physical address or to the same individual; and (c) not carrying or transporting at any one time more than a total of $3,000 in retail value worth of marijuana items designated for retail delivery.

Cannabis delivery companies should also be aware of the fact that in addition to obtaining OLCC approval, Retailers must generally register with the cities in which their stores are located before they can start operating a recreational marijuana business and delivering items to consumers. However, not every jurisdiction allows it, so companies should consult with knowledgeable attorneys before jumping on the bandwagon of cannabis home delivery.

source https://www.cannalawblog.com/oregon-cannabis-delivery-how-to-enter-the-market/

Are CBD Topicals Allowed in California?

I’ve written quite a bit on the legality of hemp-derived cannabidiol (“Hemp CDB”) products in California over the past few months (see my posts on Hemp CBD in general and my specific posts about Hemp CBD in foods and hemp cultivation). One of the areas I haven’t explored in great detail is topical products, i.e., cosmetics. I will address the murky status of Hemp CBD cosmetics in this post.

If you haven’t read my earlier posts, the gist is that the California Department of Public Health (“CDPH”) has taken a fairly hardline stance against adding Hemp CBD to foods and beverages via its now-infamous FAQs. These FAQs, notably, are based on federal law (the Controlled Substances Act which has since been amended so that hemp is no longer scheduled), but also on the federal Food and Drug Administration’s (“FDA”) prohibition on CBD in similar products (which definitely is still the FDA’s current position). Notably, the FAQs are silent on cosmetics and topical products.

While a bit less clear from the FAQs’ text, the CDPH has authority over certain products pursuant to the California Sherman Food, Drug, & Cosmetic Law (not to be confused with the federal Sherman Act). The CA Sherman Law gives the CDPH authority over foods and beverages, but notably also over cosmetics, which are defined as:

[A]ny article, or its components, intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to, the human body, or any part of the human body, for cleansing, beautifying, promoting attractiveness, or altering the appearance. The term “cosmetic” does not include soap.

Under this law, the CDPH could theoretically initiate enforcement actions or assess penalties against companies who sell adulterated or misbranded cosmetics. But until now, the CDPH hasn’t been extremely vocal about cosmetics in California—as is evident by reading the FAQs which don’t even mention them. We aren’t aware of any explicit enforcement actions against Hemp CBD topicals. So while the CDPH hasn’t said Hemp CBD topicals are prohibited, it hasn’t necessarily ruled that out.

Adding to the lack of confusion is the federal position, which my colleague, Daniel Shortt, recently discussed. In a nutshell, the FDA may view a cosmetic product as prohibited if its ingredients or the product itself is unsafe, or if it is intended to be used in a way that makes it a “drug” (i.e., it is “intended to affect the structure or function of the body, or to diagnose, cure, mitigate, treat or prevent disease”). In other words, the FDA hasn’t taken as hardline of a stance against cosmetics as it has against foods and unapproved drugs, but we still have a sense of the FDA’s willingness to crack down on products that aren’t safe or that make medical claims.

In spite of the general confusion in California and with the FDA’s policy statement, at least some clarity may soon be taken away if a new piece of California legislation, AB-228, is passed. If passed in its current form, AB-228 would state:

A cosmetic is not adulterated because it includes industrial hemp . . . or cannabinoids, extracts, or derivatives from industrial hemp. The sale of cosmetics that include industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp shall not be restricted or prohibited based solely on the inclusion of industrial hemp or cannabinoids, extracts, or derivatives from industrial hemp.

What this would mean is that if passed, CDPH could not use the CA Sherman Law to find that CBD-containing topicals adulterated simply by virtue of containing Hemp CBD (the same would also apply to foods). This may lead to more clarity for California CBD companies who have topical products.

That said, it’s not yet clear whether the CDPH would continue to follow federal law even in spite of AB-228 passing. The state may find itself in a position of ignoring federal positions (like it has done with marijuana), or the CDPH may continue to follow federal agencies. Even the California Attorney General’s office has recognized that this could happen:

Even if it [AB-228 passes], it is not clear whether changing California law on this adulteration issue would be sufficient to alter the decision calculus of the CDPH, which has to this point relied on the FDA’s interpretation of federal law. That is, it might be the conclusion of these agencies that federal law still prohibits adding CBD to food or dietary supplements, even where derived from industrial hemp.

Though this is just speculation, I don’t think that the CDPH will follow the FDA if AB-228 passes. The FDA’s policy guidelines are so broadly written that they would prohibit the introduction of marijuana into food products in California—yet we don’t see any state agencies pulling those products. This includes products that are manufactured by CDPH licensees.

It’s also important to point out that even if AB-228 passes, the CDPH will be able to find Hemp CBD cosmetic products “misbranded”. However, this is also probably less likely to occur except in cases where products make unsubstantiated or false claims or are advertised in a deceptive manner. This may very well happen for some Hemp CBD products, which is why it’s important to consult with an experienced attorney prior to marketing or advertising new products.

In sum, the current state of topical Hemp CBD laws in California is less than clear (which at this point should surprise nobody). Keep following the Canna Law Blog to keep up with all California CBD updates.

source https://www.cannalawblog.com/are-cbd-topicals-allowed-in-california/

Vireo Health Gets a Patent Win on its Tobacco Mitigation Cannabis Product