California Cannabis Investment Forum: Last Chance for Early Bird Pricing

Just a last reminder that pricing for our November 30 Southern California Cannabis Investment Forum in Los Angeles will be increasing at midnight tonight. If you buy now, you can get your tickets for $55 for one or $100 for two. Tomorrow, those costs will  increase to $75 and $135.

The Forum will begin at 6:30 p.m. with a keynote by Hilary Bricken (our lead cannabis business attorney in Los Angeles) addressing the many recent changes to California’s medical and adult use cannabis laws under MAUCRSA. From 6:45 to 8 p.m., Hilary will then moderate a panel comprised of the following:

• Alex Fang, Founder of Sublime CO2
• Paul Henderson, CEO of Grupo Flor
• Stephen Kaye, COO of Big Rock
• Kenneth Berke, President of PayQwick
• Carlton Willey, our own San Francisco-based securities and equity financing attorney

This panel will cover the following:

• Cannabis industry investing and fundraising and the outlook for the future
• Deal structures (i.e., investment rounds, debt versus equity deals, hybrid structures forced by volatile regulations, and reverse mergers)
• Business and financing concerns tied to investing in cannabis
• Investor red flags in Southern California’s cannabis industry

Audience questions will be taken throughout the presentation. A cocktail (the food and a drink is included in the ticket price) networking session will follow the panel and last until 9:30 pm.

The Southern California Cannabis Investment Forum will be held at Wanderlust in Hollywood. Hors-d’oeuvres and drinks will be provided. Doors open at 5:30 pm. We sold out of this event when we put it on in San Francisco two months ago so don’t wait to get your tickets!

We look forward to seeing you there!

source https://www.cannalawblog.com/california-cannabis-investment-forum-last-chance-for-early-bird-pricing/

BFD Alert: 2013 Cole Memo is Safe (For Now)

Attorney General Jeff Sessions seems to have made it his personal M.O. to potentially go after and take down state legal marijuana programs and businesses, medical and recreational alike (he’s made no bones about it that he’s not a fan of marijuana or its users). As of yesterday though, the state-legal marijuana industry can exercise a (slight) sigh of relief on the heels of Sessions finally providing some guidance from the Department of Justice–essentially, according to Sessions, this administration will follow the 2013 Cole Memo in its enforcement of marijuana-related crimes in states that have marijuana legalization and/or medicalization and corresponding regulatory systems.

During the House Judiciary Committee oversight hearing yesterday, Sessions stated on the record 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.

Hopefully then, cannabis businesses in states with “robust regulation” that adhere to the eight enforcement priorities of the 2013 Cole Memo will be the lowest enforcement priorities for the DOJ. However, neither that Memo nor Sessions’ apparent acceptance of it do anything to change the federal Controlled Substances Act–marijuana remains illegal under federal law. Still, Sessions agreed with Representative Steve Cohen (derived from a line of questioning from the Congressman) that marijuana is not as dangerous as heroin (despite the Schedule I classification they share under the federal Controlled Substances Act). Despite all of Sessions’ anti-marijuana rhetoric (and his poking and prodding of states that have highly regulated recreational marijuana licensing systems), it seems he’s finally coming around to facts and science. Do not though expect this Attorney General to make any effort to reschedule marijuana anytime soon as he toes the Republican Party line on continuing the failed war on drugs.

Another big boon from yesterday’s hearing is that, despite the fact that Sessions requested that Congress essentially undo the state medical marijuana protections set forth in various Congressional budget riders (which have actually shown major teeth in the Ninth Circuit), Sessions ultimately kowtowed to the fact that the DOJ must respect those laws as long as they’re in place. What a shock that the DOJ must abide by current federal laws.

So, for now, the 2013 Cole Memo remains the DOJ’s current enforcement policy when it comes to state legal marijuana, and we can expect states to continue their democratic experiments with marijuana regulatory systems at a regular clip. Do not forget though that the 2013 Cole Memo is meaningless when it comes to the actual state of the law insofar as marijuana remains federally illegal. We’re glad to see that the DOJ will (hopefully) follow the 2013 Cole Memo, but we’re even happier that Sessions plans to respect the federal budget riders (as he should have done from the get go) and that he recognizes that marijuana is not as unsafe as heroin (which is an obvious no brainer at this point for anyone who respects science and empirical data).

source https://www.cannalawblog.com/bfd-alert-2013-cole-memo-is-safe-for-now/

BFD Alert: The 2013 Cole Memo is Safe (For Now)

Attorney General Jeff Sessions seems to have made it his personal M.O. to potentially go after and take down state legal marijuana programs and businesses, medical and recreational alike (he’s made no bones about it that he’s not a fan of marijuana or its users). As of yesterday though, the state-legal marijuana industry can exercise a (slight) sigh of relief on the heels of Sessions finally providing some guidance from the Department of Justice–essentially, according to Sessions, this administration will follow the 2013 Cole Memo in its enforcement of marijuana-related crimes in states that have marijuana legalization and/or medicalization and corresponding regulatory systems.

During the House Judiciary Committee oversight hearing yesterday, Sessions stated on the record 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.

Hopefully then, cannabis businesses in states with “robust regulation” that adhere to the eight enforcement priorities of the 2013 Cole Memo will be the lowest enforcement priorities for the DOJ. However, neither that Memo nor Sessions’ apparent acceptance of it do anything to change the federal Controlled Substances Act–marijuana remains illegal under federal law. Still, Sessions agreed with Representative Steve Cohen (derived from a line of questioning from the Congressman) that marijuana is not as dangerous as heroin (despite the Schedule I classification they share under the federal Controlled Substances Act). Despite all of Sessions’ anti-marijuana rhetoric (and his poking and prodding of states that have highly regulated recreational marijuana licensing systems), it seems he’s finally coming around to facts and science. Do not though expect this Attorney General to make any effort to reschedule marijuana anytime soon as he toes the Republican Party line on continuing the failed war on drugs.

Another big boon from yesterday’s hearing is that, despite the fact that Sessions requested that Congress essentially undo the state medical marijuana protections set forth in various Congressional budget riders (which have actually shown major teeth in the Ninth Circuit), Sessions ultimately kowtowed to the fact that the DOJ must respect those laws as long as they’re in place. What a shock that the DOJ must abide by current federal laws.

So, for now, the 2013 Cole Memo remains the DOJ’s current enforcement policy when it comes to state legal marijuana, and we can expect states to continue their democratic experiences with marijuana regulatory systems at a regular clip. Do not forget though that the 2013 Cole Memo is meaningless when it comes to the actual state of the law insofar as marijuana remains federally illegal. We’re glad to see that the DOJ will (hopefully) follow the 2013 Cole Memo, but we’re even happier that Sessions plans to respect the federal budget riders (as he should have done from the get go) and that he recognizes that marijuana is not as unsafe as heroin (which is an obvious no brainer at this point for anyone who respects science and empirical data).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes on the hearing:

 

 

Chabot – federal law currently still cities marijuana as a dangerous drug, its still prohibited, its still illegal under federal law; however a number of states have for both medical purposes and now recreational purposes have basically made it legal. What is your departments policy on that relative to enforcing the law?

 

Our policy is that 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 regards to federal purposes.

 

It seems to me there has always been a tremendous amount of grey area in that whole field which I think a nation we need to look more closely at from the states point of view and the federal point of view

 

 

Cohen – you said that you are basically doing the same as Holder and Lynch, I believe they abided by congressional appropriations that limited the justice department from enforcing marijuana laws where states have passed medical marijuana laws and others; will you abide by congressional appropriations limitations on marijuana when compete with state laws.

 

I believe we are bound by that

 

Marijuana is not as dangerous as heroin, do you agree with that?

 

I think that is correct

 

Marijuana is the least bothersome of all. 29 states have legalized for medical purposes and 8 states for legal purposes. States are laboratories of democracy. States with medical marijuana have 29% lets opioid use.

 

We will take a look at it and look at rigorous analysis of marijuana usage and how it plays out. I’m not as optimistic as you.

 

You said at one time good people do not smoke marijuana. Which one of these are not good people?

 

Let me explain how that occurred – drug use in 1981 was large; it become unfashionable and unpopular and found that good people don’t use marijuana

 

John kasack, Bush, Clarrence Thomas

 

 

 

 

source https://www.cannalawblog.com/bfd-alert-the-2013-cole-memo-is-safe-for-now/

Early Bird Pricing Ends TOMORROW For Our SoCal Canna Investment Forum so Get Your Tickets NOW

Among the hundreds of California cannabis events and conferences out there, I’ve come to find few offer much insight or even tips for investing in California’s cannabis industry and ancillary sector. Many of our California cannabis clients have been engaging in all kinds sophisticated hybrid equity and debt deals to put dollars into the hands of California cannabis operators and ancillary businesses as we head into licensing in 2018.

On September 28th of this year, our San Francisco office hosted our first California Cannabis Investment Forum, and it was a huge success. Not only did we sell out and have more than 250 people in attendance, those who attended really enjoyed it and many requested we do something similar in Los Angeles. Their reasons for wanting a similar event in Los Angeles ranged from wanting their SoCal people to be able to attend to wanting to hear what is happening in Southern California and to meet and network with cannabis industry operators and investors in our area. So, by popular demand from attendees and clients, we’re hosting another investment forum at the end of this month, but this time it’s in Los Angeles and with new panelists and a new moderator!

We hope you can join us on Thursday, November 30th for a discussion on investing in Southern California’s newly regulated cannabis industry. Hosted by Harris Bricken‘s Los Angeles office, the Southern California Cannabis Investment Forum will bring together top investors and leading companies in Southern California’s cannabis and ancillary industries.

The Forum will begin at 6:30 p.m. with a keynote from me that addresses the many recent changes to California’s medical and adult use cannabis laws under MAUCRSA. From 6:45 to 8 p.m., I will moderate a panel comprised of the following:

• Alex Fang, Founder of Sublime CO2
• Paul Henderson, CEO of Grupo Flor
• Stephen Kaye, COO of Big Rock
• Kenneth Berke, President of PayQwick
• Carlton Willey, our own San Francisco-based securities and equity financing attorney

Panelists will cover:

• Cannabis industry investing and fundraising and the outlook for the future
• Deal structures (i.e., investment rounds, debt versus equity deals, hybrid structures forced by volatile regulations, and reverse mergers)
• Business and financing concerns tied to investing in cannabis
• Investor red flags in Southern California’s cannabis industry

Audience questions will be taken throughout the presentation. A cocktail (the food and a drink is included in the ticket price) networking session will follow the panel and last until 9:30 pm.

The Southern California Cannabis Investment Forum will be held at Wanderlust in Hollywood. Hors-d’oeuvres and drinks will be provided. Doors open at 5:30 pm. Early bird pricing ends at midnight tomorrow, so don’t wait to get your tickets!

We look forward to seeing you there!

source https://www.cannalawblog.com/early-bird-pricing-ends-tomorrow-for-our-socal-canna-investment-forum-so-get-your-tickets-now/

Cannabis Workplace Sexual Harassment

Over the past few weeks, story after story has come to light of sexual assault and sexual harassment in the entertainment industry. But though high profile actors, directors, and producers are getting most of the press attention right now, the vast majority of workplace sexual harassment is experienced by low-wage hourly employees, often in small businesses. Employers in every industry should take advantage of the current wake-up call to make sure their policies and procedures are effective in preventing sexual harassment in the workplace. For one thing, harassment does expose a business to potential liability because of lawsuits from current and former employees. But more importantly, a hostile workplace is less likely to hire and retain the best performers, both women and men. This isn’t the 1960s any longer; a company that doesn’t have a clear sexual harassment policy is on the road to failure.

The cannabis industry is particularly vulnerable to harassment situations for two main reasons. First, marijuana businesses are still predominately made up of men. Male-dominated businesses often develop a language and culture that can be overtly hostile to women, and cannabis businesses are no different. Second, the industry is still young, and a large number of people in cannabis management do not have similar executive-level experience in other businesses. Many cannabis businesses lack any sort of policies to address workplace harassment.

Sexual Harassment Policies 

A company’s written sexual harassment policy should have a few goals. Specifically, it should

• inform employees and contractors of the company’s objective to maintain a workplace free of harassment in all forms, including sexual harassment,
• define prohibited conduct,
• give examples of prohibited conduct,
• establish procedures for reporting sexual harassment, including clarifying a duty to report and establishing confidentiality of any reports,
• prohibit retaliation, and
• inform employees and contractors of potential disciplinary actions for violating policy.

No matter the precise nature of the policy, training and reinforcement have to be mandatory. Just about everyone can agree that certain activity crosses the line at the workplace. But many people, especially those who have not received formal sexual harassment training, can unwittingly create a hostile workplace with actions they did not perceive to be wrong. A company’s sexual harassment culture should become stronger over time if the company takes advantage of the feedback loop of training, reporting, retraining, and reinforcement training.

Dealing with Sexual Harassment Reports

Maintaining a policy is only half the battle. Employers must make sure their policy is consistently implemented company-wide. Businesses need to accomplish two goals that can be at odds with one another. They need to provide multiple avenues for employees to report harassment, but they also need to make sure the company deals consistently with reports no matter from where reports come in. Company owners and managers must be subject to the same policy as their employees, and companies need to have an avenue to discipline owners and managers to show employees that their sexual harassment policies are applied consistently across the board.

One avenue a company can encourage, when possible, is for the person levying the complaint to address the situation with the offending coworker directly. Oftentimes, a simple misunderstanding can be cleared up that way. But if that isn’t possible or if the employees is uncomfortable doing that for any reason, the next step is generally for the employee to report the harassment to their immediate supervisor or to the company’s HR department. Multiple layers of reporting are necessary, especially when the harassment may be coming from, for example, the employee’s direct supervisor. Companies that are not large enough to have dedicated HR departments should still have employees or owners that are taking on the role of HR. Some companies even have dedicated harassment committees or ombudsmen that are generally not associated with management or ownership and that can ensure that there is an outside voice to keep HR and management honest regarding the company’s sexual harassment policy.

Once a complaint has been made, a business needs to have a consistent policy toward discipline and corrective action. This can’t be a one-size-fits-all policy. Sometimes a simple training is enough to deal with an event. Other times, the offending employee should be fired on the spot. But the correct combination of corrective action and discipline needs to be consistent.

All of this can seem difficult when you are a new company just trying to get by, but successful businesses and their owners and managers need to be able to walk and chew gum at the same time. Ignore harassment policies at your peril.

source https://www.cannalawblog.com/cannabis-workplace-sexual-harassment/

Cannabis IP Licensing 101

Given the recent influx of cannabis-IP licensing deals on which we have worked, I thought it important to discuss some of the issues potential licensees often face when negotiating with brand owners.

These licensing deals are complicated and fraught with unique cannabis-related issues. Many companies come to us with such licensing deals expecting the biggest hurdle to be state cannabis law compliance. And though this is certainly a major concern, it’s important to start with the fundamentals by analyzing the validity and strength of the intellectual property itself. With any licensing deal, the first step should be determining who actually owns what intellectual property. This is especially true when it comes to the cannabis industry, where information, strain names, and industry terminology have been shared freely since long before state-level legalization.

Ownership of IP in the cannabis industry is a tricky issue, in large part because the USPTO will not issue federal trademark registrations for cannabis-related marks. Far too regularly, cannabis companies come to us with proposed licensing deals where basic due diligence quickly reveals the licensor simply does not own what it claims to own. A little bit of high-level IP due diligence can save a lot of money.If you are looking to get a license for another company’s IP, here are the most basic questions you should be able to answer about that other company and its IP:

If you are looking to get a license for another company’s IP, here are the most basic questions you should be able to answer about that other company and its IP:

• Does the licensor own any federal trademark registrations?

• If so, what goods and/or services do those trademark registrations cover?

• Was the description of goods and/or services filed with the USPTO accurate and true? Were there possible misrepresentations?

• Are the trademark registrations based on actual use, or upon an “intent-to-use?”

• What representations and warranties is the licensor making (or, often more importantly, not making) regarding the marks?

• If the licensor doesn’t own any federal trademark registrations, is it licensing someone else’s trademarks?

• Does the licensor have a master licensing agreement? Do the terms of any proposed sub-licensing agreement mirror that master licensing agreement?

• What quality control standards will you be held to by the trademark owner?

• Has the trademark owner warranted to keep all USPTO filings up-to-date?

• Does the licensor own any state trademark registrations?

• If so, has the licensor made lawful use of its mark in commerce in the state of registration?

• Does the licensor have any common law trademark rights? Can the licensor even legally acquire common law trademark rights in your jurisdiction?

This is a substantial list, but it only scratches the surface of the issues you and your cannabis IP counsel must consider before you enter into any IP licensing deal. Cannabis companies are often too quick to skip straight to negotiating commercial terms for a deal, without ever assessing whether the rights they are licensing actually exist. Just like with any other type of property — like a house or a car — a licensor of intellectual property must actually own the rights to that property to be able to confer all or some portion of those rights to another party. Seems basic, but it’s truly shocking to see the deals we’ve seen put together by attorneys who either do not know cannabis or, more often than not, do not know the intricacies (or even the basics) of intellectual property law.

Of course, even after you resolve the fundamental IP issues, you still must resolve the state cannabis law issues. In California, for example, even state trademarks are still not available for cannabis and cannabis products. And we don’t yet know how the soon-to-be-released MAUCRSA draft regulations will impact our options for commercial terms and structuring of licensing deals.

Fortunately, the news isn’t all bad. Though these licensing deals are complicated, there are creative and effective solutions to all of these problems, but those take a firm understanding of both IP and state marijuana laws from the outset.

source https://www.cannalawblog.com/cannabis-ip-licensing-101/

California Cannabis Countdown: The City of Hayward

California has 58 counties and 482 incorporated cities across the state, each with the option to create its own rules or ban marijuana altogether. In this California Cannabis Countdown series, we cover who is banning cannabis, who is waiting to see what to do with cannabis, and who is embracing California’s change to legalize marijuana — permits, regulations, taxes and all. For each city and county, we’ll discuss its location, history with cannabis, current law, and proposed law, all to give you a clearer picture of where to locate your California cannabis business, how to keep it legal, and what you will and won’t be allowed to do.

Our last California Cannabis Countdown post was on Alameda County, and before that Oakland, San Francisco, Sonoma County, the City of Davis, the City of Santa Rosa, County and City of San Bernardino, Marin County, Nevada County, the City of Lynwood, the City of Coachella, Los Angeles County, the City of Los Angeles, the City of Desert Hot Springs, Sonoma County, the City of Sacramento, the City of Berkeley, Calaveras County, Monterey County and the City of Emeryville.

Today’s post is on the City of Hayward.

Welcome to the California Cannabis Countdown.

Location. Hayward is a city in Alameda County that borders the East Bay cities of San Leandro, Fremont, and Pleasanton. Though Hayward doesn’t have the worldwide recognition of San Francisco or Oakland, it is an affordable city near the water with a strong manufacturing base.

History with Cannabis and Current Cannabis Laws. Right now you might be asking yourself: Hayward? Sure Hayward at first might not seem like a jurisdiction in which to locate your California cannabis business, but in the other states in which we have cannabis lawyers (Oregon and Washington), we long ago learned that the most glamorous cities are not necessarily the most profitable ones.

Historically, Hayward’s stance towards cannabis probably aligns closer with U.S. Attorney General Jeff Sessions than with most Californians. Hayward’s unfriendly approach to cannabis — absolute prohibition through an exclusionary zoning ordinance — was even starker when compared to the other progressive cities in the East Bay (Oakland, Berkeley, and Emeryville). Hayward’s slow march towards progress began in November of 2016 when approximately 60 percent of Hayward voters supported Measure EE and 56 percent voted for the Adult Use of Marijuana (a/k/a Prop 64). Measure EE set up a tax structure allowing the city of Hayward to tax cannabis businesses up to fifteen percent of their gross sales. The Measure specified that the tax could apply to medical and adult-use cannabis businesses and cover seed to sale license types (cultivation, manufacturing, distribution, and retail). Let’s give credit when it’s due as Hayward’s city council took notice of their residents’ wishes and just recently proposed and voted on a new cannabis ordinance.

New Cannabis Laws: On September 14, 2017, the Planning Commission held a hearing to discuss regulations for cannabis business and on October 17, Hayward’s City Council introduced an ordinance amending their municipal code. The proposed ordinance removed Hayward from the dark ages of complete prohibition. On October 30^th, the City Council approved a final version of their cannabis ordinance. Here’s a list of the some of the highlights (and some lowlights) of Hayward’s cannabis ordinance:

• Allows medicinal and adult-use commercial cannabis businesses.
• Will permit seed to sale license types, including laboratories. Commercial cannabis cultivation operations under 5,000 square feet will only need an administrative use permit, bigger operators will need to obtain a conditional use permit.
• Outdoor commercial cannabis cultivation is prohibited.
• Volatile manufacturing is prohibited.
• Caps the number of retail dispensaries to no more than three.
• Onsite consumption is prohibited although an exception could be granted for qualified medical patients.
• Temporary special events that involve onsite cannabis sales and consumption may be allowed if the applicant receives a special event permit.
• Multiple cannabis businesses can be permitted per site so long as the businesses are located on separate and distinct premises.
• Creates an ancillary option for retail sales. The retail sale of cannabis and cannabis products is allowed only as a component of a microbusiness operation. The operator must hold a microbusiness (Type 12) license issued by the state Bureau of Cannabis Control. The cumulative floor area of the retail activity shall not exceed 10 percent of the first-floor area of the industrial building and all cannabis and cannabis products for sale must have been cultivated, produced and manufactured on-site.
• All individuals that participate in the production of edible cannabis products must be state certified food handlers.
• Security cameras will have to allow for remote access to be provided to the Hayward Police Department.
• All cannabis businesses shall be subject to a 600-foot minimum setback from schools, day care centers, youth centers, and open space areas or designated parks used towards children’s activities. The setback for public parks and open spaces may be reduced by the Planning Commission.
• Applications for a cannabis business permit will be evaluated by the City Manager.

As a whole, this is a pretty substantial first step by Hayward to regulate the cannabis industry. Sure, we’d prefer if there weren’t a cap on dispensaries but the city is showing some creativity by creating an ancillary sales option. This modified microbusiness model could be an attractive option for many California cannabis business owners. We’ll still have to wait to see how Hayward implements this ordinance, but it’s safe to say that you won’t find Hayward on this list anytime soon. Well done Hayward, well done.

source https://www.cannalawblog.com/california-cannabis-countdown-the-city-of-hayward/