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California cannabis businesses should steel themselves for the reality of an unannounced inspection by state Department of Cannabis Control (DCC) compliance officers – some of whom have been showing up armed at inspection sites. California cannabis company inspections

As our Los Angeles marijuana business lawyers can explain, it’s not the first time pot shops have been subject to inspections. It’s just that officials handling it in the past typically gave companies a heads-up – often several days of notice – before showing up. But according to recent reports, there has been a surge of drop-in, no-notice inspections. The 24-to-48-hour heads-up is no longer something your company can count on.

Given that even minor transgressions or oversights might compromise your ability to keep your doors open, it’s imperative that licensed California cannabis businesses be ready for a DCC inspection out of the clear blue sky.

Prime Targets of California DCC Inspections

If a company isn’t following state marijuana law and guidelines to the letter, DCC can issue citations, fines, and even license revocation. As this new aggressive inspection campaign is under way, it’s unclear how nit-picky inspectors are going to be, but we do know the agency has expressly stated there are a few major compliance rules on which they’ll be devoting a heavy focus. Those include: Continue reading

Few sectors in recent memory have been poised to grow as exponentially as the cannabis industry. By some estimates, we’ll be seeing $45 billion by 2025. And yet, until federal marijuana law aligns with the reality of state law, the status of marijuana as as a Schedule I narcotic under the Controlled Substances Act stands as a considerable barrier to the enforcement of any business contract involving a cannabis company.Los Angeles cannabis lawyer

As our Los Angeles cannabis business lawyers can explain, the illegality defense has been used (with varying success) to invalidate business contracts that would be strongly enforceable in any other industry.

The illegality defense essentially holds that any contract requiring one party to engage in illegal conduct is not enforceable. It’s been employed by cannabis companies, vendors, distributors, etc. to avoid being held to their prior agreement.

We saw an example of this just last year in Sensoria et al v. Kaweske et al, before the U.S. District Court for the District of Colorado. In this case, a group of plaintiffs wanted to recover their investment from a cannabis company it said engaged in breach of contract, breach of fiduciary duty, civil theft, and fraud. Plaintiffs say the invested hundreds of thousands of dollars in a cannabis enterprise, only for the company to essentially cut them off from communications and ultimately, shut down after opening up a rival firm. Investors not only were deprived of a return on investment – they didn’t receive back their initial investment.

The defense responded with the illegality-based defense as a bar to recovery. The federal court noted that the overarching issue was the cannabis company’s direct involvement in the growing and selling of marijuana – legal under Colorado law, but not under the federal SCA. The court held that the plaintiffs’ failure to explain how relief could be obtained without endorsing or requiring illegal activity or how it would be paid from an asset source independent of marijuana. Continue reading

For any industry that deals in consumer packaged goods marketing, product sampling is a go-to tactic. Give consumers a little nibble of your new cookie at the grocery store or a little folder with a sample of your latest perfume – it offers prospective customers the chance to try something new with no cost or risk. It can also be a means to lure prime retailers into providing a product prime shelf space. But as our Los Angeles cannabis lawyers can explain, this practice has always been legally problematic for pot shops.California cannabis samples legality

Some of the legal barriers to California cannabis samples:

  • Age restrictions
  • Public consumption bans
  • Legal licensing and distribution laws

These were exacerbated by the COVID-19 pandemic.

But there is good reason for manufacturers to keep trying because we know that free samples can boost sales of a product by as much as 2,000 percent. More than one-third of customers who sample a product end up buying a full-size version during that same shopping trip. If you offer in-store samples, you have the potential to increase sales by more than 100 percent, even nearly a half a year after the samples were offered.

With this kind of incentive, cannabis company entrepreneurs have had to get creative – starting with CBD.

We should point out that federal law does not allow hemp companies to put CBD into topicals or foods. However, enforcement on this has been incredibly lax. Some companies have taken advantage of that, even going so far as to have brand ambassadors offering up drink samples outside their brick-and-mortar stores. As a result, sales went up. Similar successes were noted for CBD tonics as well. Continue reading

A California church that distributes cannabis and psychedelic mushrooms as sacrament has filed a lawsuit against the local city government and police department over a drug raid in which authorities seized more than $200,000 of these substances. cannabis church

The civil rights litigation filed by the Zide Door Church of Entheogenic Plants explains that worshippers at the congregation gather and consume the mind-altering plants as a means of having a direct experience with God. The church is interfaith, non-denominational, and openly supports the safe access and use of all entheogenic plants, though its particular focus is on cannabis and so-called “magic mushrooms.”

Approximately 60,000 members of the church pay $5 each month, as well as give donations, in exchange for participation in the sacraments. The church grows its own cannabis and mushrooms. The founder of the church explained to Vice Magazine that consuming these substances allows parishioners to experience spiritual visions, interact with powerful spiritual entities with lessons to teach, and sometimes even engage in a direct experience with God.

But none of that seemed to matter to the Oakland Police when they launched a raid of the facility back in 2020, seizing hundreds of thousands of dollars worth of mushrooms and cannabis. No arrests were made and no charges were filed, but the substances were never returned and the church was not provided any compensation for its value.

As our Los Angeles cannabis lawyers can explain, the actions of police may run afoul of the federal Religious Freedom Restoration Act. This, along with the Religious Land Use and Institutionalized Persons Act, are federal laws that serve as a shield against improper government actions against certain church groups and religious services. It may well provide protections for churches who use religious services.

The RFRA of 1993 bars the federal government from applying/enforcing laws and rules that may burden a person’s exercise of religion – even if the burden results from laws/rules of general applicability. It requires strict scrutiny – the highest level of review – of any federal law that may burden the religious exercises of organizations/groups/individuals.

These laws extend beyond federal government intervention, and assert that local and state government agencies can’t discriminate against religious groups either in areas of zoning and land use restrictions.

It’s our belief at the Cannabis Law Group that churches that treat cannabis as a sacrament are improperly and illegally targeted by government agencies taking action against them for this reason. That said, the law on this front is still unsettled, so it may still be possible for cannabis churches to be shut down, cannabis seized, fines imposed, evictions upheld and criminal charges filed. For those fighting back and taking civil action, it’s imperative to work with a law firm with extensive experience in California cannabis law and a track record of success on behalf of cannabis churches and other organizations. Continue reading

As Los Angeles hemp lawyers, we fully recognize that California, despite being the first state in the country to legalize marijuana, has not historically been the friendliest to hemp producers, distributors, and retailers. We began seeing a real shift on this front last year with the passage of AB-45, which sought clear rules for the regulation of CBD manufactured goods and sales. A few months ago, the California Department of Public Health issued its proposed regulations under the new law. And now, it seems we have a clear set of approved hemp industry regulations in California, and the state is prepared to accept applications to become licensed operators.hemp manufacturing

The CDPH’s Food & Drug Branch issued notice earlier this month to industrial hemp product manufacturers and extractors that it would be accepting applications and fees for the production of in-state hemp products, as well as in-state and out-of-state extracts.

Permission to legally manufacture, pack, or hold industrial hemp products and extracts requires:

  • Authorization from the Industrial Hemp Enrollment and Oversight agency.
  • Registration with the department for the applicable food, cosmetic product, or processed pet food.

Those who are making inhalable hemp products are solely required to obtain authorization from the IHEO department.

As our Los Angeles hemp lawyers can explain, hemp growers, producers, distributors, and retailers need to know that their products are going to be subject to strict regulations governing production, testing, labeling, and warehousing to ensure the safety of the products. State law (specifically, HSC 110140) authorizes inspection of any industrial hemp facility or operation by the health department in order to ensure state law and regulation compliance.

Companies that are submitting their applications to the FDB may want to consider having their attorney do it for them, or at least review all materials before submission. You don’t want your application to be turned down on a technicality, but there are many technical considerations that apply. Businesses must submit not only their application and the appropriate fees to the correct authority, but also provide a wealth of supporting documentation. Continue reading

Complaints made to California state officials and federal authorities allege that online cannabis advertising behemoth Weedmaps is once again promoting marijuana retailers and products that are unlicensed and illegal.Los Angeles marijuana lawyer

As our Los Angeles cannabis lawyers understand it, the complaints, filed a few months ago with the state’s Department of Cannabis Control and the federal Securities and Exchange Commission, assert that the executives at Weedmaps has opened to the door to black market marijuana purveyors, giving them a platform where customers can find them, as well as products that exceed safe, legal THC levels. The complaints assert that Weedmaps is aware that they are facilitating black market business and sales through their website, but has failed time and again to take action to stop it.

Black market activity, of course, directly harms legal, licensed businesses. This is well-established. The complaint alleges that Weedmaps is giving underground operators an edge competitively by allowing them to advertise on the platform. Inevitably, they’re going to be able to sell their product (which isn’t heavily taxed and hasn’t undergone rigorous testing) at much lower rates. Although Weedmaps purports to serve the legal market, this practice ends up undercutting that stated objective.

You may recall, it’s been a little over four years now that Weedmaps caught the ire of state authorities over allegations of illegal advertisements. The company, based in California, took down some of its online advertising two years ago, prior to going public last year. Continue reading

The popularity of Delta-8 in California and beyond has soared in recent years. However, the legality of the substance has been called into question, with 21 states restricting it or even banning it altogether as of April 2022, sparking outcry from companies, customers, manufacturers, and distributors. delta 8 legalization Los Angeles

In California, despite having some of the most liberal cannabis laws in the country, delta-8 is still regulated and restricted. State law regulates using, possessing, selling, distributing, or producing hemp and marijuana-derived delta-8 products – similar to the way it regulates high-THC marijuana. Unlicensed distributors (either online or with brick-and-mortar stores) aren’t allowed to sell any hemp-derived products (including Delta-8) with more than 0.3 percent THC. Licensed dispensaries, on the other hand, can. They can also sell delta-8 that is derived from marijuana. State law also regulates and restricts delta-10, THC-O and HHC products that contain more than 0.3% THC.

That said, back in may a federal appellate court in California held that delta-8 THC and other hemp-derived substances are legal under the 2018 Farm Bill. The U.S. Court of Appeals for the Ninth Circuit ruled this was true even if the products contained properties that were psychoactive.

The three justices unanimously held that goods made with delta-8 THC are legal under U.S. law. The Farm Bill establishes hemp as any part of the cannabis plant – including all cannibinoids, extracts, and derivatives – that contain less than 0.3 percent delta-9 THC by weight. However, the federal law says nothing about delta-8. The court said that while the wisdom of legalizing delta-8 products could be up for debate, it would not substitute its own policy judgment for that of the United States Congress. Continue reading

When marijuana legalization laws first began to gain traction in the U.S. (California being the first state, of course), there was considerable concern about what this would mean for road safety. After all, there is little question that driving under the influence of marijuana is unsafe. However, analysis of auto insurance premiums in states that adopted legalized medical marijuana seem to indicate a correlation between legal pot and safer roads. Los Angeles marijuana lawyer

As our Los Angeles marijuana lawyers understand it, auto insurance premiums in states that adopted legal medical cannabis fell by an average of $22 annually after legalization. The research was published in the journal Health Economics, which looked at insurance premium information from 2014 to 2019. Authors of the study speculate that it may have something to do with people opting for cannabis over alcohol, thereby reducing instances of drunk driving. It’s not that driving while under the influence of cannabis is any safer, but at least anecdotally, those under the influence of cannabis are less likely to get behind the wheel in the first place, compared to those under the influence of alcohol.

While a reduction of $22 in insurance premiums over the course of a year may not seem all that significant, one must consider that amplified by each individual on the road. And if the reason for the decline is that there is link between legal cannabis and road safety that in turn leads to fewer drunk driving crashes (and associated costs), that starts to look much more significant.

The researchers determined that legalization of medical marijuana collectively results in $1.5 billion in lower auto insurance premiums. If all states were to legalize marijuana, researchers surmise, that could result in an additional $900 million in reduced premiums. The combined total impact of would be $2.4 billion less we’d all be paying for car insurance if medical marijuana was accessible across the U.S.

What’s more, given that the amount we pay for auto insurance is directly tied to how much property is damaged and how severely people are injured in crashes, the lowered premiums are indicative of safer roadways overall when medical marijuana is made legal. Continue reading

Regulators of California’s marijuana industry want to put a stop on so-called “laboratory shopping” by growers and retailers. The practice reportedly involves cannabis companies being drawn to working with testing sites that have a reputation for landing on higher THC concentrations in marijuana products, thus allowing those goods to be sold at a premium.Los Angeles cannabis testing

As our Los Angeles cannabis business lawyers can explain, while the state has clear guidelines in place mandating marijuana products be screened for contaminants and THC content by licensed testing facilities, what is lacking is any sort of uniform methodology to do so. The result of that is that two facilities may be using different processes, ultimately leading to a variation of findings.

Products with a greater THC concentration (which has the greatest potential for intoxication) are going to be in higher demand. The state’s problem is a pattern it has identified of marijuana growers shopping around for labs that employ testing methods that have a greater tendency to indicate a higher THC concentration.

In an effort to drill down on this matter, the state’s Department of Cannabis Control recently initiated the process of rulemaking that would ultimately lead to development of a standard test method that would need to be adopted by all licensed cannabis testing labs. The state agency’s director said this issue comes about partially as a result of regulating an industry that lacks federal recognition, and thus has no standard, validated testing methods. Licensed labs have reportedly issued THC concentration data that may be inconsistent – or possibly even inaccurate – according to the agency. Having a streamlined testing process, the agency said in a press release, will improve testing accuracy, stakeholder confidence, and market integrity.

Public comment on the proposed testing method rules is being accepted through July, with a public hearing scheduled for the first day of August. Continue reading

With the state substantially altering its cannabis tax structure, the California cannabis industry is expected to get a substantial tax break, which lawmakers are hoping will boost the legal industry left lagging by competition with illicit sales, extensive bureaucracy, and heavy taxation. cannabis tax lawyer

If the effort is successful, there is a potential for its impact to be global, given that California’s marijuana market is not only the oldest but the largest in the world. Thus, its influence across the industry is oversized.

The taxation changes will effectively erase a tax on cultivation of marijuana (which had been the source of about 15 percent of state marijuana taxes – roughly $166 million as of last year). The changes were part of a larger state budget agreement, which is also going to carve out some tax credits for certain marijuana companies, as well as expand labor rights in the industry and switch collection of a state excise tax from distributors to retailers. The tax will be paused at 15 percent for three years, at which point the state will have the option to raise it again to make up for revenue lost by ending the tax on growers.

Programs that benefit from marijuana taxes include youth and environmental programs, and the state says it must balance out these needs with those of marijuana cultivators and shops that are burdened by heavy taxes and tight regulations. As our Los Angeles marijuana business lawyers are aware, many companies are treading water – if they aren’t drowning – because they’re in direct competition for sales with black market dealers that can sell their products more cheaply because they aren’t taxed or responsible for screening their supply for harmful contaminants. This year especially has been tough, given last year’s bumper crop contributing to oversupply.

Many smaller operators are likely to fail or consolidate before the tax credit goes into effect, but it’s nonetheless a welcome windfall for those in the industry. It’s been largely recognized as an operational burden, as it was paid out by growers prior to obtaining any revenue for sales. So even if that product never sold, cultivators were still getting taxed. Continue reading

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