Articles Posted in California marijuana business lawyers

police lineCalifornia vaping brand, Kushy Punch, has had its cannabis license revoked after state cannabis regulators raided its premises and found the company to be conducting business from a facility that it was not licensed to use.

Last month, California cannabis regulators received a tip off suggesting the company was running illegal business activity, and on inspection of the unlicensed Canoga Park facility, authorities seized cannabis products worth $21 million. The products were held by a company called Verticle Bliss, also operating as Kushy Punch when manufacturing and distributing cannabis products.

The Bureau of Cannabis Control (BCC) reported that approximately 7,200 unregulated vape cartridges were seized in the raid.
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The U.S. Department of Agriculture has at last issued the text of its long-awaited interim final rule pertaining to the regulation of domestic hemp. The rule is considered in immediate effect as soon as its published in the Federal Register. hemp farming

The rules were required as part of the plan to implement the 2018 Farm Bill, which legalized the production of commercial hemp as an agricultural commodity. The law also explicitly removed hemp from the list of federal controlled substances, marking it distinct from its cannabis cousin, marijuana. Both hemp and marijuana are derived from the cannabis plant, but hemp contains very little to no THC, the psychoactive ingredient that gets people high. Hemp can be used in a broad variety of products, from paper to lotion to clothing.

But as our Los Angeles hemp business attorneys can explain, these new rules don’t automatically make hemp production legal everywhere in the country. It is expressly legal in 46 states, but the farm bill did give states discretion to decide whether to continue to ban growth of the crop within their borders. As it stands, South Dakota, Idaho, Mississippi and New Hampshire have explicitly banned hemp farming and production.

Despite numerous substantial fits and starts, California’s legal cannabis market is still an a growth trajectory. In fact, it’s anticipated that within the next five years, California sales of the crop will account for almost one-quarter of the legal marijuana sold in the country. That’s according to a new analysis by ArcView Market Research and BDS Analytics.cannabis lawyer

Voters in the Golden State agreed to legalize recreational marijuana use three years ago, and sales officially became legal at the start of last year. Prior to that, only sales for prescribed medicinal use was allowed. Although there was a great deal of anticipation about how legalization would unfold, our Los Angeles marijuana business lawyers know the transition to a legal market was rocky at best.

Despite troubles with the black market and untested regulatory rules (including rigid new testing mandates, heavy taxation and licensing that moves at a snail’s pace in some jurisdictions), the current market size is $2.5 billion, according to the analysis. Continue reading

The City of Los Angeles has been urged to stop its pot shop vetting process and initiate an independent audit amid complaints that some applicants were given unfair early access.cannabis lawyer

The Los Angeles Times reports City Council President Herb Wesson wants the city to temporarily suspend the approval process until these concerns can be rectified.

As our Los Angeles cannabis business attorneys can explain, the current system only allows for review of a limited number of applications, so it’s done on a first-come, first-serve basis. The concern with this approach is that some applicants had an edge when it came to faster submission.Would-be cannabis entrepreneurs in economically-disadvantaged areas (coincidentally those hit hardest by the decades-long war on drugs before marijuana became legal) struggled to keep pace with those in wealthier communities with widespread access to high-speed internet. Continue reading

Manufacturers of THC vape cartridges should be alert to the fact that the industry could be facing a wave of product liability lawsuits, if headlines and recent filings are any indication. marijuana lawyer

Recently, a police officer/former U.S. Army Special Forces servicemember filed a product liability lawsuit in Washington State against numerous THC vape cartridge manufacturers, alleging he contracted a condition known as lipoid pneumonia as the result of using the vape cartridges. According to court records in Wilcoxson v. Canna Brand Solutions LLC et al., plaintiff began using a number of cannabis vapor products in January 2018, and continued use through September 2019. He suddenly woke up one night wheezing uncontrollably. When symptoms didn’t improve, he went to the emergency room. He was given the pneumonia diagnosis, and the pathology report noted indicators of a reactive airway disease that doctors traced to the vape pens. He was hospitalized for three days, and while he did return to work, it’s only been part-time and on light duty, as he can no longer run. The full extent of his injuries, the lawsuit says, is not yet known.

Asserting negligence and strict liability against a number of defendants, plaintiff accuses the manufacturers of producing and selling a product that was defectively designed, unreasonably dangerous, unfit for human use and that caused his illness.

The defendants in the case are listed as jointly and severally liable, which as our Los Angeles marijuana lawyers can explain means that a single defendant can be held legally responsible to pay damages caused by other defendants. This civil litigation strategy is often used when there isn’t enough reliable/scientific evidence to prove medical causation of one’s illness against any single defendant. (We saw this exact thing in tobacco and asbestos toxic torts.) It’s beneficial for the plaintiff too because if one defendant goes bankrupt or defunct or can’t be found, any of the others can be responsible to pay their share. Continue reading

Marijuana business licensingLos Angeles is a bustling city with more than four million people and a large market for cannabis sales. Only the illicit market is much bigger than the legitimate one – with 189 licensed marijuana stores compared to literally hundreds of bootleg stores. The illegal outfits are able to freely funnel unregulated products to unsuspecting consumers, in large part because there are simply too few legal outfits ready to serve the LA pot market.

To add to the conundrum, president of the LA City Council has requested a do-over on issuing all new cannabis store licenses. This is likely to slow the city’s aim of getting more businesses operating legally, down even more so.
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Californian cannabis consumers should be aware that the Golden State is now flooded with toxic vape pens sold at illegal marijuana stores. Recent tests run on cannabis vaporizer cartridges purchased at bootleg pot stores across California show frightening levels of contamination, both in the way of toxic pesticides and dangerous vitamin E oil.employment attorney

Amid a nationwide crisis that has seen more than 1,400 people sickened, and at least 33 dead from vaping-associated pulmonary injury (VAPI), counterfeit vape products sold on the black market are all too often a common denominator reported in VAPI related hospitalizations.
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Those following cannabis industry trends in recent months may be troubled by a spate of layoffs announced at half a dozen sizable marijuana businesses across the country. Some speculated this might be indicative of looming financial woes on the horizon for the entire industry.marijuana business lawyer

However, our Los Angeles cannabis lawyers prefer to look at these layoffs on a case-by-case basis. There are undoubtedly some lessons to be gleaned about business planning and management, but ultimately the same kind that are relevant to entrepreneurs in any market.

Marijuana agriculture, manufacturing, processing, retail, tech and quality control sectors all comprise a new and evolving industry. Companies that don’t properly plan from the beginning phases may soon find themselves overwhelmed, overstaffed and prime for failure.

The truth of the matter is cannabis isn’t a veritable gold mine. Companies must implement careful strategy, smart investment and measured growth. Even with the increasingly high demand for the plant and derivative products, there are a fair number of marijuana businesses that simply aren’t making the money they need to survive, let alone thrive. Continue reading

Several marijuana-related bills were signed into law by Gov. Gavin Newsom recently. Among them:

  • A measure to allow legal marijuana businesses to take advantage of more tax deductions – in a departure from IRS policy.
  • A measure to provide free medical marijuana to low-income patients – and exempting those products from state-level taxes.
  • A measure directing California regulators to provide the U.S. Department of Agriculture with a program plan for industrial hemp in accordance with the 2018 Farm Bill, which legalized the non-THC crop and its derivatives (which include CBD).California cannabis laws

In addition to passing these laws, the governor vetoed a bill that would have allowed medical marijuana to be used in hospitals and other health care facilities.

Our Los Angeles marijuana lawyers are committed to helping our clients navigate the ever-changing legal landscape of California cannabis law and regulation. With so much at stake, marijuana businesses cannot afford to ignore these changes.

Tax Law Changes

Federal tax law – specifically section 280E – prohibits those who grow, process and sell marijuana from being allowed to deduct taxes, due to the fact that the business profits from marijuana, which is illegal under federal law. Up until this point, California tax law closely matched U.S. tax law.

Now, AB 37 changes that, departing from Internal Revenue Service Policy under 280E. The measure will allow cannabis companies to take state-level deductions just like any other business – from Jan. 1, 2020 to Jan. 1, 2025. The bill takes effect immediately as a tax levy.

Greater Access for Low-Income Residents

Another measure gives greater access to medical marijuana for low-income patients. SB 34 changes the law with regard to “cannabis donations.” Existing administrative law bars licensed cannabis retailers from providing free cannabis to anyone at a licensed premises. There is a narrow exception for licensed medical marijuana retailers and those with micro-business licensees that are providing medical marijuana to patients who struggle to afford it.

SB 34 authorizes all licensed cannabis shops to offer free or reduced-cost marijuana or related products to medical marijuana patients who meet certain medical and income requirements. The bill further exempts marijuana businesses from being taxed on these “donations.”

No Cannabis in Hospitals

One measure that failed was SB 305, which would have required some health care facilities to allow medical marijuana access to terminally ill patients on site. In a veto message, the governor said he “begrudgingly” declined to make the measure law – for fear it would have jeopardized Medicaid and Medicare funding for those facilities. Those programs are subsidized by federal tax dollars, and using that money for an outlawed Schedule I narcotic could have cost the healthcare industry dearly.

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marijuana bankingIn the nation’s first ever vote on a stand-alone marijuana bill, the House of Representatives voted to allow federally insured banks to serve cannabis businesses in states like California, where marijuana use is legal.

First introduced by Rep. Ed Perlmutter, D-Colorado, the Secure And Fair Enforcement (SAFE) Banking Act simply states that deposit insurance cannot be cut off by federal authorities, nor can “any other adverse action” be taken against a financial institution for working with cannabis businesses in states and territories where marijuana use is permitted.

A great number of Democrats from Southern California were among the 206 co-sponsors of the bill, as was GOP Rep. Duncan Hunter of San Diego. Rep. Katie Porter, D-Irvine, also introduced an amendment making it clear that new banks and credit unions would be protected by the bill too. Continue reading

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