Video 1 KTLA Channel 5 News Story June 18, 2010: Lake Forest Medical Marijuana Dispensary Appealing Injunction Order Video 2 KTTV Channel 11 News Story June 4, 2010: Los Angeles Medical Marijuana Dispensary Challenges LA's Ordinance Video 3 Cannabis Law Group's Attorney Damian Nassiri Sues the City of Los Angeles To Block It's Ban on Medical Marijuana as Featured on PBS's So Cal Insider - Part 1

Articles Posted in California marijuana business lawyers

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Given the challenging current state of the California cannabis industry, an increasing number of CEOs are considering joint ventures, where companies at different points of the finance and supply chains connect via contract for mutual benefit. Joint ventures can help bolster profits and reduce costs for both operations – without having to endure the hassle and legal headaches of a formalized acquisition.California cannabis joint venture

As our Los Angeles cannabis business lawyers can explain, a joint venture is a commercial enterprise with a specific goal undertaken by 2+ partners that otherwise get to retain their distinct identities. Joint ventures can take on many different forms, but typically involve some type of shared returns, ownership, risks, or governance. Often, they’re pooling resources such as expertise, labor, data, physical space, etc., and minimizing risk by dividing it up among them. The extent to which each partner benefits/takes a risk is outlined in the joint venture contract – which should only be signed after careful review by an attorney representing each party. In some cases, it can involve the creation of a separate business entity, such as an LLC.

Joint ventures can be an innovative solution, but it’s not ideal for every situation. Furthermore, it’s usually most beneficial for all involved when there is:

  • A clearly stated purpose, a tangible goal.
  • A time limit, either for termination or re-evaluation.
  • A specified hierarchy or authority structure.
  • Clear allocations of profit sharing and losses.
  • Stipulated resources that will be shared (and which will not).
  • A blueprint for dealing with disputes and liabilities.

These agreements tend to make the most sense in situations that involve:

  • Pooling resources for branding and intellectual property. Ex: A grower and distributor pool resources to develop a marketing strategy to promote and sell a certain strand.
  • Pooling resources for a single service. For instance, several small cannabis retailers might create a joint venture to get better rates on delivery or shipping. Smaller growers might band together to get better rates on regulatory testing of their products by an accredited testing facility.
  • Developing certain cannabis products that wouldn’t necessarily be released by a single company solely with its own resources.

It’s worth noting that identifying joint venture opportunities and partners can be challenging in virtually any industry, but it’s fairly new practice in the cannabis industry. This is another reason it’s a smart idea to hire an experienced cannabis business lawyer to help you navigate the process. Continue reading

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Licensed cannabis B2B operations in California are faced with some pretty substantial challenges when it comes to getting off the ground. A rampant black market, heavy taxes, and tight regulations – all of these drain time, money, and professional resources, and make it tough to turn a profit in this industry. Many can also add to that list: Deadbeat customers. Los Angeles cannabis lawyer

As Los Angeles cannabis company lawyers, we know this has grown to become a significant problem for our clients. Put simply: Customers aren’t paying their bills. In response, more than half the state’s wholesale B2B cannabis market has invested in help from a Los Angeles non-profit credit association tasked with rating retailers and flagging repeat offenders – with the ultimate goal of halting the growth of hundreds of thousands of dollars in unpaid invoices. The operation, Credit Management Association, is reviewing accounts receivable and documentation from dozens of brand and distributors. Ultimately, it will release a “do not sell list” of two dozen+ cannabis retailers and delivery companies flagged for:

  • Failure to pay their bills in a timely manner (90+ days late on invoices).
  • Owing at least $25,000 for products.

As longtime Los Angeles marijuana lawyers, we recognize that the majority of cannabis retail and delivery companies don’t set out with the intention of becoming bad actors. They are subject to many of the same brutal market forces as suppliers. They fall a bit behind, and then it’s an uphill battle to fight their way out of debt.

Still, it’s a significant issue because pretty much every manufacturer, distributor, and brand has a non-inconsequential amount of unpaid invoices. That’s not a new problem, but it’s one that’s been exacerbated in the last year thanks to plummeting stocks and dwindling capital. Companies are having to take a hard line with some of their biggest clients – because they simply aren’t paying up.

Companies say they’ve been left with increasingly few choices, particularly because they aren’t backed by investors. If they utilize a debt resolution service, they’re going to take a 20 percent hair cut right off the top – even if they are paid. Most of these claims exceed the small claims avenue because the debts are primarily in excess of $5,000. Continue reading

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California cannabis regulators are taking pointed aim at mistreatment of cannabis company employees throughout the state. The Department of Cannabis Control has sought assistance from law enforcement agencies throughout the state to help identify and root out labor exploitation, which they say has become a serious problem in the marijuana industry. There are even allegations of cartel-driving human trafficking within the cannabis industry. California cannabis employment lawyer

Even mor recently, the California Department of Industrial Relations issued a reminder to cannabis employers that they are bound to comply with California labor law requirements. Further, it was noted that labor protections apply to ALL workers – regardless of the worker’s immigration status or even the legal status of the business. That means individuals operating unlicensed cannabis businesses can catch heat not only for operating unlawfully, but also for failing to follow state statutes pertaining to worker rights.

As longtime Los Angeles cannabis lawyers who also practice employment law in Southern California, we are closely familiar with the intersection of these issues and the unique legal questions that can arise.

Cannabis businesses are expected to provide workers with:

  • Minimum wage. The statewide minimum is $15.50 as of January 2023. Some cities may impose higher minimum wages.
  • Overtime paid at 1.5 the regular rate. Generally, overtime rates must be paid if an employee works more than 8 hours in a day or more than 40 hours in a week. If the employee works more than 12 hours in a workday, they must be paid double for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
  • Valid workers’ compensation insurance. If the worker is hurt on the job, they have a right to expect workers’ compensation coverage, which is required by almost all employers in the state. If the company doesn’t have workers’ compensation insurance, they can be fined by the government and the worker can can sue them for damages.

The new unit of the DCC is aimed at taking action against cannabis companies that coerce or threaten workers, compel them to work in dangerous conditions, or deny them pay, benefits, or breaks to which they are entitled.

Last year, the Los Angeles Times published an investigation exposing the unfair treatment of cannabis workers, who are sometimes cheated out of wages, threatened with physical harm, or compelled to work in dangerous conditions that have actually proven fatal for some. Continue reading

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If anyone knows how critical it is to keep good records, it’s California cannabis companies. From metric analytics to regulatory compliance, the marijuana industry depends on data and documentation to ensure their operations are successful. Routine audits are a part of this. IRS audit California marijuana businesses

As our Los Angeles cannabis lawyers know, there are many different types of audits. If you’re proactive, you conduct internal audits – of your policies, your practices, your financial records, your compliance accuracy, etc. There are external audits, which might be requested by the board, investors, etc. for a lot of the same reasons as an internal audit, except with a fresh set of eyes from the outside. And then there’s an IRS audit or compliance audit.

Three years ago, the Department of the Treasury’s Inspector General for Tax Administration indicated that the IRS intended to ramp up its audit of cannabis businesses nationally. That report flatly stated the IRS did not believe most marijuana industry companies were correctly applying IRC 28E, and thus might owe millions in taxes. (This was based on 2016 tax filings.)

Of the subsequent IRS audits that took place in three states (California, Washington, and Colorado), roughly 60 percent of cannabis companies had to adjust their tax returns – which totaled nearly $50 million in unpaid taxes just for 2016.

This year, the IRS has better staffing than in recent years – plus the ability to conduct most audits virtually. Owners of plant touching businesses need to be especially primed and ready for this. Continue reading

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Companies that produce CBD products for consumer sales need to be especially careful with respect to the potency of their product and proper labeling that does not make misleading medical claims. As our Los Angeles CBD lawyers can explain, these are the two fronts upon which most CBD product liability lawsuits and regulatory action were predicated on in 2022.preventing CBD lawsuits

Public acceptance of CBD and cannabis products has grown, use has expanded, and even the federal government has been steadily easing restrictions.

However, where companies are too often getting caught up in litigation and regulatory scrutiny is with respect to potency, mislabeling, and misbranding.

Let’s start with the risk of product liability claims. For those who are unfamiliar, product liability is when a consumer alleges that a product was defectively designed, defectively made, or the warning about the risks was inadequate. Claimants don’t need to prove negligence, but they do need to show the product was the cause or a major contributing factor to the plaintiff’s illness or injury.

The long-term adverse impacts of CBD (or lack thereof) aren’t really widely known because research on these products has been so restricted over the last several decades. The U.S. Food and Drug Administration has raised concern about the potential for CBD to interact negatively with certain medications, and that it might cause liver damage. But the extent to which this is true isn’t well-known because it hasn’t been thoroughly studied. These potential harms could end up being the subject of lawsuits in the future. President Joe Biden recently passed a law permitting advanced research on the risks and medical benefits of both cannabis and its derivatives – including hemp-derived CBD. Continue reading

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Recreational marijuana has been legal for adults in California for the past 7 years – but driving under the influence of marijuana (or any mind-altering substance) has always been strictly prohibited. But despite all the legislative and regulatory developments with respect to marijuana law, the state has yet to establish any bright line rule on legal THC limits for drivers.Los Angeles marijuana DUI defense

Of course, as our Los Angeles cannabis DUI lawyers can explain, a big part of the reason for that is because it’s none so simple to establish marijuana intoxication simply based on the levels of psychoactive THC in one’s body. Unlike alcohol, which cycles through the body very quickly, THC remains traceable for weeks after consumption. A 0.08 percent blood-alcohol level would likely indicate recent excess alcohol consumption. But the same isn’t true for THC. Person A might have higher levels of THC in their bloodstream than Person B, but still be less intoxicated. The level of THC in one’s system simply doesn’t tell the whole story, particularly if one is a regular cannabis consumer.

Despite this, 18 other states have imposed some sort of limit on the amount of THC drivers can have in their bloodstream before they’re considered “under the influence” of cannabis. (THC, of course, is short for tetrahydrocannabinol, the element contained in marijuana that creates the “high.”)

There are some safe driving advocates trying to change that. One of those is the family of a 25-year-old who died tragically in a California car accident in 2020 – a passenger in a truck driven by her boyfriend. He would later say he saw an animal, jerked the steering wheel, and crashed into another vehicle – totaling his truck and killing his girlfriend instantly. The woman’s father believes the boyfriend was stoned, and he’d even spoken to his daughter about not getting into the car with her boyfriend when he’d been consuming cannabis. Her mother said she’d spoken directly to the boyfriend about what they recognized as a serious safety issue.

The boyfriend, according to a local news outlet, reportedly conceded that he’d consumed marijuana the day of the crash – but he was a habitual user of cannabis and his consumption had been earlier in the day. He insisted he was not impaired. Continue reading

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Although it didn’t get a lot of splashy coverage when it first passed, the gargantuan appropriations bill signed by the president at the end of last year contained a piece of legislation that has some significant potential for expansion of the cannabis cosmetics industry. Los Angeles CBD business

The Modernization of Cosmetics Regulation Act of 2022 (better known as MOCRA), it’s the first time cosmetic rules have been updated by Congress through the Federal Food, Drug, & Cosmetics Act since it was passed in 1938. Other aspects of the law have been updated many times over as we’ve seen evolutions of technology, science, product safety, and responsible resourcing advocacy. Still, none of those expressly addressed makeup laws until MOCRA.

Prior to these changes, makeup companies didn’t legally have to test their products or the individual ingredients to ensure safety. Businesses didn’t have to register their production facilities with the FDA, abide by good manufacturing practice rules, or notify the government when there are adverse reactions (even life-threatening ones). Additionally, the FDA didn’t have the power to recall cosmetic products – even those that could be deadly. MOCRA rectifies all this and grants the FDA authority to oversee regulation of makeup products. (Small businesses may be exempt from certain requirements, depending on the specific circumstances.)

Cosmetics are defined not just as makeup, but those products intended for application to human bodies for cleaning, beautifying, altering appearance, or promoting attractiveness. Any product that promises to treat or prevent a condition or disease or alters some bodily function is classified as a “drug” by the FDA. It’s worth noting that CBD products can fall into both categories, but we’re specifically here just talking about CBD-infused cosmetics – though many do promise anti-inflammatory properties. These can include products like:

  • Lip balm and lip gloss
  • Moisturizers
  • Under eye serums
  • Hair creams
  • Scalp oil
  • Skin cleansers
  • Face masks
  • Deodorant
  • Mouthwash
  • Concealer/color corrector
  • Mascara

What Does This Mean for CBD Cosmetics Companies?

Continue reading

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Twitter recently garnered a great deal of praise for being the first social media giant to revisit its marijuana advertising rules, opening the door to industry promotion of brands and informational content related to THC, CBD, and cannabis-related products and services.

Certainly, this is big news. But our Los Angeles cannabis business consulting lawyers would urge caution before rushing to your marketing firm for content. Los Angeles cannabis advertising lawyer

Previously, the company only permitted ads for hemp-derived CBD topical products. This was still more progressive than other social media firms. TikTok, Instagram, and Facebook have had (and maintain) a strict no cannabis advertising policy – so long as it remains illegal at the federal level. (This despite the fact that 21 states allow recreational use cannabis – and more are on the horizon.) It’s likely only a matter of time before these other social media platforms adopt policies similar to Twitter’s.

However, despite  giving the green light to “approved cannabis advertisers to target the U.S.,” cannabis companies on Twitter still aren’t allowed to advertise their actual products for sale. The only exception is for topical, hemp-derived CBD products that contain less than 0.3 percent THC (which is the government’s threshold for being classified as a CBD product rather than a more heavily-restricted THC product). Undoubtedly, there’s a market for these types of products, but it doesn’t represent the full array of cannabis products and services.

Further, cannabis companies seeking to advertise on Twitter must:

  • Have a proper license.
  • Pass through Twitter’s ad approval process.
  • Limit their target audience to jurisdictions wherein they are licensed to operate.
  • Do not target youth under age 21.

Advertisers are NOT allowed to:

  • Create ads that promote or depict people using cannabis.
  • Display advertising that shows people under the influence of cannabis.
  • Claim any sort of efficacy or health benefits.
  • Use any celebrities, images, icons, characters, or athletes in their ads that might appeal to children or those under 21.

Continue reading

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Federal lawmakers – from both sides of the aisle and in both Congressional bodies – are pushing for a means of streamlining so-called “breakthrough therapies” that involve psychedelic drugs like MDMA and psilocybin for the purpose of promoting drug research and development. California cannabis lawyer

As longtime Los Angeles cannabis business attorneys, we help break down what legislators are after.

The new bill, introduced by Democrats and Republicans in both the House and Senate, is titled the, “Breakthrough Therapies Act.” It seeks to revise the U.S. Controlled Substances Act by establishing a procedure through which certain Schedule I narcotics can be considered “therapies” by the U.S. food & Drug Administration. Either that, or they could qualify for a waiver via the U.S. food, Drug, and Cosmetic Act (FDCA). This waiver would allow the drugs to be transferred under a lower-schedule classification to research facilities and pharmaceutical laboratories.

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When it comes to the sales and distribution of CBD, there are a lot of unknowns as far as the potential health implications – for better are worse. But now, federal regulators have released comprehensive guidance of this popular cannabinoid. The guidance reviews the potential harms, side effects, and unknowns, while stressing that state-legal cannabis dispensaries provide the safest CBD products to consumers.CBD lawyer Riverside

As our Los Angeles CBD lawyers recognize, CBD has been on store shelves legally across the U.S. since the passage of the federal 2018 Farm Bill. Recently, advisory notes from the Substance Abuse and Mental Health Services Administration indicate its popularity has ballooned, now being available from some 270,000 retailers across the country. It’s sold in beverages, tinctures, topical ointments, food, and more.

The primary point stressed by federal regulators is that whatever CBD’s benefits, it’s not intended or recognized as safe for children unless expressly approved by the U.S. Food & Drug Administration (FDA) for a specifically stated purpose. As it stands, the only approved purpose for administering CBD to children is to help treat rare cases of epilepsy. Even then, only the purest form of CBD is recommended.

It’s estimated that one-third of Americans used CBD or a CBD-infused product at some point in 2020.

Among the main concerns listed by the federal agency:

  • Lack of clear safety standards.
  • Inconsistent quality control.
  • Lack of uniformity in labeling.

All of these, the agency said, leads to additional concerns for accidental intoxication or overdose – primarily involving children. The primary health risks include potential for adverse drug interactions, adverse impacts to development and reproduction, and liver toxicity. These statements, however, lack the clinic research that might conclusively determine the safety (or lack thereof) with regard to CBD products. They simply haven’t been studied adequately – thanks to the U.S. government’s own rules.

What’s more, the FDA didn’t go out of its way to list the benefits of CBD – which include reduced reliance on powerful prescription medications like opioids for treatment of chronic pain and other conditions.

Despite this (and fervent calls from CBD industry advocates, stakeholders, and California lawmakers), the FDA has already stated it’s not going to issue rules specific to CBD that would allow it to be lawfully used as a food item or dietary supplement. The agency said it intends to rely on Congress to create these new rules.

The agency has also turned down numerous requests from Americans seeking FDA rules for CBD marketing. This has left California CBD retailers and manufacturers in the dark about what rules they need to follow – making it all the more imperative to rely on an experienced cannabis lawyer for guidance on walking the legal tightrope on everything from banking to advertising to sales to warehousing to order fulfilment. Continue reading

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