The Senate recently passed the 2018 Farm Bill, which contains provisions to legalize the cultivation, processing and sale of industrial hemp. Any part of the hemp plant, including the seeds thereof and all derivatives, extracts, cannabinoids would be legalized under this Bill.
The hemp legislation was originally proposed and championed by Senate Majority Leader Mitch McConnell, whose home state of Kentucky would reap great benefits from hemp legalization. McConnell had proposed a stand alone hemp legalization bill earlier this spring – The Hemp Farming Act of 2018; and the provisions of the Hemp Farming Act have been incorporated into the 2018 Farm Bill.
Here’s the good news – the Food and Drug Administration (FDA) just approved a prescription cannabidiol (CBD) medicine. So, that means CBD is now legal, right? Unfortunately, no, CBD is still considered a Schedule I drug by the Federal Drug Enforcement Agency (DEA).
The newly approved drug is called Epidolex and is used to treat a rare and severe form of epilepsy. This is is big news as it is the first FDA-approved drug that contains a purified drug substance derived from marijuana.
One of the biggest challenges faced by my licensed marijuana producer clients is the oversupply of marijuana currently on the market. A recent report from NPR indicates that many licensed producers in Washington State are selling marijuana for as little as $250 a pound.
The oversupply of marijuana not only financially harms licensees but also can result in diversion to the black market. If licensees are producing too much marijuana to be sold to licensed retailers then there is always the temptation to sell it to black market dealers. Thus, the Washington State Liquor and Cannabis Board (the “LCB”) is considering enacting rules to limit state wide production…
Last week, the Washington State Liquor and Cannabis Board (the “LCB”) provided notice of a number of rule change proposals meant to implement 2017 legislative changes. Among these changes are clarifications as to who may invest in licensed marijuana businesses…
Starting April 1, 2018, licensed marijuana processors that make Marijuana Infused Edible (“MIE”) products will be regulated by both the Washington State Department of Agriculture (“WSDA”) and the Washington State Liquor and Cannabis Board (“LCB”). All marijuana processors that make MIE products must obtain a WSDA MIE Processor license endorsement by April 30, 2018…
Recently Adopted Rules
Changes to Packaging and Labeling Rules Meant to Ease the Burden on Licensees and Improve Readability for Consumers. Rule changes effective January 1, 2019 include:
- Eliminating most accompanying materials except pesticides information.
- Adjustments to packaging requirements for certain edible products packaging, and to further prevention of the promotion of over consumption.
- Additional clarity for what is considered “especially appealing to children” and a new definition for the term “cartoon.”
- New Universal Symbol Requirement
- Complete text of the new rules can be found here
Significant Changes to Marijuana Advertising Rules Affecting Outdoor Signage. New Rules Effective March 10, 2018 Include:
- Limits text on on outdoor signs, including billboards to licensee’s business name, location and type or nature of the business.
- No outdoor advertising signs, including billboards, may contain depictions of marijuana plants or marijuana products.
- Signs placed on windows within the premises of a licensed marijuana retail store that may be visible outside the premises facing outward must meet the requirements for outdoor advertising.
- “Billboard” is defined as a permanent off-premises sign with a minimum size of ten five feet in height by twenty eleven feet in width.
- Link to the complete set of rules can be found here
New Marijuana License forfeiture Rule Proposed
- The rule is being proposed to implement new state law regarding license forfeiture
- The state must require license forfeiture on or before 24 months of license issuance if a marijuana retailer is not fully operational and open to the public, unless the state determines that circumstances out of the licensee’s control are preventing the licensee from becoming fully operational
- No marijuana retailer’s license may be subject to forfeiture within the first nine months of license issuance
- Full text of the rule can be found here
Cannabis Legislation and Technical Housekeeping Rules Proposed
- The LCB is seeking to implement legislation passed in during the 2017 legislative session
- Proposed rules would clarify difference between a “financier” and a “true party in interest” as follows:
- A financier may not receive an ownership interest, control of the business, or a profit-sharing interest or percentage of profits in exchange for financial support.
- Washington state residency requirements do not apply to financiers, but all financiers must be United States residents (emphasis added).
- Rules clarify that consultant that receives flat or hourly rate compensation as opposed to percentage of profits or interest in the licensed business is not a true party in interest
- Language proposed to allow for volume discounts,
- Language proposed to prohibit license issuance within exterior boundaries of tribal lands
- Technical changes proposed to add exceptions for “free products” or “treats or services”
- Further clarifications are proposed regarding issuance of marijuana research licenses
- The full text of the proposed rules can be found here
Last week, the Washington State Liquor and Cannabis Board (the “LCB”) notified licensees that the state’s new traceability system – Leaf Data Systems was hacked. According to the LCB, a vulnerability in the program was exploited, which allowed an intruder to download a copy of the traceabilty system’s database. The intrusion caused transfer and manifest issues for licensees…
Well the other shoe has finally dropped today – Sessions has rescinded the Cole Memo that barred federal enforcement of marijuana laws in states where marijuana is legal. The Cole Memo set forth the Obama Administration’s priorities in regard to the enforcement of marijuana laws. These priorities included keeping marijuana out of the hands of minors, preventing diversion of marijuana to other states, and keeping organized crime out of the legal market. As long as states that legalized marijuana maintained these enforcement priorities they were safe from federal interference, until now…
Heather is excited to announce the publication of the third edition of her ebook. Whether you are looking to enter the legal marijuana market as an owner or an investor, or whether you are simply wanting to understanding how recreational marijuana businesses operate, this book will be of interest to you.
Topics covered include:
- licensing of marijuana businesses
- financing of marijuana businesses
- choosing a location for a marijuana business
- taxation of marijuana businesses
- banking and lending options
- federal law enforcement issues
- changes to medical marijuana law
- differences between Washington and Oregon law
Heather documents both the challenges encountered by marijuana entrepreneurs as well as their ability to succeed.*
*Disclaimer – The information presented in this book is not meant to be legal advice nor a substitute for seeking legal advice. Anyone seeking to enter the legal recreational marijuana business world needs to seek independent legal advice as to the laws and regulations with which they will need to comply.