The cannabis industry is on a remarkable growth trajectory with the continued legalization of medicinal and, more recently, recreational use. With a growing list of jurisdictions now regulating its use, yet still facing federal level prohibition, the complexity that companies face working in and for this industry need strategic and legal advice.
Our firm has a long-standing reputation in working in highly controlled industries and navigating the complexities of compliantly operating within the confines established by regulatory bodies. We extend this experience to include services involving labor and employment matters, corporate and financing work, the protection of intellectual property rights, real estate transactions and disputes, product liability, tax issues, and immigration law.
Whether your company “touches the leaf” or provides supplies to this rapidly growing industry, our firm can tackle virtually any issue you’ll face in building your cannabusiness.
Warning Regarding Federal Law
The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances. Federal penalties for violating the federal Controlled Substances Act (the “CSA”) are serious and, depending on the quantity of marijuana involved, can include criminal penalties of up to 20 years in prison and/or a fine of up to $2,000,000. 21 U.S.C. § 841. The penalties increase if the sale or possession with intent occurs within 1,000 feet of a school, university, playground, or public housing facility. 21 U.S.C. § 860. In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. 21 U.S.C. § 881. Although the U.S. Department of Justice has noted that an effective state regulatory system, and compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of the CSA is not diminished by the passage of state laws which may permit such activity.
The smell of rich soil, the emerald green glow of plants blossoming, the sound of an irrigation system hard at work. It’s everything you would expect on a farm working diligently to grow its crop. But this isn’t like any other agricultural endeavor. This is the rapidly growing world, pun intended, of a Cannibusiness. Hundreds of new potpreneurs are popping up every day as more states pass laws that open up this billion dollar business potential.
If you attend any of the dozens of conferences dedicated to the cannabis industry you’ll find hundreds of exhibitors and thousands of attendees, many of whom are wearing coats and ties. The legitimizing of this industry has been transformational in the past few years. And as a result, existing cannabusinesses are coming out of the shadows and new entities are forming every day to service an industry that needs everything from warehouse space and lighting equipment to packaging materials and CO2 systems.
Those cannabusinesses are facing issues like any other company in any other industry. Employment matters, contract disputes, real estate lease negotiations, financings, tax matters, and intellectual property questions must be managed. But an added layer of complexity exists for cannabusinesses because of the continued categorization of marijuana as a Schedule I drug under the Controlled Substances Act. Failure rates loom large for any business trying to get off the ground and when you add federal illegality to the equation it gets that much harder. Our firm’s Cannabis industry group has brought together a multi-disciplinary group of attorneys to help build cannabusinesses with the guiding philosophy that together we CANN do it.
- December 26, 2017