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Robert Mikos is one of the nation’s leading experts on federalism and drug law. His most recent scholarship analyzes the struggle among federal, state, and local governments for control of marijuana law and policy, which includes a first-of-its-kind casebook, Marijuana Law, Policy, and Authority. In this podcast, he discusses the intersection of federal and state cannabis law, the prospects for federal reform, the SAFE Banking Act and other hot topics in the field.

The risk of corruption in state cannabis licensing has once again been highlighted by recent reports that a federal grand jury has subpoenaed at least seven Massachusetts cities, including Boston, for information about contracts between cannabis firms and municipalities. The subpoenas apparently relate to “host community agreements,”  a contract between individual cannabis operators and their host community that is required by state law in Massachusetts.  Host community agreements, and similar arrangements in other states that have legalized cannabis, are well…

On Tuesday, October 29, the US Department of Agriculture (USDA) established the US Domestic Hemp Production Program through the issuance of an interim final rule (the “Rule”). The USDA published the Rule on Thursday, October 31, in the Federal Register. The Rule took effect upon publication, but the USDA will take comment for 60 days. Pursuant to the Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), the Rule outlines provisions for states and Indian tribes to submit their plans…

Although prosecution of state-legal sales by licensed and compliant cannabis businesses may not be a current priority for federal law enforcement, prosecution of corruption in the industry clearly is. Consider the following, all of which have occurred within the last three months: The indictment of alleged Rudolph Giuliani associates Lev Parnas and Igor Fruman for, among other things, a scheme to make illegal campaign finance donations in connection with a planned recreational marijuana business in Nevada (according to various reports,…

In recent posts, we discussed lessons learned from recent compliance cases in the cannabis industry, and provided a checklist of key due diligence issues. In both articles, we highlighted the importance of independent verification of state cannabis licenses. Unfortunately, it is not always easy to get official information from state cannabis regulators. Information about cannabis licenses is not always public. This is the case in Arizona, where state law prohibits the release of the names of medical cannabis licensees. In…

The cannabis industry operates at a disadvantage vis a vis other industries because Section 280E of the Internal Revenue Code prohibits business expense deductions for businesses that “traffic” in federally controlled substances, including cannabis. As a result, cannabis companies pay taxes on gross rather than net profits. In the latest defeat for cannabis companies in the Tax Court, Boulder Alternative Care, LLC (“Boulder”), a Colorado dispensary, lost its bid to obtain ordinary business expense deductions for its legal operations (Docket…

On September 25, 2019, the House of Representatives passed the “Secure And Fair Enforcement Banking Act of 2019” or the “SAFE Banking Act of 2019” (H.R. 1595) by a vote of 321 to 103. If adopted, the SAFE Banking Act would, among other things, create a safe harbor for depository institutions that provide banking services to state compliant marijuana-related businesses and also remove proceeds from state compliant cannabis transactions from the definition of criminal proceeds under U.S. anti-money laundering laws. …

It seems as though no matter where you go these days, you’re bound to encounter a product containing cannabidiol, commonly referred to as CBD. As you have likely heard by now, the 2018 Farm Bill (formally, the Agriculture Improvement Act of 2018), which was signed into law on December 20, 2018, legalized the regulated production of hemp. This triggered a corresponding amendment of the Controlled Substances Act (CSA), removing “hemp” from the definition of marijuana and specifically excluding “tetrahydrocannabinols (THC)…

The Federal Trade Commission (“FTC”) announced on September 10, 2019 that it sent warning letters to three unidentified companies for making claims regarding their products that contain cannabidiol (“CBD”), a compound derived from cannabis. The products, which range from “gummies,” and creams to oils, tinctures and capsules were advertised with claims that the products could treat serious diseases and conditions. In prior posts, we have mentioned Food and Drug Administration (“FDA”) regulation of drug claims. When claims are made regarding…

The uncertainty of the legal regime governing cannabis makes thorough due diligence on prospective business partners essential for those who want to ensure that they are complying with state law and minimizing their risks of federal investigation. In this two-part series, we first discuss some key compliance lessons from recent events and then offer a checklist for use when conducting due diligence on potential partners. Lesson I: Even “legal” companies sometimes violate state law “It’s o.k. – they’ve got a…