Welcome back to Higher Law, our weekly briefing on all things cannabis. I'm Cheryl Miller, reporting for Law.com from Sacramento, where a nearby marijuana-hawking billboard featuring a goat and a scantily clad woman has caused a bit of a stir. News site CALmatters asks if the giant ad violates California's regs banning pot marketing to minors. I ask, is it a smart advertising ploy since we're all talking about it?
This week, we consider U.S. Attorney General nominee William Barr's support for the Cole memo (yes, the one Jeff Sessions rescinded) and whether the marijuana industry is feeling reassured by his remarks to the U.S. Senate. Plus, IP lawyers go to court over "Happy Apple." And California has its final marijuana regs in the books.
Thanks as always for reading. Your story ideas, tips, feedback and marijuana goat lore are always appreciated. Drop me a line at firstname.lastname@example.org or you can call me at 916-448-2935. Follow me on Twitter at @capitalaccounts.
Barr Backs the 'Cole Memo'
William Barr is no Jeff Sessions, at least when it comes to marijuana. President Trump's nominee to lead the U.S. Department of Justice made that clear this week when he sat in the klieg lights of the Senate Judiciary Committee.
“To the extent people are complying with the state laws—distribution and production and so forth—we’re not going to go after that,” Barr, of counsel at Kirkland & Ellis, told senators.
Barr said he would not "upset settled expectations" by pursuing state-legal marijuana companies that had relied on the Cole memo, which the pot-hating Jeff Sessions rescinded last year before his ouster.
But Barr also said states acting unilaterally to regulate marijuana are "breeding disrespect for the federal law," and he wants congressional action.
"We either should have a federal law that prohibits marijuana everywhere, which I would support myself because I think it’s a mistake to back off marijuana," Barr said. "However, if we want a federal approach—if we want states to have their own laws—then let’s get there and get there in the right way."
So what does that mean for state-licensed businesses?
“His pledge not to use Department of Justice resources to undermine state laws provides assurance to over one hundred thousand cannabis industry employees, thousands of legal businesses, and the many state and local governments reliant upon marijuana tax revenue," said Aaron Smith, executive director of the National Cannabis Industry Association.
>>> That's a key argument legalization advocates have been making. The industry, particularly in states such as Colorado, has set down roots. If the feds crack down on state-regulated marijuana now, a whole lot of jobs and tax revenue will disappear.
Saphira Galoob, CEO of the Washington, D.C., cannabis lobbying firm The Liaison Group told Reuters that Barr's remarks were "a positive sign" that he "recognizes and acknowledges the country’s will for a regulated cannabis marketplace—and that a majority of Americans clearly support respecting states and protecting patients."
Lawyers Fight Over 'Happy Apple' Mark
Owners of The Happy Apple Co. probably aren't smiling after a federal judge in Washington refused to issue a preliminary injunction blocking another company from selling Happy Apple cannabis-infused drinks.
U.S. District Judge Richard Jones of Washington's Western District said plaintiffs Lochirco Fruit and Produce Co. (a distributor of apples and apple treats) and the Happy Apple Co. (a West Coast seller) failed to show that Tarukino Holdings Inc.'s use of the Happy Apple name on its marijuana beverages is likely to confuse consumers.
The marijuana drink can only be sold in stores licensed by Washington state to carry marijuana and marijuana-related products, Jones noted in his Jan. 9 ruling.
"Defendants' products and Plaintiffs' products are not likely to be sold in close proximity to each other, and it is unlikely that a purchaser would mistakenly enter a retail store selling marijuana or marijuana-related products and confuse a cannabis-containing apple beverages with the fresh apples, apple cider, or caramel apples sold by Plaintiffs," Jones wrote.
Lochirco Fruit of Missouri and California-based The Happy Apple Co. sued Turikino Holdings last year, alleging trademark dilution and infringement, cybersquatting and unfair or deceptive acts. Lochirco and The Happy Apple Co. are represented by Tucker Ellis of St. Louis, Mo. and Newman Du Wors of Seattle. Tarukino is represented by Cascadia Intellectual Property and the Mann Law Group, both of Seattle.
California Finalizes Cannabis Regs
California's cannabis regulations are now final. The state Office of Administrative Law green-lighted the expansive rules late Wednesday, and they took effect immediately.
A lot of attention has been paid to provisions that allow licensed companies to deliver marijuana to customers in communities where grows and retail outlets are banned. But there's a lot for lawyers to chew on related to labeling restrictions, new regulations on delivery platforms and ownership definitions.
Juli Crockett, director of compliance for cannabis compliance firm MMLG, has a good rundown here.
Who Got the Work
The Cannabis Trade Federationannouncedthat it will work with 15 principal lobbyists and more than a dozen associates from five law and lobbying firms to advocate for the STATES Act, which would provide federal protections for state-legal marijuana operations. The firms are Brownstein Hyatt Farber Schreck; Jochum Shore & Trossevin; The Raben Group; Navigators Global, and theGROUP. The Cannabis Trade Federation is a 501(c)(4) advocacy group whose founding members include CannaCraft, TILT Holdings and iAnthus Capital Holdings.
Keith Stein, counsel at Dentons Canadahas been appointed to the board of directors of Vancouver, Canada-based cannabis cultivator Invictus MD Strategies Corp.
Greenspoon Marderhas announced a partnership with Green Table Global, a producer of cannabis events designed to bring together "high net-worth individuals, public and private investors and high quality emerging cannabis businesses." The partnership "will combine networks and strategies to further develop one of the leading cannabis consortiums in the nation," Gerald Greenspoon, Greenspoon Marder's co-managing director, said in a press release.
McMillan LLPassisted Aurora Cannabis Inc in its planned acquisition of Whistler Medical Marijuana Corp., a deal valued at up to $175 million. Norton Rose Fulbright Canada served as legal counsel for Whistler.
In the Weeds...
>> Forget the border wall debate and look south, cannabis lawyers. My colleague Dylan Jackson says business interest in Columbia, where 80 medical marijuana licenses have been issued, and Mexico, where legalization is on the horizon, is heating up. Luis Armendariz, a partner at Corral, Arzola, Armendariz & Maynez in Chihuahua, Mexico, says his firm has already been contacted by a slate of U.S.lawyers looking for opportunities for their clients.Daily Business Review
>> Gov. Andrew Cuomo's marijuana legalization proposal is finally here. It includes a 20 percent state tax, a 2 percent tax on sales from wholesalers to retailers and a per-gram tax on growers. It would allow counties and small cities to ban local sales. Vertical integration, growers operating retail shops, would be outlawed, too. Sales wouldn't start until April 1, 2020 at the earliest. Democrat & Chronicle
>> Add Rhode Island to the list of northeastern states preparing to legalize recreational marijuana. Gov. Gina Raimondo—"with reluctance"—included a proposal in her budget plan that forecasts the first adult-use sales starting in January 2020. Raimondo told the Providence Journal that she's resisted the idea for years but now thinks Rhode Island would suffer as an island of prohibition surrounded by legalized states. Providence Journal
>> Massachusetts regulators want more authority to to alter "host" agreements between marijuana businesses and local communities. Some would-be business operators say the fees or nonprofit donations local agencies require spike start-up costs beyond what they can afford. The Cannabis Control Commission will ask the Legislature for the power to review local agreements. Mass Live
>> What's in a name? For marijuana entrepreneurs, quite a bit. There's location, legitimacy and uniqueness. Plus, you really don't want to seem dull. “I think it’s a mortal sin to have a bad name in such a cool and hyper-competitive space,” Benjamin Weis, director of strategy for naming company A Hundred Monkeys, told The Boston Globe. The Boston Globe
What's Next: Calendar Call
Jan 22 - The U.S. Court of Appeals for the Tenth Circuit is scheduled to hear oral arguments in Feinberg v. Commissioner of Internal Revenue, an appeal of a tax court ruling upholding the IRS' authority to deny a Colorado-licensed dispensary certain business-expense deductions. The Greenwood, Colorado, firm Thorburn Walker represents the dispensary owners.
Jan. 22 - The National Cannabis Industry Association hosts a webinar on Michigan's new adult-use marijuana law. The scheduled speakers are members of NCIA's state regulations committee: Maureen McNamara, Michael Cooper and Barton Morris.
Jan. 24 - The National Cannabis Bar Association hosts a webinar on federal hemp legalization. Courtney Moran, the founding principal of EARTH Law, will lead the presentation.