Category Archives: Marijuana Legalization

BIG NEWS: DOJ recommends marijuana policy status quo over federal crackdown

Shortly after being confirmed as Attorney General, Jeff Sessions created various task forces to review Obama-era DOJ policies. In late July he received a report back from the task force evaluating federal marijuana enforcement policy, and the Associated Press is reporting that the news is good for state-legal marijuana businesses:

The Task Force on Crime Reduction and Public Safety, a group of prosecutors and federal law enforcement officials, has come up with no new policy recommendations to advance the attorney general’s aggressively anti-marijuana views. The group’s report largely reiterates the current Justice Department policy on marijuana.

It encourages officials to keep studying whether to change or rescind the Obama administration’s more hands-off approach to enforcement — a stance that has allowed the nation’s experiment with legal pot to flourish. The report was not slated to be released publicly, but portions were obtained by the AP.

While this report does not bind the DOJ to any particular policy stance, it is in line with recent comments that have come from Jeff Sessions. Indeed, he said that the 2013 Cole Memo was “valid,” while noting he may have some “different ideas . . . in addition to that, but essentially we’re not able to go into a state and pick up the work that the police and sheriffs have been doing for decades.”

In a meeting with Colorado Governor John Hickenlooper earlier this year, Sessions appeared open to maintaining the “hands off” approach the DOJ has taken in legal states. “He’s obviously reviewing the Cole (Memo),” Hickenlooper said. “(They’re working on) a version of that that makes sense for this administration. We’ll have to see how far they go.” Doug Friednash, Hickenlooper’s chief-of-staff, told The Denver Post that Sessions said the Cole Memo was “not too far from good policy.” 

Now that’s all good news, but the DOJ has also sent letters to Colorado, Oregon, and Washington state officials questioning the efficacy of their state regulatory structures. Washington state officials, for their part, have begun responding to the allegations contained in the letter they received.

The news from the DOJ comes on the heels of a bill introduced by New Jersey Senator (and likely 2020 presidential candidate) Cory Booker that would legalize marijuana. While Booker’s bill is unlikely to get much traction in Congress, it is a sign that legal marijuana could shape up to be a pivotal issue in the 2020 race.

Marijuana policy at the federal and state levels continues to change at seemingly breakneck speed. I’ll be updating this blog more often to keep you all up-to-date on the most recent news. Check back for new posts on Ohio’s proposed districts for Ohio medical marijuana dispensaries, the release of applications for Ohio medical marijuana testing laboratories, information about Ohio’s medical marijuana cultivator applicants, and other marijuana law and policy news.

Finally, later this week I’ll also be sharing some pretty big personal news. So I’ve got that going for me. Which is nice. 

Department of Commerce announced cultivator territories and draft processor rules, Board of Pharmacy hints at dispensary rule changes

Ohio medical marijuana cultivator territories announced

The Department of Commerce recently identified how it will designate territories for Ohio medical marijuana cultivators. By way of background, the current draft of Section 3796:2-1-01(A) provides for up to three Level I cultivators and three Level II cultivators in each of 4 designated territories. This is a change from the original drafts where the Department was to split up Ohio into 12 designated territories.

The Department announced recently precisely how it intends to divide the state for purposes of cultivator licenses, and the result ends up with Northeast Ohio’s quadrant including what will likely be 4 of the more competitive counties in the state for medical marijuana cultivation: Cuyahoga, Summit, Mahoning, and Lorain. Here is an image from the Department’s announcement:


This design runs the real risk of making some quadrants so competitive that well-qualified applicants are shut out based solely on the number of applicants in that territory. In other words, the 5th best Level I applicant in Northeast Ohio may very well be a more qualified applicant than the top applicant in Northwest Ohio, but there will only be 3 Level I licenses awarded in Northeast Ohio. Furthermore, such large territories may encourage consolidation of applicants in closer proximity, as opposed to having cultivators more widely disbursed as would be the case if Ohio had a larger number of territories.

It will be interesting to see if this map changes at all as we continue with the rule-making process, and do not be surprised to see some border counties transition into neighboring territories (for instance, Lorain could very well end up as part of the Northwest quadrant).

Changes to Ohio medical marijuana dispensary rules

On January 27, the Ohio Medical Marijuana Advisory Board met and received an update from the Board of Pharmacy on the comments received relative to the proposed dispensary rules. Notably, the Board referenced three major changes to its initial draft rules:

  1. The number of licensed dispensaries will be increased from 40 to 60 statewide;
  2. The $80,000 biennial fee to renew a dispensary license will be reduced (although we do not know what the reduced fee will be); and
  3. The Board will remove the requirement of having a “clinical director” either on-site or available by phone during hours of operation (I discussed the clinical director previously).

New dispensary rules have not yet been issued, but rest assured I will post an update when they are.

Proposed Ohio medical marijuana processor rules

The Department of Commerce also proposed its initial set of draft rules for Ohio medical marijuana processors. The first round of public comments are being accepted through close of business on February 10, 2017. Here are the highlights:

  1. The Department will license 40 medical marijuana processors, with 10 processors in a given territory (my educated guess is that the Department will utilize the same territories for processors as it does for cultivators);
  2. Once an applicant is awarded a provisional license, the applicant will have six months to get its facility up and running before it can receive its certificate of operation;
  3. Processors must either maintain a surety bond in the amount of $750,000 or an escrow account in that amount, and must also demonstrate that it has $250,000 in liquid assets; and
  4. Processor application fees will be $10,000 to apply; $90,000 to obtain a certificate of operation; and $100,000 annually to renew a processor license.

Check out the latest draft processor rules by clicking here.

We know from the draft cultivator rules that Ohio will award “plant-only processor” licenses to cultivators who wish to sell plant material directly to dispensaries, although those entities will have to meet more stringent packaging and labeling requirements than other cultivators. These plant-only processor licenses will cost $5,000 for Level I cultivators and $500 for Level II cultivators.

Stay tuned as Ohio continues its rule-making process. And, in the event you are interested in getting involved in Ohio’s medical marijuana industry (whether as a cultivator, processor,  or dispensary operator), don’t hesitate to contact us at (216) 566-8200 for a free consultation to discuss your plans.

Trump taps Jeff Sessions for Attorney General nominee: what does this mean for legal marijuana?

The cannabis community has been eagerly waiting to learn whom Donald Trump would nominate as the nation’s top law enforcement officer, and it appears we have our answer: Alabama Senator Jeff Sessions. So what does this mean for legal marijuana?

Let’s first start with a quick overview of the current federal approach to marijuana in legal states. In 2013, Deputy Attorney General James Cole issued a memorandum to all United States Attorneys related to marijuana enforcement. Cole recognized that the Department of Justice had “limited investigative and prosecutorial resources,” and accordingly the Department was focusing its efforts on enforcement priorities that were “particularly important” to the federal government:

  • Preventing the distribution of marijuana to minors;
  • Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;
  • Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;
  • Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
  • Preventing violence and the use of firearms in the cultivation and distribution of marijuana;
  • Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;
  • Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and
  • Preventing marijuana possession or use on federal property.

In other words, if a state’s regulatory system does not implicate these enforcement priorities, and if marijuana enterprises are compliant with state law, then the Department of Justice would exercise its discretion and allow those enterprises to operate. Importantly, this policy is not set in stone, and is subject to review by subsequent administrations. Which brings us now to Donald Trump and his nominee for Attorney General, Jeff Sessions.

In interviews throughout the election season, Donald Trump was actually fairly consistent in his open-minded approach to legal marijuana. He told the Washington Post that “In terms of marijuana and legalization, I think that should be a state issue, state-by-state[.]” He also told Bill O’Reilly that he was in favor of medical marijuana “a hundred percent,” even though he thought that diversion into other markets was a problem (so did James Cole).

Jeff Sessions, however, has not been as open when it comes to legal marijuana. A former Attorney General for the State of Alabama, he famously joked that he thought the Klu Klux Klan was fine “until [he] found out they smoked pot.” He was nominated for a federal judgeship in 1986, but his nomination was rejected by the Senate Judiciary Committee (which was controlled by Republicans at the time, and is now the same Committee that Sessions chairs in the Senate).

In an exchange with Michele Leonhart during a Senate hearing in 2010, Sessions said the following:

“I’m a big fan of the DEA[.] * * * These legalization efforts sound good to people[.] They say, ‘We could just end the problem of drugs if we could just make it legal.’ But any country that’s tried that, Alaska and other places have tried it, have failed. It does not work[.] We need people who are willing to say that. Are you willing to say that?”

Sessions’ attitude appears to conflict with the attitude of the President-Elect who nominated him, and perhaps he will adopt the President-Elect’s federalist approach to legal marijuana. But given Sessions’ prior comments, the best case scenario for the legal marijuana industry may be to maintain the current status quo. For instance, with Sessions as the nation’s top law enforcement officer, it is probably unrealistic to expect that the DEA will revisit its decision not to reschedule marijuana.

Hopefully Americans will get insight into how a Sessions-led Department of Justice will treat legal marijuana during the confirmation process. Until that happens, it looks like the waiting game continues for legal marijuana entrepreneurs.

Confusion continues regarding whether Ohio doctors can recommend medical marijuana. 

Earlier this month, the Ohio State Medical Board provided “guidance” to doctors relating to medical marijuana, stating that they should not recommend medical marijuana to patients until the Board finalizes its rules to certify doctors to make those recommendations — a process that could take until September 2017.

According to that guidance:

“A physician is not permitted to issue a state of Ohio approved written recommendation to use medical marijuana until the physician has obtained a certificate to recommend from the State Medical Board of Ohio. Per House Bill 523, the rules outlining the standards and process needed to obtain such a certificate to recommend will be developed no later than September 8, 2017.”

State Senator David Burke felt the “guidance” was unnecessary, telling Cleveland.com, “Willing physicians are in the free and clear[.]” He also noted that Ohio doctors will have to treat marijuana as a controlled substance under state law. “The affirmative defense was meant to allow for a quick transition for folks who need this product sooner than later[,]” he said.

The Gongwer News Service reported, however, that at yesterday’s meeting of the State Medical Board, member Robert Giacalone said that “the Medical Board is in no way prohibiting the recommendation of medical marijuana now that HB 523 is effective.” He further said:

“If Ohio physicians wish to recommend medical marijuana before the rules are in place, we strongly recommend that they contact a private attorney because the legislation is not crystal clear and could be interpreted as providing conflicting instructions to physicians.”

Giacalone’s statement appears to be a 180 degree turn from the “guidance” offered by the Board earlier this month, which did explicitly say that Ohio physicians were not permitted to recommend medical marijuana prior to being certified to do so by the State Medical Board. That being said, Giacalone is absolutely correct that HB 523 is not crystal clear when it comes to physician discipline for recommending medical marijuana.

Under R.C. 4731.30(B)(1), for instance, an Ohio physician seeking to recommend treatment with medical marijuana “shall” apply to the State Medical Board for a certificate to recommend — however, this section does not explicitly state that physicians must apply for certification before they recommend medical marijuana.  Furthermore, subsection (C)(1) is clear that a “physician who holds a certificate to recommend” may recommend medical marijuana to patients, but this section does not state that only physicians holding this certificate can recommend medical marijuana.  And, under R.C. 4731.22(B)(49), a physician may be disciplined for “failing to comply with the requirements of section 4731.30 of the Revised Code or rules adopted under section 4731.301 of the Revised Code when recommending treatment with medical marijuana.”

In other words, if R.C. 4731.30(B)(1) and (C)(1) require physicians to be certified before recommending medical marijuana, then R.C. 4731.22(B)(49) could allow for that physician to be disciplined if he or she recommends marijuana prior to being certified.

Under R.C. 4731.30(H), though, a physician is immune from civil liability and may not be disciplined by the State Medical Board or Board of Pharmacy (or be prosecuted criminally) for doing any of the following:

  1. Advising a patient, patient representative, or caregiver about the benefits and risks of medical marijuana to treat a qualifying medical condition;
  2. Recommending that a patient use medical marijuana to treat or alleviate the condition; or
  3. Monitoring a patient’s treatment with medical marijuana.

On its face, this subsection does grants immunity to all physicians recommending medical marijuana, regardless of whether that physician has been previously certified — and, in fact, it may render the certification requirement practically meaningless. Thus, there appears to be a direct conflict between R.C. 4731.30(H) and R.C. 4731.30(B)(1) and (C)(1).

Another interesting question is whether R.C. 4731.22(B)(49) applies to physicians who simply advise patients about the risks/benefits of medical marijuana or monitor the patient’s treatment, as the law does not explicitly call for discipline against physicians for engaging in those activities, with or without a certificate from the State Medical Board.

And as if the above analysis wasn’t confusing enough, it gets even more convoluted when one considers the Ninth Circuit case of Conant, et al. V. Walters, et al., 309 F.3d 629 (9th Cir. 2002). In that case, a group of physicians and patients argued that interfering with physicians from recommending medical marijuana violated the First Amendment — and they won an injunction against the federal government. To my knowledge, Conant has not been adopted by the 6th Circuit or any Ohio state court — but the First Amendment implications of Ohio’s new medical marijuana law cannot be ignored.

At the end of the day, there will likely be Ohio physicians issuing written recommendations to patients before the State Medical Board certifies them to do so. If they find themselves subject to disciplinary proceedings, they will at least have plausible arguments that R.C. 4731.30(H) and the First Amendment prevent discipline from being imposed.

Attorney Ethics and Legal Marijuana: Ohio Supreme Court Proposes Partial Fix

We’ve covered the ethical issues associated with legal marijuana on this blog previously, including the August 2016 advisory opinion issued by the Board of Professional Conduct. Today, the Ohio Supreme Court proposed a rule change to Rule 1.2 that would allow attorneys to represent medical marijuana clients regarding conduct “expressly permitted” under H.B. 523.

The August advisory opinion held that Rule 1.2(d) barred attorneys from offering traditional legal services to medical marijuana clients. The opinion also left open the possibility that an Ohio lawyer’s use of medical marijuana and ownership interest in a medical marijuana business could lead to discipline under Rules 8.4(b) or 8.4(h).

The proposal offered today by the Ohio Supreme Court only addresses the first issue: lawyer representation of marijuana businesses under Rule 1.2. As proposed, Rule 1.2 is separated into two subsections, with a new subsection (2) reading:

(2) A lawyer may counsel or assist a client regarding conduct expressly permitted under Sub.H.B. 523 of the 131st General Assembly authorizing the use of marijuana for medical purposes and any state statutes, rules, orders, or other provisions implementing the act. In these circumstances, the lawyer shall also advise the client regarding related federal law.

This language is notably more limited than language used in other states. In Alaska, for instance, the state adopted a new Rule 1.2 (f) that allowed lawyers to advise regarding conduct the lawyer “reasonably believes” is authorized by Alaska’s marijuana laws. The rule proposed by the Ohio Supreme Court, however, specifies that a lawyer’s advice must relate to conduct “expressly permitted” under H.B. 523.

In addition, the Supreme Court has not amended Rule 8.4 in any way — which continues to leave open the possibility that a lawyer’s use of medical marijuana could lead to discipline. This is still a big problem.

The Court will accept comments on this proposal through September 18, 2016. Comments may be forwarded either by mail or email to:

John VanNorman, Senior Policy and Research Counsel
Ohio Supreme Court
65 S. Front St., Seventh Floor
Columbus, OH 43215
or
John.VanNorman@sc.ohio.gov

At the end of the day, there is no question that proposed Rule 1.2(d)(2) represents real progress when it comes to attorney involvement in the Ohio medical marijuana industry. While the language may need tweaked, even as written it allows an attorney to represent a medical marijuana business with the traditional legal services the Board deemed prohibited in the August advisory opinion. Plus, kudos to the Court for acting so quickly.

You can view the full proposal from the Ohio Supreme Court by clicking here.

Breaking: Devastating Advisory Opinion from the Ohio Supreme Court Board of Professional Conduct

We’ve previously covered the topic of Ohio attorney professional ethics relating to House Bill 523 and the coming medical marijuana industry in Ohio. Well, today Ohio lawyers received the much-anticipated advisory opinion from the Board of Professional Conduct and it was…. less than encouraging.

I’m on the road coming back from an oral argument in central Ohio (I pulled over at a McDonald’s to write this, don’t worry), so I’ll hit the bullet points here and provide more in-depth analysis at a later time. Suffice it to say that the Board has chosen to follow the lead of the state’s that have drastically limited (if not outright prohibited) lawyer involvement in the marijuana industry.

From the opinion:

Under Prof.Cond.R. 1.2(d), a lawyer cannot deliver legal services to assist a client in the establishment and operation of a state regulated marijuana enterprise that is illegal under federal law. The types of legal services that cannot be provided under the rule include, but are not limited to, the completion and filing of marijuana license applications, negotiations with regulated individuals and businesses, representation of clients before state regulatory boards responsible for the regulation of medical marijuana, the drafting and negotiating of contracts with vendors for resources or supplies, the drafting of lease agreements for property to be used in the cultivation, processing, or sale of medical marijuana, commercial paper, tax, zoning, corporate entity formation, and statutory agent services. See also, Colo. Op. 125 (2013). Similarly, a lawyer cannot represent a property owner, lessor, supplier or business in transactions with a marijuana regulated entity, if the lawyer knows the transferred property, facilities, goods or supplies will be used to engage in conduct that is illegal under federal law. Even though the completion of any of these services or transactions may be permissible under Ohio law, and a lawyer’s assistance can facilitate their completion, the lawyer ultimately would be assisting the client in engaging in conduct that the lawyer knows to be illegal under federal law.

However, there is a range of conduct that the Board has deemed to be permitted:

[The current Rule] permits a lawyer to explain to the client the conflict that currently exists between state and federal law, the consequences of engaging in conduct that is permissible under Ohio law but contrary to federal law, and the likelihood of federal enforcement given the policies of the current administration. A lawyer may counsel and advise a client regarding the scope and general requirements of the Ohio medical marijuana law, the meaning of its provisions, and how the law would be applied to a client’s proposed conduct. A lawyer also can advise a client concerning good faith arguments regarding the validity of the federal or state law and its application to the client’s proposed conduct.

In addition to the permissible range of advice permitted under Prof.Cond.R. 1.2(d), the rule does not preclude a lawyer from representing a client charged with violating the state medical marijuana law, representing a professional license holder before state licensing boards, representing an employee in a wrongful discharge action due to medical marijuana use, or aiding a government client in the implementation and administration of the state’s regulated licensing program. With regard to the latter, lawyers assisting a government client at the state or local level in the establishment, operation, or implementation of the state medical marijuana regulatory system are not advising or assisting the client in conduct that directly violates federal law. The state or a local government is not directly involved in the sale, processing, or dispensing of medical marijuana prohibited by federal law, even though it is arguably enabling the conduct through the issuance of licenses and the maintenance of its regulatory system.

It appears, therefore, that until the Ohio Supreme Court amends the Rules of Professional Conduct Ohio marijuana businesses will be forced to operate without many of the kinds of professional legal advice that lawyers provide to clients in other industries. This result is simply untenable over the long term, given the regulated nature of the industry and the need for competent legal counsel.

I will follow up with an update on the course forward for Ohio lawyers and their clients in the medical marijuana industry.

A link to the full opinion can be found by clicking here.

Attorney Ethics and Legal Marijuana

With the recent passage of H.B. 523, medical marijuana in Ohio will become a reality this September. Most people are familiar with the fact that the rule-making process will take some time, but Ohio attorneys are presented with a more difficult question: can we even advise medical marijuana businesses? To answer this important question, among others, I recently sought an advisory opinion from the Ohio Supreme Court Board of Professional Conduct Advisory Opinion Committee. The Committee will be considering these questions and the Board will hopefully issue an opinion before the end of the summer.

By way of background, all Ohio lawyers are bound by the Ohio Rules of Professional Conduct. Included within those rules is a prohibition against advising or assisting clients in conduct “the lawyer knows is illegal” (Prof.Cond.R. 1.2(d)) as well a prohibition against committing an “illegal act that reflects adversely on the lawyer’s honesty or trustworthiness” (Prof.Cond.R. 8.4(b)). These provisions are implicated because, while more than half of the country has legalized marijuana in some form, it remains illegal at the federal level under the Controlled Substances Act.

Ohio attempted to address attorney discipline in Section 3796.24(A) of H.B. 523, which provides that a professional license holder “is not subject to professional disciplinary action solely for engaging in professional or occupational activities related to medical marijuana.” The problem, however, is that attorneys are regulated exclusively by the Ohio Supreme Court, so it is not clear that the legislature can prevent the Court from imposing discipline against Ohio lawyers for violating the Rules of Professional Conduct.

I am seeking an opinion on three distinct questions:

  1. Whether an Ohio lawyer may ethically counsel, advise, and represent medical marijuana cultivators, processors, retail dispensaries, testing laboratories, caregivers, and/or patients as each may be licensed or seek to become licensed under Ohio state law;
  2. Whether an Ohio lawyer (or a member of a lawyer’s immediate family) may ethically operate or hold an ownership interest in a medical marijuana cultivator, processor, retail dispensary, and/or testing laboratory as each may be licensed (or may apply for a license) under Ohio state law; and
  3. Whether an Ohio lawyer may ethically use medical marijuana as provided by Ohio state law.

Generally speaking, most states that have considered these issue have come down in favor of attorney representation of legal marijuana businesses, including Arizona, Colorado, New York, Washington (through the King County Bar Association), California (through the San Francisco Bar Association), and Illinois. A minority of states, such as Hawaii, have taken the opposite viewpoint. Connecticut’s opinion on the topic of advice to marijuana businesses offered little guidance, although Connecticut does allow for attorneys to use medical marijuana. In addition, Washington has approved attorney ownership of marijuana businesses and also attorney use of marijuana.

Guidance from the Advisory Opinion Committee has probably never been more imperative than when it comes to medical marijuana. Marijuana businesses not only have to navigate a complicated state regulatory environment, but also have to deal with the ever-changing federal approach to cannabis. Here’s hoping that Ohio lawyers have an advisory opinion sooner rather than later so that our role in this industry can have clarity.

To view my full request for an advisory opinion, click here.

You can also read about the request for an advisory opinion on Cleveland.com by clicking here.

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