Cannabis Business Blog

Here at GSB, we work with those in the cannabis industry (like producers, processors, retailers and ancillary service providers) and those in the alcoholic beverage industry (like wineries, breweries, distilleries, hotels and restaurants).

Washington utilized its alcoholic beverage rules as a model for the cannabis rules.  So, anytime there is a “gap” in the cannabis rules, we look to the alcoholic beverage rules to predict the LCB’s likely position on any given topic.

Despite the significant overlaps, we often see a love/hate relationship between the alcoholic beverage and cannabis industries. 

The House Appropriations Committee released the 2017 Omnibus Appropriations bill on May 1 as part of the fiscal year. Congress decided to continue the 2015 rider[1] that prohibits the Department of Justice from spending funds to prevent state implementation of their medical marijuana laws. The new rider expires on September 30, 2017, the end of the fiscal year, unless it is included in the next appropriations bill. Past legislative actions suggest its continuation is more likely than not.

Join us in Portland on Thursday, May 18 for a free half-day seminar as we discuss best practices on regulatory, business and operational issues to promote your company’s long-term growth and success.

Growing Up Green: Learning How to Blossom in Oregon’s Budding Marketplace (co-hosted by Garvey Schubert Barer, ACT Resources, PLLC, and Mosaic Insurance Alliance) will provide information on what every cannabis license holder needs to know, including attracting investors, real estate, insurance, taxes and lessons learned from the Washington market.  Additionally, the OLCC’s Portland Metro Public Safety Manager will be on hand to discuss regulatory issues and answer your questions.  This event is designed specifically to address issues affecting cannabis producers, processors, retailers, and ancillary businesses.

View the complete agenda on the event page on our website. 

Date & Time
Thurs. May 18, 2017
Registration: 12:30 - 1:00 pm
Program: 1:00 - 4:20 pm (followed by a hosted networking social)

Location
Two World Trade Center (Mezzanine Room 3/4)
25 SW Salmon Street
Portland, OR 97204

Two recent District Court cases, High Desert Relief, Inc. v. United States of America and Alpenglow Botanicals, LLC et. al. v. United States of America have raised a novel issue in the IRS’s audits of cannabis businesses. Both of these suits were petitions to quash IRS summonses. A taxpayer who is under a civil audit from the IRS can petition a District Court to “quash”, or cancel, a summons issued to a third party for information relating to the IRS’s audit of that taxpayer. This type of suit is notoriously difficult for taxpayers.

All brands should strive to be unique. However, it is particularly important that businesses in competitive industries, like the cannabis industry, adopt brands that are highly distinctive and unique. Why? In competitive industries, consumers are bombarded by choices. When consumers walk into a store and are faced with numerous, similar brands, they have a hard time distinguishing between them. Consumers may have had a positive experience with a brand, but they can’t quite remember whether it was ACME 1 brand or ACME 2 brand. The need to be distinctive extends both to the brand name, as well as to its packaging. If ACME 1 and ACME 2 both have green and black packaging, it may be impossible for consumers to correctly identify the brand they had a positive experience with. Even worse, if a consumer had a negative experience with a brand that sounds and looks similar to another brand and its packaging, the consumer may avoid both brands, either because they can’t tell them apart, or they assume they are related in some manner.

To ensure cannabis brands benefit from consumer loyalty, and do not suffer negative branding consequences caused by inferior competitor products, it is imperative that cannabis brands strive to be distinct.

Raising money into any business can be stressful and time consuming, and requires compliance with a multitude of state and federal laws. Understanding the investment landscape and being prepared can make the process smoother and quicker.

• Details Matter. From the type of entity you’ve formed to run your cannabis business to your capitalization structure, your business plan, and the agreements between the founders and the company, details matter to investors and play a role in the decision of whether to invest in a company. Having a business structure that facilitates investment and clean documentation are important first steps in attracting outside capital.

Justice Department has options to crack down, but may galvanize the push for even wider legalization

In statements that were perhaps inevitable but nonetheless surprising to the cannabis industry, White House Press Secretary Sean Spicer on February 23, 2017, provided the first official comments on how the Trump administration may address recreational marijuana.

Responding to a question from an Arkansas reporter regarding medical marijuana, Spicer indicated that the Trump administration sees “a big difference” between medical and recreational marijuana, stating that federal law needs to be followed “when it comes to recreational marijuana and other drugs of that nature.”

Spicer also indicated that enforcement decisions will primarily be a Department of Justice (“DOJ”) matter, stating that enforcement is “a question for the Department of Justice,” but that he believed there would be “greater enforcement of [federal law], because again, there’s a big difference between medical use, which Congress has, through an appropriations rider in 2014, made very clear what their intent was on how the Department of Justice would handle that issue,” which, Spicer stated, is “very different from the recreational use, which is something the Department of Justice will be further looking into.”

Although Spicer’s statements should probably not be considered as the Trump administration’s definitive policy statement on recreational marijuana use, they do raise a variety of concerns for cannabis businesses.

On Thursday, November 3, Garvey Schubert Barer’s Cannabis Industry Group will be presenting Cannabis 2016: Transitioning from Infancy to Maturity, a half-day educational program geared toward helping companies thrive amid the industry’s fluid business environment.  As the cannabis industry has been undergoing a rapid maturation, nascent enterprises are quickly evolving into sophisticated businesses.  This session will provide best practices and guidance to help manage business and operational issues to ensure the long-term growth and success of industry members.

Vela, a cannabis retail shop, and an educational and community-building hub is hosting a series of free events in September and October that include speakers David Mendoza, Senior Policy Advisor for the City of Seattle Office of the Mayor, Pete Holmes, Seattle City Attorney, and Rick Garza, Director of the Washington State Liquor and Cannabis Board to discuss legislative solutions to support the legal market, and the current status and challenges of the marketplace. Come join fellow patrons and partners to learn, discuss and share tips.

In a long-awaited decision released this morning, the United States Drug Enforcement Administration announced that it has denied two petitions to reschedule marijuana under the Controlled Substances Act (the “CSA”). The DEA concluded that marijuana should remain a Schedule I controlled substance because it does not meet the criteria for currently accepted medical use in treatment in the United States; there is a lack of accepted safety for use of marijuana under medical supervision and it has a high potential for abuse.  The DEA’s decision relies on a scientific and medical evaluation and scheduling recommendation from the United States Department of Health and Human Services (“HHS”), based on studies conducted by the United States Food and Drug Administration and National Institute on Drug Abuse (“NIDA”).