The shredding of the Cole memo last month leaves the cannabis industry in an uncertain regulatory environment.
Industry-wide anxiety of this sort can sometimes breed business disputes that wind up in litigation. Besides being expensive, defending a lawsuit from a business partner, investor, supplier, or employee can be a major distraction from your business goals.
If tensions are simmering in your company, maybe it’s time to address any legal loose ends governing your business relationships. Virtually every lawsuit ever filed could have been avoided had the parties identified sources of conflict early and attempted to resolve their differences.
Here are some key questions to help identify whether legal issues may be bubbling beneath the surface of your cannabis business.
This article was first published on GSB's Duff on Hospitality Law blog.
Since Washington voters passed I-502 in 2012, there has been much discussion concerning how hoteliers should respond to guests who seek to use (or are caught using) marijuana on a hotel property, either in a public area or in a guest room. Could a hotel even promote itself as friendly to marijuana tourists?
Use of marijuana in view of the general public remains illegal under state law and Liquor Control Board regulations have long required liquor licensees to conduct their licensed premises in compliance with such state drug laws. Allowing guests to smoke anything, including marijuana, in public spaces may also violate public smoking laws and smoke-free workplace laws. So, it was fairly clear that guests could not use marijuana in the public areas of a hotel, and a hotel could not allow guests to use marijuana (smoked or otherwise) in any public place. But that left open the question of whether a hotel could allow guests to use marijuana in smoking-friendly rooms, either explicitly or simply by taking no affirmative action against use of marijuana in guest rooms.
Amended Liquor Control Board rules that went into effect earlier this year appear to answer this question with respect to properties with hotel liquor licenses. WAC 314-11-015 addresses the responsibilities of all liquor licensees, including hotel licensees. The amendments state that licensees and their employees may not:
Engage in or permit any employee or other person to engage in the consumption of any type of marijuana, usable marijuana, or marijuana-infused products in a liquor licensed business, including outdoor service areas or any part of the property owned or controlled by the licensee.
Permit any person consuming, or who has consumed within the licensed premises, any type of marijuana, usable marijuana, or marijuana-infused products to remain on any part of the licensed premises.
“Licensed premises” includes all areas under the legal control of the licensee and available to or used by customers, which would include guest rooms.
It is unclear whether the Liquor Control Board intended these amendments to require hotels with premises licenses to exclude marijuana use in guest rooms and require licensed hotels to remove patrons who have used marijuana in guest rooms. However, as written, the amended rule states that a hotel licensee may not permit any person to consume marijuana in any part of the property owned or controlled by the licensee nor remain on any part of the licensed premises after consuming marijuana on the licensed premises. The letter of these rules require licensed hotels to prohibit use of marijuana in all areas of their property, including guest rooms, and to remove patrons who are found to have consumed marijuana on their property.
Foster Garvey’s Cannabis practice group comprises a premier legal counsel team who provides a full range of legal services such as regulatory compliance, marijuana licensing, business finance, contracts, labor and employment, health care, real estate, intellectual property, litigation and dispute resolution, technology and tax. Our team possesses deep and diverse industry experience and has counseled clients across virtually all industry sectors. We understand the inherent challenges that licensed marijuana and ancillary businesses in Washington state, Oregon and Alaska are burdened with in this highly regulated industry as they deal with onerous state and local regulations as well as uncertainty resulting from federal law.
We are committed to helping our clients achieve their business goals while navigating the intricacies in this rapidly changing area of law. We prize innovation and entrepreneurship, and closely monitoring industry trends.