9th Circuit upholds guidance directing gun dealers to not sell firearms or ammunition to MMJ patients

On August 31, 2016, in Wilson v. Lynch, the United States Court of Appeals for the 9th Circuit upheld the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) directive to all Federal Firearm Licensees (gun dealers) indicating that possession of a medical marijuana card was a sufficient basis to refuse to sell firearms or ammunition.

In September 2011, the ATF sent an open letter to all Federal Firearm Licensees (FFL) stating,

[A]ny person who uses or is addicted to marijuana, regardless of whether his or her State has passed legislation authorizing marijuana use for medicinal purposes, is an unlawful user of or addicted to a controlled substance, and is prohibited by Federal law from possessing firearms or ammunition. Such persons should answer “yes” to question 11.e. on ATF Form 4473 . . . and you may not transfer firearms or ammunition to them. Further, if you are aware that the potential transferee is in possession of a card authorizing the possession and use of marijuana under State law, then you have “reasonable cause to believe” that the person is an unlawful user of a controlled substance. As such, you may not transfer firearms or ammunition to the person, even if the person answered “no” to question 11.e. on ATF Form.

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NCBA Guest Post on CEB's Marijuana Law Hub

What if it’s Rescheduled? Intellectual Property Questions for Cannabis Businesses 

NCBA Co-Founder Amanda R. Conley was recently invited to write a blog post for CEB's Marijuana Law Hub on the impact of the possible rescheduling of cannabis for existing businesses.

As Amanda explained, 

In connection with growth of cannabis businesses in California and nationwide, we’ve seen a huge rise in federal trademark application filings, many of which have been successfully prosecuted and registered. But intellectual property protection is difficult for cannabis businesses facing a constantly shifting patchwork of federal, state, and local laws that varyingly prohibit, or enable and regulate, the manufacturing and distribution of cannabis products.

Read more about what rescheduling could mean for cannabis businesses' intellectual property protection at mjlawhub.ceb.com.

USPTO Issues Major Ruling for Cannabis Companies: In re Morgan Brown

On July 14, 2016, the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (USPTO) refused to register the mark HERBAL ACCESS (U.S. Serial No. 86/362,968) for use in connection with "retail store services featuring herbs" on the grounds the mark was being used in connection with the sale of marijuana in violation of federal law. To read the full text of the Board's decision, click here.

The Board's Reasoning

The Board began by stating that to qualify for federal trademark registration, “[a]ny goods or services for which the mark is used must not be illegal under federal law.” In doing so, the Board appeared to rely on a previous finding that "'use in commerce,' means a 'lawful use in commerce,' and [that the sale or] the shipment of goods in violation of [a] federal statute . . . may not be recognized as the basis for establishing trademark rights.” In re Midwest Tennis & Track Co., 29 U.S.P.Q.2d 1386, 1386 n.2 (T.T.A.B. 1993) (quoting Clorox Co. v. Armour-Dial, Inc., 214 U.S.P.Q. 850, 851 (T.T.A.B. 1982)).

Reconciling these two statements, In re Morgan Brown can be read to hold that any goods or services that form the basis for “lawful use in commerce” of a mark that is the subject of a trademark application cannot be illegal.

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The Ethics of Cannabis Representation in California

When debating whether to take on a new client in the medical cannabis industry, there are two questions that should immediately come to any attorney’s mind:

  1. Is it legal?
  2. Is it ethical?

A June 2015 ethics opinion from the Bar Association of San Francisco (Opinion 2015-1) answers both questions in a way that most lawyers are familiar with: yes and no. But ultimately, the opinion takes the position that representation is ethical if:

  • The lawyer properly apprises herself and her clients of the risks associated with the cannabis industry, including the possibility of federal prosecution.
  • The lawyer advises clients to adhere to state regulation
  • The lawyer discourages conduct and behavior that would invite federal prosecution.

Specifically, the opinion addresses the question of whether a lawyer may represent a client in forming and operating a medical marijuana business (that would be lawful under California state law) by assisting with lease negotiation and obtaining financing, a use permit, and a business license for the client.

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DUIs and The Arizona Medical Marijuana Act

On November 20, 2015, the Supreme Court of Arizona held that, while possessing a valid medical marijuana card did not immunize individuals from prosecution under the state's zero tolerance marijuana DUI law, those legally entitled to engage in the use of marijuana could offer an affirmative defense to criminal DUI charges by showing that the level of cannabis metabolite in their system was not sufficient to cause impairment. Dobson v. McClennen2015 WL 7353847 (2015).

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Case Update: US v. Marin Alliance for Medical Marijuana

On October 19, 2015, in US v. Marin Alliance for Medical Marijuana, the US District Court for the Northern District of California held that under the Rohrabacher-Farr Amendment (Amendment), a permanent injunction granted to the Department of Justice (DOJ) in 2002 prohibiting the Marin Alliance for Medical Marijuana (MAMM) and Lynette Shaw from engaging in cannabis related business could only be enforced to the extent that the actions of MAMM and Shaw are illegal under California law. While the court declined to vacate the injunction entirely, the decision is the first to make clear that the DOJ may not interfere with medical marijuana-related businesses that are legal under state law.

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State Law Round-Up

Oregon

On October 1, 2015, recreational sale of cannabis became legal in Oregon. Oregon residents that are 21 years or older may now purchase up to 7 grams of recreational cannabis at roughly 200 of the 350 cannabis dispensaries originally set up to distribute medical marijuana.  Dispensaries specifically designed to cater to the recreational user will become operational sometime in 2016.

While many dispensaries believe that the legal status of recreational marijuana could greatly increase the volume of cannabis sales, some are concerned that local city and municipal regulation could interfere with business as usual.

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Historic Medical Marijuana Bill Passes in California

California was the first state to authorize medical marijuana, but for almost twenty years the state has had no detailed regulation, forcing localities to take on the issue though zoning and police powers.  All of that ended today when, after weeks of closed-door, high-pressure negotiations, one bill was finally passed. The Governor has indicated he will sign the bill, which can be found here.  NCBA will be hosting a series of round table discussions to flush out what this means for attorneys practicing in California and those with clients who might be looking to enter the space.  Keep an eye on our Events page for more information. 

Check out the Sacramento Bee's coverage for more on the status of the bill. 

Agreement Reached on Historic Medical Marijuana Bill

Press Release from Assemblymember Bonta. (Sacramento, CA) – Today the California State Assembly reached a historic agreement on a comprehensive regulatory framework for the state's billion dollar medical cannabis industry that will be placed in AB 266 and AB 243. AB 266 is authored by Assemblymembers Rob Bonta (D-Oakland), Ken Cooley (D-Rancho Cordova), Reginald Byron Jones-Sawyer (D-Los Angeles), and Tom Lackey (R-Palmdale), while AB 243 is authored by Assemblymember Jim Wood (D-Healdsburg).

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Cannabis Banking

On July 9, 2015, Senator Jeff Merkley (D-OR) introduced a bill to the US Senate that would allow legitimate marijuana businesses to obtain banking services from federally regulated banking institutions. The Senate legislative proposal tracks the language of a bill introduced to the US House of Representatives by Member Ed Perlmutter (D-CO) on April 28, 2015.

Currently, since marijuana remains illegal on a federal level, banks that serve the marijuana industry risk severe federal penalties, including sanctions, fines related to money laundering, revocation of FDIC insurance, and forfeiture of assets. As a result, many legitimate cannabis businesses that are organized under and adhere to state law must run their businesses on a cash basis, which both invites crime and increases the difficulty and expense of running a legitimate business.

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Tougher Penalties for California’s Cannabis Cultivators

On August 7, 2015, California Governor Jerry Brown signed Senate Bill (“SB”) 165 into law, significantly widening the scope of the type of environmental violations subject to penalties, and sharply constraining the discretion of the Department of Fish and Wildlife (“DFW”) to impose those penalties.  Cultivators of controlled substances (e.g., cannabis) in California have always been subject to civil fines for certain environmental violations, such as illegal stream diversions or releases of petroleum.  In particular, Section 12025 of the Fish and Game Code imposes fines on cultivators over and above whatever penalties those environmental violations already carry.  But the dramatic increase in the number and size of grow-sites—coupled with the severe, ongoing drought—has prompted a response from government authorities.  In the words of the new law’s author, commercial-scale cannabis grow-sites “leav[e] behind devastating impacts on the terrestrial and aquatic habitats they occupy. . .  In 2014, DFW found over 135 dams or diversions in rivers and streams, equating to close to 5,000,000 gallons of stolen water.”  In other words, SB 165 was passed to increase the reach and potential sting of the added fines under Section 12025.

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