Mike Arnold

To say that the California Department of Cannabis Control over-regulates the industry would be an understatement. Here is a list of some of the regulations I think are the worst for the industry, in no particular order: ❌ 15023: Sets out the process for approval of "business modifications". This sounds benign enough, but has probably given me the most gray hairs of any regulation out there. Licenses cannot be sold per subsection (c), so asset sales are off the table. Licenses cannot be transferred to new locations per subsection (h), so new leases are off the table, leading to horrible results. There is an extremely stilted process for ownership changes per subsection (c)(1), which I have seen different DCC employees interpret in every imaginable way with almost no consensus. This rule is single-handedly responsible for making M&A transactions 10x harder in CA than other states. ❌15014: Establishes licensing fees, which can reach into the SIX-FIGURE range PER YEAR. ❌ 15043: Prohibits retail sales except between 6 AM and 10 PM. This rule, which as far as I can tell is NOT mandated by state law, virtually guarantees illegal market sales outside of the permitted window. Cities often restrict this window even further. ❌ 15415(d): Limits deliveries to within 15043's hours of operations window. In other words, drivers cannot leave a premises or return to the premises outside of that window. That makes delivery businesses' operational window even shorter. ❌ 15418: Prohibits delivery drivers from carrying more than $10,000 of product at any time. This makes deliveries into far-away locales that have restricted brick-and-mortal sales much more difficult. ❌ QR code rules: DCC's best idea to combat the market has been to require retailers to display a QR code linking to their license. As if that will really combat the illegal market. ❌ 17300: Prohibits a host of different products, some of which make little sense. Don't even think about dairy products, although butter is ok (?). And don't even think about products imprinted with the shape of a human (sorry to Mike Tyson's gummy ears). ❌ 15041.1: Licensees literally need agency permission to sell branded merch unless it's one of about 20 different kinds of items authorized by the state. And that merch has to list the licensee's license number. Not very easy for a licensee with multiple licenses. ❌ Track and trace rules: The bane of any licensee's existence. I've run out of room for more bad rules. I'd love to hear what other folks think in the comments below. [This post is informational only, is not legal advice, and does not create an attorney-client relationship.]

⚠ Something actually meaningful just happened in #California #cannabis, but not in the good way if you're in the biz. When advising #cannabislicensees and #cannabislandlords, I'd always discuss the concept of covenants, conditions, and restrictions, which includes #easements. Eyes would either roll or gloss over at that point. 📣 Based on the case of JCCrandall, LLC v. Santa Barbara County, holders of easements can stop CA cannabis licensees in their tracks if those licensees don't secure the consent of those easement holders beforehand 📣 The FACTS: County issued a CUP to Santa Rita Holdings, Inc. to operate a cultivation facility on land owned by the Hughes Land Holding Trust. A 1998 easement for "agricultural purposes" owned by JCCrandall exists on the Hughes land for ingress and egress across that land, and the easement is the only access to the Hughes parcel. The PROCEDURE: JCCrandall objected to the County's issuance of the CUP to Santa Rita. JCCrandall then appealed the CUP issuance and the County supes denied that appeal. Before the County trial court, in its petition, JCCrandall claimed: "1) the use of the easement for cannabis activities is prohibited by the terms of the easement deed and federal law, 2) state law requires JCCrandall’s consent for cannabis activities on its land and JCCrandall refuses to consent, and 3) the road violates County standards for private roads." The County denied JCCrandall's petition, and JCCrandall then appealed that decision to the state appellate court. The DECISION: The appellate court found that: 1. An easement includes the right to exclude others as part of the fundamental right of property ownership; 2. Cannabis cultivation and transportation is illegal and easement holders cannot be forced to accommodate the same (and CA laws can't and don't change that); 3. CA cannabis laws require licensees to provide proof of the right to occupy/use the real property they plan to use for commercial cannabis activity and that includes providing express approval of the landowner. Easement holders are also considered landowners, and licensees need to secure their consent, too, to comply with CA licensing requirements; 4. Even though the easement is for "agricultural purposes", the federal illegality of cannabis is not a lawful agricultural purpose and violates the easement deed; and 5. The County cannot escape the fact that the easement is the only way to access the Hughes parcel. If JCCrandall won't allow cannabis transport via the easement, then the easement is unavailable for the proposed use and "the streets and highways cannot be deemed adequate", which violates County Code. TLDR: Do not sleep on easements (and CC&Rs) when it comes to real property and cannabis. In California, for now, easement holders hold a good amount of leverage when it comes to California cannabis licensing and real property use.

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📢New hemp product retail/wholesale license alert for Oregon📢 📝Relevant links on comments 🔵Effective 7/1/24 a "vendor" is required to obtain a license from OR Dep't of Ag 🟠Each vendor site must have this license prior to storing, transferring, or selling hemp products 🔵The license is required for online vendors that sell into or out of OR 🟠The license is annual and expires 6/30 each year 🔵The fee is $100 🟠The license is site specific - vendors need separate licenses for each vendor site 🔵There are a few exceptions which don't require this license - 1) If the person only facilitates the sale or transfer by connecting buyers and sellers and the person does not store the industrial hemp or hemp items at any time 2) A licensed grower, handler, or agricultural hemp seed producer is (with some notification requirements) 3) any sites licensed by OLCC 4) a person who only transports industrial hemp or hemp items and does not store the industrial hemp or hemp items at any time other than as necessary for transportation or delivery

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California banned intoxicating hemp products, but won't be able to put a dent in the market. The Alcoholic Beverage Control (ABC) has been publishing weekly enforcement data on its website. As of 11/10, it has visited 3,575 ABC licensees and seized only 5,318 products and found 102 violations. The chart is a bit unclear (i.e., were the 5,318 products only seized from 102 locations), but the point is that 5,318 units is a drop in the bucket. Meanwhile, I posted last week (post link in comments) about Department of Cannabis Control (DCC) and Department of Tax and Fee Administration's so-called "Safe Limits" operation that resulted in the whopping seizure of ... 151 boxes of products across 51 locations with only 15 citations issued. My takeaway from this is that ABC has been much more aggressive about enforcement. On the other hand, DCC has done very little, which is consistent with how it handles the illegal cannabis market. In any case, seizing a few thousand products is not going to change anything. Not only are there likely hundreds of thousands or even millions of products still on shelves, but many more products are being mailed into California via e-commerce platforms. This all begs the question of whether it was wise for the state to enact a sweeping ban on intoxicating hemp products, when it could have simply passed some common-sense regulations and focused enforcement resources on the illegal cannabis market. I think the clear answer is "no." [This post is informational only, is not legal advice, and does not create an attorney-client relationship.]

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Disappointing News from California! "The emergency regulations prohibit the sale of consumable hemp products with detectable amounts of THC, the primary psychoactive compound in marijuana, or other intoxicating cannabinoids and set a limit of five servings per package for such products." The cannabinoid industry has always been very vocal about their desire for regulations and accountability. This step is the exact opposite of that and will only serve to drive responsible operators out of the industry and leave the less scrupulous actors free to peddle unregulated cannabinoids.   Rather than regulate the cannabinoid market, California has taken a prohibitionist approach and pushed hemp derived cannabinoids into an unregulated underground market. Sander Zagzebski Michael Cristalli Amber M. Naiman Claire Wells Hanson Robert Hoban The Cannabis Chamber of Commerce U.S. Hemp Roundtable   https://lnkd.in/gj2--Yyk DPH-24-005E Emergency Regulations for Serving Size, Age, and Intoxicating Cannabinoids for Industrial Hemp The California Department of Public Health is dedicated to optimizing the health and well-being of Californians  

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People often talk about California's excessive cannabis excise tax or cities' high gross receipts taxes. But equally problematic are the CDTFA's tax penalties. CDTFA is empowered to charge a 60 percent fee on cannabis taxes if returns are not filed or taxes are not paid on time. Additionally, payment schedules will often identify an "other" fee which I've been told by CDTFA representatives includes "collection costs". I've seen businesses hit with these penalties for being a single day late to pay a tax bill. Yes, a single day. A few years ago, the now-dead tax on cultivation and excise tax both had to be collected by distributors (from cultivators and retailers, respectively) and paid to CDTFA. Most (maybe close to all) distributors eventually got hit with these penalties when their cultivation or retail partners were late to pay bills. Personally, I think this is a big part of why a lot of distributors failed over the years. Even now that retailers are responsible for paying excise tax, the problem hasn't been solved at all. A large amount of retailers are behind on paying excise taxes, because they are so high (and set to increase by 4%) and because municipal gross receipts taxes are also high (i.e., LA's 10% tax). If the state wants to help licensees out, it should also reduce the excessive penalties and seriously consider forgiving previously charged penalties. A larger issue is that I'm not really convinced that the state does want to help licensed businesses out. [This post is informational only, is not legal advice, and does not create an attorney-client relationship.]

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California's legal cannabis industry is being obliterated by a massive and growing illegal market. As I write this, there are thousands of illegal grows, delivery businesses, and even brick-and-mortar retail businesses (yes, you heard that) that are essentially allowed to flourish because the regulators don't try to stop it. Cue the DCC's newest campaign, the Real CA Cannabis campaign. While scrolling through its webpage, I see many quotes like this: "Many people aren’t aware unlicensed dispensaries exist, while others don’t see an issue with shopping at unlicensed dispensaries. Unfortunately, because these businesses are unlicensed, they aren’t obligated to follow any of the regulations designed to keep consumers, workers, and communities safe." You don't say! Maybe it would be more helpful for the agency that is in charge of regulating the industry to actually try to do something about the illegal market, rather than public education which does not and will not work. There are two alternatives California could adopt: (1) enforce existing laws against illegal businesses, or (2) make legal cannabis businesses easy and cheap to operate. For reasons I still don't get, California doesn't seem to want to do either of those things. [This post is informational only, is not legal advice, and does not create an attorney-client relationship.]

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Iowa Governor Kim Reynolds signed House File 2605 on May 17, 2024 (link in comments) Summary - 📝The bill is effective July 1, 2024 and notable set new milligram caps and a warning statement Key takeaways - ✔️A consumable hemp product can be sold in IA if the maximum total THC is less than or equal to (the lesser of): 🟠0.3% on a dry weight basis, or 🔵4 milligrams per serving and 10 milligrams per container ✔️The Department of Health and Human Services (HHS) must establish rules for packaging and labeling ✔️Each container must contain a notice advising consumers of the risks associated with its use (HHS must adopt rules with this notice) ✔️There are also new more severe penalties ✔️Alcoholic beverages are expressly prohibited from containing THC (whether naturally occurring or synthesized)

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ENVIGO beagle breeding business fined 35 million dollars and ordered compliance monitoring. This is a start, but this anti-social, gluttonous company and parent company ought to be annihilated. They are one of the most violent, extractive, abusive companies in the world. Here, they exploited the environment, workers, and beagles. This is where the illusory values of capitalism overtake true and real human values, empathy, and science. Again, this company should terminated. Dr. Boileau, PhD #animalrights #humanrights #environmentalrights #ecosystemrights https://lnkd.in/gSt3_Qxy

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Prohibition 2.0 or the Drug War on Marijauna 2.0 is now being led by people like #GovernorNewsome of California and the lobbyists who puppeteer him. “while I appreciate the author’s intent to support small and equity cannabis cultivators, I am concerned that the bill’s broad eligibility, which extends to the vast majority of licensed cultivators, would undermine the existing retail licensing framework and place significant strain on the Department of Cannabis Control’s ability to regulate and enforce compliance.” It’s amazing how far from the end of prohibition we truly are. This nonsensical notion that the cannabis supply chain needs to be modeled in a certain way or regulated for anything other than testing safety is laughable. Designing a market structure is the obsession of a flawed mindset. The only question that should be asked is if it gets the ball 🏈 closer to freedoms end zone. Even if your financial model doesn’t benefit from freedom your soul will! #cannabis #marijuana

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Newsom just signed and vetoed a bunch of cannabis bills. Here are a few: 1 - AB-1775 (signed) will allow licensed consumption lounges to sell non-alcoholic beverages and food, as well as tickets for live events. This will be a big change for consumption lounges, though to be fair there are not many in California and cities will also have to authorize them. 2 - SB-1059 (signed) will stop cities from including excise tax and sales and use tax in their definitions of "gross receipts" for purposes of taxing retailers. This should give retailers a much needed break - albeit not nearly enough - on local taxation. 3 - AB-1111 (vetoed) would have allowed certain small cultivators to obtain "small producer event sales licenses" to sell cannabis at certain licensed events. It really makes little sense why this was vetoed, as the pool for sales would have been definitionally very small. This certainly isn't exclusive of all the cannabis bills Newsom signed or passed this week, but these are some of the bigger highlights.

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🚨 New Blog Post Alert! 🚨 I’ve just published a new article on Money and Dirt that dives into a recent California Court of Appeal ruling with significant implications for the cannabis industry. In this case, the court ruled that a cannabis grower could not use an access easement over a neighboring property without the servient owner's permission, citing the fact that cannabis remains illegal at the federal level. This decision highlights the legal complexities surrounding cannabis businesses, particularly the ongoing conflict between state and federal laws. 📖 Read the full post here: https://lnkd.in/gUddxtmZ Let me know your thoughts in the comments – how do you think this ruling will affect cannabis growers in California? #CannabisLaw #PropertyLaw #RealEstate #Easement #LegalNews #California

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With all of the discussions around public safety issues related to hemp products, I wanted to share this thread about the significant investigatory work being done on the MJ side of the ledger. Thanks to Trent Hancock and Alex Halperin for bring attention to this very serious public safety issue and highlighting the need for stronger regulatory actions for these unsafe regulated cannabis products. Cannabis Regulators Association (CANNRA) FYI..

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We've all seen story after story about legal California cannabis businesses allegedly selling cannabis products with pesticides. The state can and should do a better job at tackling this issue. At the same time, it's worth taking a step back and realizing that cannabis products in the illegal market are routinely filled with toxic pesticides. For example, take this press release I posted about a few weeks ago. The press release alleges that pesticides were used at an illegal grow that the state raided, and that: "The pesticide was identified by the Alameda County Agricultural Commission as containing isoprocarb, an unregistered pesticide that is toxic if inhaled or swallowed. Authorities also discovered other potentially harmful substances, including unidentified liquids and additional illegal pesticides, including one labeled 'Golden Eagle.'" Back in June, the LA Times published an article entitled "A new threat to cannabis users: Smuggled Chinese pesticides," looking at raids on allegedly illegal facilities where a host of harmful products were found: "lab tests had revealed a cocktail of dangerous insecticides and fungicides that when burned would emit a cloud of pest- and mold-killing smoke. Among the unusual substances was isoprocarb, which is not permitted in the United States; profenofos, an organophosphate so harmful its use here was discontinued in 2016; and fenpropathrin, an acutely toxic insecticide that is fatal if inhaled. Additional tests would show the warehouse plants were tainted with some of the same pesticides." Again, the state can and should police use of unpermitted pesticides in the legal market. At the same time, if the state is serious about public health (as it should be), then it needs to address the illegal market which is reportedly using harmful pesticides and insecticides on products. I've long said that the best way to tackle the illegal market problem is to make it easy to enter the legal market - and that the only alternative is to ramp up enforcement. California apparently hasn't heeded my advice. As we sit here today, the state has made it more difficult in many ways to participate in the legal market, and still hasn't meaningfully enforced laws against the illegal market. So, as you can expect, the legal market continues to shrink, and the illegal market continues to grow. And with that, you can expect to see more toxic products enter the illegal and unregulated market.

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Anyone who decides to open their own business has to ask themselves if they are crazy from time to time. For me, why would I leave the best litigation job in the state of Utah? (We can argue about this of course. Taipei Taiwan was also the best LDS church mission in the world so . . . ) Why would I give up the safety and security of a well-known brand, great bosses, and awesome friends and co-workers? Why would I move to a 100 square foot office, learn how to set everything up, send faxes, and bother people on Linked in? Because I'm betting on myself, and I'm betting that I can deliver good results to clients who have been injured, and I can deliver good results to clients of pre-litigation attorneys who refer cases to me. I still might be crazy, but oh well. At the same time, I'll ask anyone out there to take that same bet on me. If you know someone who has been hurt in an accident, take a chance that I can use my experience and skill to take care of that person. And if you are a pre-litigation personal injury firm looking to offload some cases, give me a shot. I've handled hundreds and hundreds of litigation cases that couldn't get resolved in pre-litigation. And if any of you aren't ready to refer a case, I'm always happy to talk options and strategy and consult on any personal injury case that isn't getting done. Hit me up at john@jblegalutah.com. www.jblegalutah.com

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I want to spark discussions based in reality around cannabis progress in the US. Please consider the problems as I see them and the SOLUTIONS I believe can be achieved in the next 4 years: *Federal Legalization* Any discussion that doesn't address social justice (e.g., pardons and expungement) and social equity (e.g., giving back to communities disproportionately affected by the war on drugs) are a non-starter - like the Farm Bill (see below). Unfortunately this will have to be shelved for at least the next 4 years. Talk all you want about cabinet picks but only congress holds this power and getting 60 senators to pass this is a pipe dream. Instead the focus should be put on these other two key policies: *Farm Bill* My three part solution is to: 1) regulate by cannabinoid "type". Type 1 (All THC) and 2 (Mixed THC:CBD) are Marijuana. Type 3 (CBD hemp) and others are hemp. New "types" like THCV get reviewed and classified by USDA in this context. The reasoning for this is overwhelming. Types can be classified by cannabinoid ratios from current pre-harvest requirements. We can also use cheap genetic tests as an alternative or additional method that can be applied as early as first leaf stage. The best part - no more arbitrary THC thresholds! You can grow CBD hemp to whatever THC content it can hit. This also closes the "THCa hemp loophole" 2) Allow natural hemp D9 products. Hemp bev and others can still make a handsome profit using mother liquor. This would also incentivise US hemp farming (not Chinese). 3) No synthesis or semi-synthesis allowed. It's novel pharmaceutical development and belongs under the FDA. Further, recent data shows that dirty byproducts are too potentially dangerous. *Rescheduling* The industry should be uniting to get this passed. The DEA seems set against it by inviting mostly prohibitionist groups to testify next month. It doesn't hand the industry to Pharma (they already have Schedule 1 capabilities). It makes THC and Type 1/2 cannabis easier to study for people like me and my colleagues. Like yesterday's study I highlighted, we could actually put D9 THC (currently scheduled 1) as a control against d8, HHC, and THCP. This is how we gather undisputable data to justify federal legalization in 4 years time. _ _ _ _ _ Thoughts on any of this? Please, let's start some civil discussions in the comments! #BetterCannabisThroughScience P.S. happy to testify as an expert witness for these!

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Breaking Cannabis News! The Fourth Circuit’s Ruling on THC-O: Broad Implications for the Hemp and Marijuana Industries A groundbreaking decision by the U.S. Court of Appeals for the Fourth Circuit recently classified THC-O as legal under the 2018 Farm Bill. This ruling directly opposes the DEA’s stance that THC-O, a hemp-derived cannabinoid, is a Schedule I substance. By clarifying that hemp-derived products are legal so long as their delta-9 THC content remains below 0.3%, this ruling could reshape both the hemp and marijuana industries. Implications for the Hemp Industry: The ruling opens significant doors for the hemp industry, particularly for manufacturers and retailers of cannabinoids like THC-O and THCA. It provides a clearer legal framework for products derived from hemp, which may have been previously regulated as controlled substances under the DEA’s restrictive interpretation. This ruling limits the DEA’s regulatory authority over hemp products. The agency had been taking a hardline stance on many cannabinoids, classifying them as illegal even when derived from hemp. By stripping the DEA of the ability to categorize these substances under the Controlled Substances Act, the court’s decision will likely lead to an explosion of hemp-derived cannabinoids hitting the market. Broader Legal and Market Considerations: This ruling is expected to trigger legal battles over other hemp-derived cannabinoids, such as HHC and THCA, which have similarly fallen into gray areas under federal law. Courts may need to resolve disputes over the classification of these substances, possibly setting additional precedents that shape how the federal government and the DEA can regulate the hemp industry. Importantly, while the ruling is a victory for the federal classification of hemp, individual states may still attempt to regulate or ban these cannabinoids, creating a patchwork of compliance issues for producers and sellers. The federal ruling may lead to industry advocacy to standardize laws across states for easier market access and distribution. Impact on the Marijuana Industry: Although this ruling focuses on hemp, its implications for the marijuana industry are also noteworthy. It highlights a growing legal separation between marijuana (high-THC products) and hemp (low-THC products). This division may pressure marijuana industry advocates to push harder for federal legalization of cannabis products that exceed the 0.3% delta-9 THC threshold, creating momentum for legislative changes that would reconcile the legal treatment of hemp and marijuana. The ruling could bolster efforts to address the legality of other cannabinoids in the marijuana space. As cannabis legalization expands across states, marijuana industry players might look to this case as a template for how to challenge federal restrictions on other cannabinoids, potentially seeking broader legal pathways for marijuana-derived substances. ChatGPT can

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