Marijuana Series: How Profitable is the Business of Cannabis? For Now, the IRS may Decide

3/5/2018| Article

By: Travis Scales


A Colorado based marijuana business recently petitioned the Supreme Court to determine whether the IRS exceeded its authority through an independent investigation and subsequent determination that the company was trafficking in a controlled substance. As a reminder, cannabis is still placed in Schedule I of the Controlled Substances Act. That Federal classification holds firm even though states across the U.S. are increasingly permitting forms of medicinal and recreational marijuana use.  An enduring national proscription creates a major hurdle for businesses operating lawfully at the state level. The reason, aside from the numerous  risks inherent to operating any business that flouts the laws of the United States, comes down to profit. 

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Marijuana Series: Real Estate Opportunities Fueled by Legalization of Cannabis, The Landlord Perspective

3/5/2018| Article

By: Carmen Andrade



Currently, 29 states and the District of Columbia have legalized the use of cannabis for medical purposes. The steady growth in sales of legal cannabis in North America has so far proven to be big business, not only for the growers and sellers, but also for owners of real estate holding inventory that may be well suited to serve the growing industry. In 2016 alone, sales of cannabis grew to 6.8 billion. This is an increase of 34% from 2015 sales. The current trend suggests that there will be legalization of both medical and recreational cannabis in additional states, including the State of New Jersey where medical use has been legalized and significant efforts are being made to make recreational use legal as well.


By way of example of the real estate ventures inspired by the legalization of cannabis, Innovative Industrial Properties is a real estate investment trust that buys buildings, renovates them and leases out space to medical marijuana growers. The company went public on the New York Stock Exchanges in 2016 and is said to be valued at about $60 million. Among its holdings are properties in the State of New York, our neighbor, where medical marijuana is legal. Similarly, other real estate investors, even if at a much smaller scale, are likely to pursue the developing real estate opportunities surrounding the cannabis industry. Landlords can better prepare themselves for the cannabis boom by becoming knowledgeable of the potential issues that may present themselves in real estate leasing transactions with growers and sellers of cannabis. 

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Marijuana Series: Federal Reserve Approves Colorado Credit Union To Serve Cannabis Industry (But There’s A Catch)

3/6/2018| Article

By: Peter J. Gallagher


The Wall Street Journal recently reported that the Federal Reserve conditionally approved a Colorado credit union, Fourth Corner Credit Union, to serve cannabis-linked businesses. To obtain this approval, however, the credit union had to “step back from its original plan to serve state-licensed dispensaries.” Instead, it will focus on “individuals and companies that support legalized marijuana, including those who partner with vendors, such as accountants and landlords.” In other words, the credit union can service individuals and entities involved in the cannabis industry, but not those who “touch the plant.”

The conditional approval is important because of the banking difficulties faced by cannabis-linked businesses. A “significant chunk of the financial system” is regulated by the federal government, which still considers the distribution of cannabis a crime. Therefore, the doors to traditional banking and lending institutions, not to mention credit card companies and processors, are often closed to cannabis-linked business, forcing them to deal entirely in cash.

The credit union still has some hurdles to overcome, including obtaining deposit insurance (the National Credit Union Administration, which provides such insurance rejected its application, and this decision is being challenged in the courts). But the Federal Reserve’s decision, which resolved a lawsuit filed by the credit union three years ago, appears to be a promising development, albeit incrementally so, for cannabis-linked businesses.

Marijuana Series: Virginia Legislature Approves Expanded Use Of Cannabis-Derived Oils

3/8/2018| Article

By: Peter J. Gallager


Both houses of Virginia’s legislature have unanimously approved bills that will expand the ability of Virginia doctors to recommend marijuana or cannabis extracts to their patients. The bills are not identical, but once the relatively minor differences between them are reconciled, a consolidated bill will be sent to Governor Terry McAuliffe for his signature.

Under Virginia law, as it now stands, a “practitioner” (defined as a “practitioner of medicine or osteopathy licensed by the Board of Medicine who is a neurologist or who specializes in the treatment of epilepsy”) may issue a “written certification” for the use of “cannabidiol oil or THC-A oil” to a patient for “treatment or to alleviate the symptoms of a patient’s intractable epilepsy.” The practitioner who issues the certification is immune from prosecution under Virginia’s laws against distributing controlled substances, and the patient who possesses a valid certification can use that certification as an affirmative defense to prosecution under Virginia’s laws against possession of marijuana. Likely as a check against the over-prescription of these oils, Virginia law also allows the Board of Medicine to sanction a practitioner for “failing to properly evaluate or treat a patient’s medical condition or otherwise violet[e] the applicable standard of care for evaluating or treating medical conditions.”

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Marijuana Series: Governor Murphy's Nominee for Health Commissioner Discusses Marijuana While the NJ State Association of Chiefs of Police Announces Its Opposition to Legalization

3/13/2018| Article

By: Brian P. Sharkey


On March 8, Dr. Shereef Elnahal, Governor Murphy's nominee to become the Commissioner of New Jersey's Health Department, testified before the Senate Judiciary Committee.  During his testimony, Dr. Elnahal fielded several questions from Committee members about marijuana, both the State's medicinal program and the question of legalizing marijuana for recreational purposes.  With respect to the State's medicinal marijuana program, Dr. Elnahal stressed that improving patient access would be one of his priorities as Commissioner.  Dr. Elnahal did not elaborate on how access should be increased, but emphasized that the Department was reviewing all aspects of the program as directed by Governor Murphy's Executive Order No. 6.  When presented with questions concerning legalization, Dr. Elnahal explained that he had not seen any analysis related to health issues.  However, when asked if there was a connection between increased access to marijuana and opioid abuse, Dr. Elnahal referred to a recent study that showed a 6% decrease in opioid use when medicinal marijuana is readily available, and he also indicated that it will be one of the tools the Department uses in in its efforts to combat opioid abuse in the State.  The Committee approved Dr. Elnahal's nomination, which now moves to the full Senate.  

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Marijuana Series: New Jersey Marijuana Politics Are Fluid, But Governor Murphy Remains Committed to Legalization

3/14/2018| Article

By: Brian P. Sharkey


Although the status of marijuana legalization has been the focus of attention in New Jersey since Governor Murphy took office in January, the past several days have seen increased activity in this area.  The biggest development that we will focus on is Governor Murphy's remarks supporting legalization in his Budget Address on March 13, but that is far from the only newsworthy development over the past few days. 

The day before the Governor's Budget Address, Senate President Stephen Sweeney stated that he was opposed to a recent bill, S.1926, that was introduced by Senator Ron Rice, a Democrat, and Senator Robert Singer, a Republican, that would decriminalize possession of small amounts of marijuana.  Senate President Sweeney told NJ Advance Media that "I really don't have an interest in it[.]  I don't see it moving forward at this time.  You're basically legalizing something that's not legal now.  If you're gonna do it, do it right.  Regulate it and manage it properly."   (The title of the NJ Advance Media article covering this topic is "Decriminalizing weed instead of legalizing it won't happen, N.J. Senate president says".)  In contrast, the Republican State Assembly Minority Leader Jon Bramnick indicated that he supports the decriminalization approach, as he explained that "[n]o one should be a convicted criminal and not be able to get a job because they had a small amount of marijuana[.]"  Meanwhile, Senator Tom Kean, Jr., the State Senate Minority Leader, noted that the Republication caucus in the Legislature did not have an official stance with respect to this subject.  

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Marijuana Series: "Big Pharma's" Entry Into the Cannabis Market

3/20/2018| Article

By: Brian P. Sharkey


Tilray is a federally licensed producer of medical cannabis products in Canada. On March 19, Tilray made big news in Canada, and around the world, when it announced that it signed a binding letter of intent to form a strategic alliance with Sandoz Canada Inc. ("Sandoz Canada"), an affiliate of Sandoz International GmbH, a global leader in biosimilars and generic products and part of the Novartis Group. The purpose of the strategic alliance, whereby Tilray will be the exclusive collaborator with Sandoz Canada, is to accelerate innovation and increase the availability of medical cannabis products.

Tilray's press release announcing the alliance identified four specific items areas that the parties will focus on, subject to necessary regulatory approvals and final agreements: 1) Tilray will utilize Sandoz Canada's knowledge and sales force to educate Canadian physicians and pharmacists about Tilray's medical cannabis products; 2) Tilray will become the exclusive partner of Sandoz Canada for non-smokable/non-combustible cannabis products; 3) Tilray will partner with Sandoz Canada to develop new, innovative medical cannabis products that provide an alternative to smokable/combustible products; and 4) Sandoz Canada will wholesale distribute non-smokable/non-combustible Tilray products to hospitals and pharmacies in Canada.

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Marijuana Series: The Latest Updates On The Efforts To Legalize Marijuana In New Jersey

3/22/2018| Article

By Brian P. Sharkey


There were a number of significant developments during the week of March 12, 2018, in the world of New Jersey politics concerning marijuana. The biggest event was Governor Murphy's clear and unequivocal support for legalization in his Budget Address on March 13, but another significant development was Senate President Stephen Sweeney's statement that he was opposed to the bi-partisan legislation in the Senate that would decriminalize marijuana. Since then, there has continued to be additional reaction to Governor Murphy's Budget Address, as well as new developments.

For example, Senator Cory Booker, who has been a vocal advocate for legalization and who sponsored the Marijuana Justice Act of 2017 in Congress, which would legalize marijuana at the federal level, expressed his appreciation for Governor Murphy's position. The day after the Governor's Budget Address, Senator Booker tweeted the following message: "Thank you governor. Marijuana prohibition in NJ is bias against low income communities and communities of color. Prohibition has devastated lives and families. Economically harmed communities and wasted so many tax dollars. I applaud your leadership and support your efforts."


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