What to Watch For: The Near-Term Outlook on Cannabis

by Burns & Levinson LLP
Contact

We anticipate 2018 as being a pivotal year for cannabis across the country. As momentum for the movement to legalize continues to build, here are some of the things we’re keeping an eye on.

Rohrabacher-Blumenauer Extension
The Rohrabacher-Blumenauer Amendment was extended until January 19, 2018, as part of the budget deal passed on December 21, 2017, that averted a federal shutdown. With the New Year, we are eager to see whether Congress will continue to extend the protection provided by the Amendment, which prevents the federal government from using federal funds to prosecute fully compliant and licensed medical marijuana operations. Should the Amendment not be extended, attention will turn to Attorney General Sessions, to see what measures he may take to shut down or otherwise impede the progress of the industry.

While there is certainly legitimate cause for concern, many industry advocates doubt that the Attorney General will do much in the way of going after licensed medical facilities, given that the Amendment does not bar the use of federal funds for crackdowns on the recreational cannabis industry, coupled with the fact that the government has, at least to date, not begun any such crackdowns.

Tax Code
For 2018, many are wondering if this will be the year of “normalization” of the impact of IRS Code provision 280E, which prevents cannabis businesses from taking many deductions available to non-cannabis businesses and thereby lowering the amount of federal income taxes required to be paid. In 2017, there was an attempt to rectify these taxation issues in the body of the recently passed tax legislation, but the final version of the law did not end up containing such protections. Industry insiders look to the possibility that certain tax courts, which have begun reviewing these issues, may provide some long-awaited judicial clarity as well.

Cannabis IP
A dispensary’s sales are impacted by the number of genetic variations that it may be able to sell (whether medicinal or adult-use), so as the industry mature, obtaining nation-wide protections on those variations will become increasingly important. Because cannabis is illegal under federal law, it has proven extremely challenging to obtain either trademarks or patents regarding any cannabis-related product or business (as such protections are overseen by the U.S. Patent and Trademark Office). Industry experts and IP lawyers have been working to determine to what extent the various genetic strains of cannabis can be patented, using multiple different approaches.

California as a Model for Massachusetts…?
California commenced adult-use sales on January 1, 2018. How well will its program initially function? What unforeseen roadblocks will complicate matters as it ramps up? Many have raised concerns that the California market is ill-prepared for the huge demand, and expect to see cannabis shortages throughout the state. If such a situation arises, how industry and state agencies react may prove instructional for Massachusetts, which targets July 2018 for recreational sales to begin.

Also, in Massachusetts, the Cannabis Control Commission will soon promulgate its new rules and regulations, as well as the actual application process, with respect to the recreational or adult-use marijuana market. The CCC is also considering rules for on-site consumption and special one-time usages. We will be closely following how the new rules and regulations will impact both the cannabis industry and the local market.

Hemp & the Controlled Substances Act
There has been some ambiguity regarding the legality or applicability of the Controlled Substance Act to the growth of hemp and the manufacture and sale of hemp products, including products with cannaibidiol (CBD) that contain less than .3% THC. In certain states, police have informed manufacturers of products containing CBD oil that such manufacture/sale is illegal. Recently, the Drug Enforcement Administration has taken the position that hemp-derived CBD oil is illegal, even if it does not contain THC. We look forward to more clarity (hopefully) in both practice and procedure at the state and federal levels.

Scaling Marijuana 
With 2018 being an election year, we anticipate more states either adopting medicinal and other recreational marijuana programs, or expanding the scope of programs currently in place. New Jersey’s governor and legislature have both indicated a willingness to legalize recreational marijuana use through the legislative process in 2018, with bills already being prepared in preparation for the start of the next election. Will New Jersey be the next big recreational market, and the first to become so via the legislative process?

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Burns & Levinson LLP | Attorney Advertising

Written by:

Burns & Levinson LLP
Contact
more
less

Burns & Levinson LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.