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November 01, 2022 Practice Points

Cannabis Considerations: A Brief Overview of Our Regional Cannabis Conference

Key takeaways from a day of lively debate and thoughtful discussion.

By Julia R. Emfinger

On September 12, 2022, the Real Estate, Condemnation, and Trust Committee of the ABA’s Litigation Section hosted a Regional CLE Program at the offices of Greenberg Traurig, LLC, in Chicago. The program focused on cannabis law. Throughout the course of the day, speakers participated in panels on a variety of topics, including those directed at business considerations, legislative history (including discussion of upcoming legislation or referenda which could expand legalization to new states), litigation trends, employment considerations, ethical issues, and real estate specific challenges to operating in the cannabis space. Speakers included members of academia, in-house counsel for cannabis businesses, and lawyers in private practice experienced with cannabis law.

The conference—unlike many CLE presentations—involved lively debate from both the panelists and attendees, reflecting the deep commitment and passionate interest the participants have for this emerging area of the law. While it would be impossible to fully summarize the information presented at the conference, here are some high-level takeaways.

One of the biggest legal and business challenges to starting or operating in the cannabis space is the necessity for businesses to operate outside any federally regulated financing or banking institutions, since cannabis is still illegal at the federal level. As a result, many businesses are forced to structure themselves to segregate “plant-touching” activities (cultivation, production, manufacturing, and sales) from other activities (marketing, branding, and HR), to broaden the opportunities to obtain financing for at least some business activities. Furthermore, businesses may find it easier to get financing from smaller, state-chartered institutions, such as credit unions, as opposed to federally chartered institutions.

Also, because cannabis is still federally illegal, the answer to many legal challenges that businesses face is often “depends on the state.” States that have legalized cannabis for either medical or recreational use have adopted a wide range of approaches and regulations. For example, the requirements for getting licensed vary from state to state; so too do banking regulations, which result in financing being easier to obtain in some states compared to others. Issues specific to real estate, such as the ability to obtain title insurance for property that will be used for a cannabis business, are also highly dependent on state law. Whether employers can terminate an individual for using cannabis is also a function of state law. Although this final consideration might not have an impact only on cannabis businesses, regulations of this sort often reflect a state’s tolerance for cannabis use by citizens, which in turn impacts cannabis businesses.

There are several potential and proposed changes to federal law that are being considered and that could change the landscape dramatically, making cannabis businesses subject to more uniform treatment across the country. There are two proposed reforms, which would offer comprehensive changes to federal cannabis regulation, the Cannabis Administration and Opportunity Act (CAOA), and the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. The CAOA would remove marijuana from the Controlled Substances Act, and the STATES Act would exempt business from federal enforcement if those businesses are in compliance with state and other local laws and regulations regarding cannabis. While neither of these pieces of legislation are likely to be passed in the near future, they represent a changing attitude toward the use of marijuana.

Other piecemeal reforms at the federal level are more likely to be successful. The Secure and Fair Enforcement (SAFE) Banking Act would prevent federal banking regulators from taking negative action against banks that provide services or lend money to legitimate cannabis businesses. The Capital Lending and Investment for Marijuana Businesses Act would expand on the SAFE Act to allow even greater access to capital and financial opportunities that are more in line with other regulated industries. The Veterans Equal Access Act would permit doctors operating within the Department of Veterans Affairs to discuss medical cannabis with their patients. Because these regulations are narrower in their scope than CAOA or the States Act, they enjoy greater support and are more likely to be passed relatively soon.

Finally, the conference included discussion about the ethical considerations involved with representing clients in the cannabis space, and a panel on assistance for attorneys who are struggling with substance use disorders. These panels rounded out the topics to provide a comprehensive and thoughtful day of learning.

Access the recording with the passcode wL0A#FzU.

Julia R. Emfinger is a shareholder with Greenberg Traurig, LLC, in Chicago, Illinois.

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