Although cannabis is still classified as a controlled substance at the federal level, New York State recently enacted the Marijuana Revenue and Taxation Act (MRTA), a law legalizing adult-use cannabis within the state. Questions abound, however. When will all five members of the Cannabis Control Board be appointed? When will the Board, once appointed, establish regulations including with regards to the licensing and application process—and what kinds of licenses will be available? Practically speaking, will landlords be willing to take on the risk of leasing space to cannabis cultivators, processors or dispensaries—and, if so, what are some of the issues that will arise in negotiating leases to cannabis operators? What constraints does the MRTA place on the location of these businesses?
The legal cannabis industry in the U.S. is growing at an unprecedented rate and is projected to reach $73.6 billion by 2027. While federal law still classifies marijuana as a Schedule I drug, many states have legalized both medical and recreational marijuana. As state restrictions ease, new business opportunities continue to emerge. On the Policyholder Pulse blog, colleague Ashley Cowgill provided a thorough exploration of insurance options, including one of particular relevance for readers of G2G:
Property insurance generally protects a business in the event the business’s property, including, equipment, storage facilities, or signage is damaged or stolen. Property insurance does not, however, typically cover property in transit, or property belonging to another person. Thus, once the product is out for delivery, a property policy will generally not provide coverage if the product is lost or damaged.
For the full list of insurance coverages options that cannabis delivery services may want to consider, click here.
Throughout 2018, we have discussed the implications of the legalization of marijuana on the real estate industry. In this final year-end edition, we provide a few important considerations and recommendations for property owners, landlords and tenants when purchasing or leasing green property.
Today, our colleagues Cathie Meyer and Amy Pierce published their Client Alert titled California Enacts Mini-GDPR Effective January 1, 2020. Under the new law, covered businesses will need to update policies and procedures for responding to customer inquiries about collection, use, sale and disclosure of customers’ personal information or face stiff enforcement actions. Takeaways from the Client Alert include:
- The California Consumer Privacy Act of 2018 provides consumers with broad rights to control use of their personal information by covered businesses.
- Covered businesses will need to review and revise their existing privacy policies to make the required disclosures and to provide two methods for customers to inquire about use of their personal information.
The new law is effective January 1, 2020.
This morning, our colleagues on the State & Local Tax team published their Client Alert titled The U.S. Supreme Court Changes Sales and Use Tax Collection Nexus. In South Dakota v. Wayfair, Inc., the Court overrules the “physical presence” requirement as “unsound and incorrect.” Takeaways from the Court’s decision include:
- South Dakota law satisfies the Commerce Clause “substantial nexus” requirement based on the “economic and virtual contacts” with the State.
- The Wayfair decision does not prohibit the retroactive application of this new standard for Commerce Clause “substantial nexus.”
- The decision strikes a blow to the Court’s stare decisis jurisprudence.
Legalized cannabis use is rapidly sweeping the nation. Currently, 29 states have legalized some form of cannabis, effectively turning the majority of the United States green. In this post, we will take a closer look at some of these green states and discuss cannabis real estate trends across both state and country lines.
On April 30, the U.S. Court of Appeals for the Ninth Circuit issued an unpublished order in Hemp Industries Assoc. v. U.S. Drug Enforcement Administration, et al., denying the Hemp Industry Association’s (HIA) petition seeking review of the DEA’s Final Rule establishing a new drug code for marijuana extract that went into effect on January 13, 2017.
Denying the petition, the Ninth Circuit noted that
“A party may petition a Court of Appeal for review of a final DEA decision, 21 U.S.C. § 877, but if the party fails ‘to make an argument before the administrative agency in comments on a proposed rule,’ they are barred ‘from raising that argument on judicial review.'”
The cannabis industry–both recreational and medicinal–is one of constant development, with a litany of obstacles. Even since December of last year when we began our series on the legalization of marijuana and its correlation to the real estate industry, new wrinkles have emerged, which may have an effect on future cannabis real estate deals.
California rang in 2018 as the largest legal marketplace in the country for recreational marijuana when it implemented the Medicinal and Adult-Use Cannabis Regulatory Safety Act (“MAUCRSA”). As we discussed in Part 1 and Part 2 of this blog series, while California’s real estate industry is budding with recreational marijuana, negative side effects are inevitable. In this Part 3 of our five part blog series on the legalization of marijuana and its correlation to the real estate industry, we discuss what has changed since January 1st, what still needs to be done, and how the real estate industry has been impacted.
The real estate industry has been on a high after the legalization of marijuana, but as we examined in “Part 1: The Real Estate Bloom,” getting involved in this budding industry comes with risks, the majority of which stem from marijuana being listed as an illegal Schedule I drug under the federal Controlled Substances Act (CSA). Under the CSA, it is illegal to possess, cultivate, and/or sell marijuana or to “knowingly open, lease, rent, use or maintain any place … for the purpose of manufacturing, distributing, or using any controlled substance.” Additionally, under the Comprehensive Drug Abuse Prevention and Control Act, the federal government is allowed to seize property that is connected to illegal drug activity. This federal illegality opens up the marijuana industry to a number of vulnerabilities. Indeed, federal prosecution of marijuana activities has been relaxed after the issuance of the Cole Memorandum, which instructed federal prosecutors to only focus its efforts on certain issues related to the legalization of marijuana in the states. Such issues include, among others, preventing the distribution of marijuana to minors, preventing marijuana revenue from ending up in the hands of criminal enterprises, and preventing the diversion of marijuana across state lines. However, although the Cole Memorandum resulted in the federal government taking a hands-off approach in its enforcement of cannabis prohibition, we may see a federal push back under the current administration, which has repeatedly expressed its opposition to the legalization of cannabis.