Cannabis

Today, more than half of U.S. states have passed legislation and/or voter-led initiatives legalizing the medical and recreational use of marijuana. While marijuana cultivation, distribution, sales and use remain illegal at the federal level, the combined interests of patients, consumers, business owners, investors, and state law enforcement agencies and revenue departments have fostered unprecedented growth in this nascent industry.

With rapid development, however, comes significant uncertainty. As state agencies and local municipalities are working to develop and implement effective regulatory schemes and procedures, businesses, investors, landlords and lenders are in turn striving to take full advantage of emerging opportunities without incurring unnecessary risk.

At Clark Hill, our attorneys have been involved in the industry since the earliest days of the recent legalization movement. From our offices across the country (all of which are located in states that have approved marijuana use in some form), we have advocated for industry groups, trade associations and other clients on a range of legislative initiatives and regulatory policy matters. We have helped draft numerous statutes, ordinances, ballot measures and referenda, and have litigated related election law disputes.

We provide comprehensive, cross-disciplinary counsel to growers, processors, caregivers, transporters, lenders, investors and other cannabis-industry clients on issues familiar to companies in any sector. Our guidance is further refined by our deep understanding of the complex, nuanced and often-conflicting requirements of federal and state law enforcement officials and regulatory agencies. 

We have significant experience advising clients in the following, among other areas:

  • Banking and finance
  • Business formation, investments and governance
  • Corporate restructuring and bankruptcy
  • Data privacy
  • Environmental law
  • Government relations and legislative advocacy
  • Insurance and reinsurance
  • Intellectual property
  • Labor and employment
  • Litigation and dispute resolution
  • Occupational health and safety
  • Product liability
  • Real estate and construction
  • Taxation and tax controversies

As industry thought leaders, we have made numerous presentations to interest groups, trade associations, and state and local legislative bodies, and have written a number of articles exploring emerging concerns, court decisions, and regulatory and legislative developments at the local, state and federal levels.

Experience

Represented a client in litigation in Michigan relating to a cannabis ballot initiative in the City of Detroit. 

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Advised private-sector companies in Illinois and neighboring states on issues involving marijuana and the workplace, including the effect of medical and recreational use on employment, drug testing, accommodation of medically required marijuana usage, and drafting policies and procedures to comply with conflicting federal and state laws. 

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Counseled Arizona employers and employees on employment discrimination matters relating to individuals’ status as medical marijuana cardholders, including drafting policies, advising on specific situations regarding applicants and employees, and representing clients in disputes involving alleged discrimination based on physician-approved use of medical marijuana. 

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On behalf of landlords and tenants, reviewed commercial leases for medical marijuana dispensaries. 

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Advised on municipal regulations, drafting ordinances and zoning issues for a property management company.

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Represented investor in purchasing an ownership interest in a business operating medical cannabis cultivation and dispensary facilities in Illinois pursuant to the Illinois Compassionate Use of Medical Cannabis Pilot Program Act.

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Represented cannabis industry participants, including dispensaries, targeted in California Proposition 65 lawsuits. 

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Represented clients leasing space to growers in the San Francisco “green zone” and have advised landlords in municipalities across the state as local governments review zoning laws to ban or allow commercial indoor or outdoor growing operations. 

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Represented architects and engineers involved in the design work for cannabis-growing and processing facilities — which involve the same security, technology and engineering challenges found in pharmaceutical plants and other industrial-process facilities — as well as planning for safe decommissioning of these operations. These matters frequently include conducting legal and regulatory risk assessments, negotiation of contracts, insurance and risk management, and construction issues

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Advised businesses and municipalities on a range of zoning, economic incentive, and federal and state tax matters relating to legal marijuana operations in Michigan. 

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Represented a newly formed Michigan limited liability company, in its efforts to purchase land, obtain appropriate local zoning and seek third parties to obtain licenses under PA 281 for medical cannabis-related activities. 

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Advised potential investors in a new business venture, including raising $15,000,000 in capital, that would have as its purposes the purchase and outfitting of improved real estate to then be leased to growers under PA 281.

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Helped owners, investors, lenders and financial-services providers address the enforcement priorities of federal agencies, including the U.S. Department of Justice and the Financial Crimes Enforcement Network (FinCEN). We conduct comprehensive due diligence to ensure that businesses are duly licensed and registered and follow standard practices for the sale of recreational and/or medical marijuana. We also monitor business activities and public sources to identify suspicious activity or other red flags. 

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In connection with its receipt of two medical marijuana dispensary licenses in Pennsylvania, have advised a client on formulating its application and appeals with respect to these licenses, capital-raising documentation, media “right to know” requests, real estate transactions and zoning, and employment matters. 

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Advised a client engaged in establishing a grower operation and a potential retail shop in Bangor Township, Michigan. 

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Advised a number of not-for-profit owners of medical marijuana dispensaries in Arizona, including negotiating leases for dispensaries and cultivation sites and providing services to permit holders, and have counseled on capital formation, banking issues and business disputes on behalf of cannabis-industry clients. 

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Defended a number of trademark infringement actions in federal court relating to the sale of alleged Zig Zag knockoff products. 

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Advising clients regarding federal and state financial institution regulations in the context of providing services to cannabis-industry participants. 

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Represented a Philadelphia client in its application for a Pennsylvania Department of Health Medical Marijuana Grower/Processor Permit, including working with an outside lobbyist to help draft an affirmative action plan required by the Department. 

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Represented California clients in cases involving corporate control disputes medical dispensaries now operating as non-profit mutual benefit corporations make the transition to for-profit companies. 

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Served as an elected City Council member in Pleasant Hill, California, where the municipality is considering land use and zoning legislation to address commercial and medical cannabis sale and grow operations. 

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Advised medical marijuana businesses in Michigan on entity formation and organizational structure issues.

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Represented a condominium owner fined for smoking medically prescribed cannabis in her home, arguing that the interests of residents, owners and condominium boards must be balanced.

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Advised growers, producers, retailers and others in the cannabis industry on tax issues arising during the formation and structuring of corporate entities.

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Represented landlords and property managers with respect to cannabis-industry facilities in Michigan. 

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Advised a client on issues relating to operating as a secured cannabis transporter. 

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Representing a client in Oregon in a dispute involving the alleged failure of a million-dollar cannabis oil extraction machine to perform as claimed. 

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Advised employers on drug testing and medical marijuana issues in the workplace. 

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Represented a number of California-based cannabis-industry businesses, including growers, processors, landlords of growers and dispensaries, and software developers, on a range of real property issues, as well as related regulatory matters and non-real property litigation. 

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Advised clients on federal tax issues under Internal Revenue Code Section 280E, which limits the deductibility of certain business expenses in connection with the sale of drugs that are illegal or regulated under federal law.

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Represented Arizona cannabis retailers and growers with respect to business formations, governance, vendor agreements, licensing, acquisitions and other transactions. 

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Represented a Pennsylvania medical marijuana company in a “right to know” case

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Advised an Arizona commercial growing facility and associated dispensary on the dispensary certificate application process, various corporate transactions, regulatory compliance, litigation, and Department of Health Services matters. 

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Represented a client in Fort Bragg (Mendocino County), California, in a corporate dispute, successfully restoring control of the operations to our clients.

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Represented a dispensary in Oakland, California, in a business dispute regarding the termination of the contract with its management company and defending claims made by investors in the management company. 

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Attended several programs reviewing legal and regulatory issues in the California cannabis industry as the state prepares for recreational sales beginning in January 2018. 

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Researched Arizona cannabis law and requirements for dispensary applications. 

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