Attorney Insights on the Cannabis Industry 2024 | Ask Us Anything

Attorney Insights on the Cannabis Industry 2024 | Ask Us Anything

Recorded Live January 10, 2024

[00:00:00] Vince Sliwoski: Welcome to the webinar, it’s an ask us anything webinar on attorney insights in the cannabis industry. My name is Vince Sliwoski. I’m a transactional lawyer here in the Portland. Office of our law firm. And I have two co panelists today, you’ll see on your screen, the other guy with the blue shirt, Jesse Mondry.

He’s a litigator who’s sitting here just across the way from me in Portland. And then the guy who didn’t wear a blue shirt, I don’t know why Griffin Thorne in our Los Angeles office. And he’s a transactional lawyer like me, and we all work a lot together. We thought it’d be fun just to kind of sit here and brainstorm.

And I can tell you that we have done like no preparation for this webinar, which is kind of neat. You’re just going to hear like the unvarnished, like off the top of our heads, here’s how we’re thinking about this. I don’t think we need to prepare a lot because we do this stuff all day, every day, but we want it to be kind of open ended.

And if you have questions, please do feel free to type them in because we’d love to entertain them. So, without further ado, I just kind of, I want to kick it off with a general question of my own. That I think Griffin, maybe if you wouldn’t mind answering or just sort of setting us up for today, what are sort of, what’s the state of the industry today?

What is going on right now? You’ve been doing cannabis law for a long time. Like me, what, what are your just general big picture, 10, 000 foot reflections on the industry right now?

[00:01:25] Griffen Thorne: It’s not doing very well. Well, I think, that just as a whole, many companies are failing or on the verge of failing. It’s overtaxed. And look, I’m not trying to be, pessimistic, but realistic here based on our experience, you know, a lot of, there’s a lot of, hurt going on right now. And, you know, at the same time, there’s a potential for big changes on the horizon this year, like rescheduling and things that would change, which I.

No, we’re going to talk about today. and things like major tax changes. There’s state level. I mean, every state different, but in California, where I practice house practice in Washington and other states, like there’s big changes on the horizon at the state level. So I think, you know, if I had to put it in a very short sentence, I’d say that there’s.

A lot of pain. We’re on the horizon of potentially big changes that could bring a lot of good to the industry.

[00:02:20] Vince Sliwoski: Maybe, maybe then I can kick off with, yeah, or follow on your comments and just talk about some things that we might be seeing in 2024. And if you guys have any sort of comments, just cut me off or weigh in, because these are, these are just some off the top of my head ideas, but.

You know, in my view, the way to start talking about this would probably start talking about federal issues, right? just because if things change at the federal level, things are going to change at the state level and it’s kind of, it’s, it’s the fundamental basis or the paradigm that we’re operating in.

I think the biggest news in my view, stems from a recommendation that happened last August, which was this health and human services Letter to the Drug Enforcement Administration, telling them that marijuana ought to be moved from Schedule 1 to Schedule 3 of the Federal Controlled Substances Act, right?

That was really big news. And as far as we can tell, things are moving along. There was some news on that this week. DEA or HHS, excuse me, DEA confirmed they got the HHS letter and they’ve been kind of proceeding apace and I don’t know how long that’s going to take. The smart money is now saying, you know, if we have rescheduling at all, it probably won’t occur until this fall after the election.

So, you know, can still be a 2024 development. And it’s an uncertain and can be as circuitous process. There could be litigation around it. There could, we could not end up at Schedule 3. DEA could ultimately say, you know, we don’t really care what you said, HHS. We’re not going to do it. DEA has ignored other sort of federal missives before.

So, I think that’ll be like the biggest story to watch. And the reason that it’s the biggest story to watch is not just the general reason that it’s kind of the biggest change or potential change in federal law and policy in the last, I don’t know, 40 years on cannabis, but. It would be the practical stuff that comes from it.

So I always highlight as a business lawyer, the changes that we’d see to the tax code, and specifically to marijuana businesses, there’s an onerous provision called two 80 E you guys have probably heard that buzzword, which would no longer apply to cannabis businesses if they’re trafficking in a controlled substance still, but only on schedule three.

and that, you know, would have the collateral effect of making all of these tax paying businesses margins better. Ideally, they’d be able to attract more investment. You’d think that they would. And it’s going to be just like a general, like, fairer sandbox for the industry to play on that we treated more like, you know, coffee shops or restaurants or everybody else, that has a business in the U. S. that doesn’t have to pay taxes where they’re not allowed to deduct a lot of their ordinary and necessary business expenses. So the tax thing is a really big issue that would come with rescheduling. there’s others. There would be new avenues for research. We did have a cannabis research bill passed.

I think that was in 2022. Maybe it was 2023. that changed things just a little bit, but when a drug goes down from schedule one to schedule three, the doors are kind of open. And I, you know, some people complain about that and say, we don’t want big pharma moving in and all that. Well, I always say too bad.

Cannabis has already been researched like crazy anyway, and this will just make it more normalized. moving to Schedule 3 would have lighter criminal penalties, obviously, for anybody who’s apprehended by the federal government, thinking more about, like, traffickers now, and, like, sort of larger scale quote unquote cannabis crimes, because there aren’t many arrests at the federal level for simple possession, but it would just, it would have that ripple effect of changing all sorts of things.

you also might see other stuff happen at the federal level. Biden has been pardoning people. He went in October and did some of that and then he did it again in December. I was kind of critical or maybe unimpressed about those if any of you guys follow our blogs, but it’s movement and it sort of can send a message.

, we also might see attention. I’m sure we’ll see attention actually to a banking bill again. There’s always the safe or safer banking act kind of being batted around and moving through Congress. It passed the house. What is it guys? Like seven, eight times. I don’t even remember anymore. And it got it.

Yeah. And it never makes it over the hump. It gets a little further every time. This time we actually got through the Senate Judiciary Committee. Which is big news and it, you know, almost got to a floor vote. You would think this kind of thing would pass. Everybody wants it to pass. I think the issue for this year is just who controls the house.

And is that going to get to a floor vote? And, you know, if the composition of Congress changes after the elections, that obviously changes the analysis. So. We’ll see if there’s progress on that. I’m my, I’ve kind of open minded on if that’s necessarily a good thing for industry. I think we’re going to have like a lot new banking regulations and things like that for.

The banks that choose to deal with cannabis businesses, if the safer banking act does pass, and that can be a good thing or a bad thing, be careful what you wish for a lot of these businesses already are banked and doing okay, it would be nice for them to be again, treated more normally, but I’m just not sure if this concept hasn’t been oversold at this point, we’ll also just see general introduced federal legislation again, stuff like the more act, the safe.

Safe. I can’t remember what it’s called. I don’t know. It’s the state’s reform act that that’s another piece of legislation. I’m not going to kind of go through with each and every one of these pieces of federal legislation does or would do. Some are a little more conservative. Some are more liberal and have like social equity components and things like that.

and we, you know, we’ve seen some of them do pretty well. The More Act actually passed through the House already a couple of years ago. That was under Pelosi. But you see Congress sort of thinking and talking about these things. And to the extent Congress can get anything done, you know, maybe one of these bills could pass.

And that’s sort of a separate and distinct paradigm or analysis from HHS and DEA moving to reschedule, marijuana down to schedule three. So, you know, that’s my really high level survey of like what we might see federal stuff going in 2024 exclusive of hemp, which I want to sort of talk about separately and later.

Do you guys think I missed anything or do you have anything to say? Did I say anything that you disagree with?

[00:08:41] Griffen Thorne: Yeah, I mean, I think at the end of the day, well, there’s a lot of chaos and confusion about what rescheduling wouldn’t do. and so does that mean there’s even been a few questions here about rescheduling related things?

So somebody asked, and it’s probably about my comment about the industry not being in a great place is bankruptcy an option? And the answer is currently no. we’ve helped businesses do alternatives to bankruptcy, like going through receiverships and things of that nature. But no, bankruptcy is not on the table.

Well, as long as it’s. As long as law is what it is, someone else asked, is Congress have the ultimate authority to make the final decision over the DEA? And the answer is yes, but they’re completely inept and unable to do it. As Vince was saying, there’s been, you know, in the last few years alone. A half dozen attempts at getting something passed and you just can’t do it, right?

So that’s why this administrative process is underway. and you know, DEA could decide or not. I, unlike Vince, I do think there will be movement this year, before the election because I can’t imagine the president isn’t going to lean on the DEA to do something. I mean, there’s, it only benefits him to, to change scheduling and it.

You know, doesn’t really besides 280e. It’s not the magic cure all that a lot of people make it out to be So I think it’s like a net benefit almost no matter what to him without really shaking things up too much because Schedule two or three or four any schedule isn’t going to completely legalize state markets In fact, they’ll still violate the controlled substances act.

and at the same time Moving it down to a different schedule doesn’t like ultimately bring pharma into the picture, doesn’t automatically bring them in rather, because it’s not like there’s approved smokable cannabis drugs, right? It’s, that kind of stuff is way down the horizon. and to Vince’s point, yeah, there could be research formulations that are developed at a later date that are, they’re FDA, but just, it’s really not going to change all that much except potentially tax if we land on schedule three.

So I think it is going to happen. I also should say that a lot of the talk, as I understand it is speculative. Like, we know there was a recommendation made, the documents have been released, but they’ve been redacted to the point where it’s they’re completely useless. Right? So we know that a rescheduling recommendation was made.

And it’s been reported that it’s to Schedule 3, but that’s, I mean, I don’t think there’s been an actual document released to the public showing that, right? So it’s just what reporters have heard from sources. And so we all need to take that with a big grain of salt. The recommendation could have been to Schedule 2, for all we know.

And like Vince said, the DEA could just say, hey, you know what, We like getting funding to fight marijuana. We don’t want to give that up. And so we’re just gonna keep things as they are and claim that this stuff doesn’t have a medical benefit despite, you know, the mountains of evidence to the contrary.

[00:11:37] Vince Sliwoski: Yeah.

Go ahead, Jesse. Just to just kind of, I

[00:11:42] Jesse Mondry: think to Griffin’s point that the rescheduling is not sort of this cure all, you know, going back to that bankruptcy question, if it’s, even if cannabis or marijuana is rescheduled, you know, downwards, that’s not going to some, that’s not going to, to my knowledge, allow cannabis businesses to, file for bankruptcy.

So, it doesn’t sort of do anything to help that sort of distressed part of the industry in terms of providing remedies. Rescheduling is not going to do anything for that. And so that’s, you know, sort of another limitation of what their rescheduling is.

[00:12:11] Griffen Thorne: Vince, what do you think about rescheduling and 280e reform?

Is it going to be proactive only or retroactive? Prospective, my bad.

[00:12:19] Vince Sliwoski: I’ve asked a few CPAs about that. I mean, I think the general position that businesses should be taking is it’s not retroactive. I wouldn’t bank on it being retroactive. It seems like kind of a contorted reading of how You know, the IRS works and if the IRS sort of came out and expressly said, well, you know, we’re going to do this or that with a policy statement or something, then yeah, that’d be right track and it would be great.

But, you know, this isn’t happening via an act of Congress, but that happened via Congress and Congress were the one moving it to three, then they could write in that law and all sorts of Tax liability shall be retro blah, blah, blah, and deal with it. But I think it’s going to be on a go forward basis, essentially.

So if you’re, if you’re thinking, maybe I’ll just hold off on filing a tax return for a year or two until this thing gets ironed out, I’m not telling you to do that or don’t do that. I’m telling you to talk to your CPA about that, but I wouldn’t be like holding out hope desperately that my tax liability is going to be forgiven for everything up prior to the point of rescheduling.

The other thing I’d say about it is there’s this funny like misconception sometimes that I get with people talking about what Schedule 3 means. Schedule 3 is still totally illegal guys, like it’s, it’s, it doesn’t mean like you can do whatever you want with cannabis. It doesn’t open up interstate commerce.

It’s like, and the way that I sort of explain that to people, and it seems to hit home more as I say, look at other drugs that are on Schedule 3, right? There are a lot of other Drugs that we all know what they are, and they’re on Schedule 3, and people aren’t out there openly trafficking in them, right?

Codeine is on Schedule 3, anabolic steroids are on Schedule 3. If marijuana were moved to Schedule 3, it would be very analogous to, you know, if I were to walk down the street in Portland and be able to go to a codeine shop and just buy some codeine that I wanted to use at home, or buy some steroids, or any other number of drugs that are on that schedule.

So. Marijuana will have that status. It will be verboten, but it will just still be all these people in states kind of flouting federal law and trafficking in a schedule three substance rather than a schedule one substance. And just because it’s three, it’s slightly better on the tax. It’s a lot better on the tax side and it’s slightly better on the criminal side, but it’s not full reform.

It’s not what a lot of people want to see, right? A lot of people want decriminalization. They want marijuana to be treated like. Drugs that are more harmful, alcohol, tobacco, like those things aren’t on any schedules, right? Why not? Well, they should be, you know, if we’re applying the proper criteria, but marijuana won’t have that status.

It won’t be a free for all. It will still be heavily controlled

[00:14:52] Griffen Thorne: to add to that. Vince. I think some people go the other direction and say that by putting it on schedule 3, it actually is going to kill the industry because it’s The federal government would then, you know, say, Hey, all these crazy regulations that apply to like ketamine type drugs now suddenly need to be applied to cannabis.

And so any state programs illegal, right? I don’t, I don’t see that happening because why would they look good? Well, one is much more aggressively regulated and prohibited. And so, why would they go through the effort of reducing penalties and everything only to then enforce it against the industry?

Right? Completely illogical to me. so I, I think that in all likelihood, the federal enforcement priorities aren’t going to change much, if rescheduling happens. Like, they won’t make it worse for the industry. If anything, it’ll make the tax versions go away and it’ll make some of the other concerns go away.

It might make banking easier, it might make bigger banks less hesitant to get into the space, although probably not, at least at first. but yeah, it’s, it’s, I I don’t see it as, as being like the industry killer that a lot of people predict it. It could be.

[00:16:05] Vince Sliwoski: Do you, I know a lot of people to complain and I’ve touched on it briefly about like the sort of research and pharma aspect of this and FDA specifically and they’re saying, Oh God, now FDA is going to come and regulate and ruin everything.

And, and you actually, I should ask you specifically Griffin, cause you do a lot of ketamine work in the firm and that’s a schedule three drug. What do you think about that argument that people keep making about FDA as a bogeyman essentially and coming to crush the industry in a sense, if we go to schedule three?

[00:16:36] Griffen Thorne: I mean, I, I guess nobody really knows yet what they’re going to do. anyone who’s been in this space long enough can remember that when Trump signed the farm bill in 2018, the same day the FDA came out and said, you can’t do anything with CBD basically. and I’m paraphrasing there, but you know, it was literally the same afternoon.

And so, You know, you got to remember what FDA has authority over, food, drugs, dietary supplements, et cetera. I, I mean, depending on how cannabis is marketed, obviously it could be construed as a drug. are they going to, I just don’t know. Nobody really knows yet. They haven’t, as far as I know, commented publicly.

At the same time, like, what’s pharma’s involvement going to be in this? We don’t know yet, right? So, Like I said a second ago, you can’t get a patent. You’re not gonna be able to get a patent, like a pharmaceutical patent, on smokeable cannabis flower, right? Something that exists naturally is forever, right?

So, but there could certainly be new drugs developed. They, you know, that are derived from cannabis that there are medical patents on in the future. I mean, it’s happening right now, with psilocybin. It’s happened in the past with, what is it called? Marinol? And so Marinol. Yeah, so I don’t really know.

I don’t really think that there’s a risk that Big Farm is going to come in and shut down recreational dispensaries in San Francisco. But I mean, I think that the FDA could make things difficult for everybody as it’s done. Right. Quite recently. I mean, and people are asking is, is this, could this be regulated by ATF or other agencies?

Like, yes, if that happens through Congress, not if it happens through the DEA, right? The agencies don’t have power. They can only act like, think of it like an upside down triangle, right? You have a law at the top and it says, this is what you as the agency can do. And so you only can act within that cone of, of, of authorization from Congress.

Right? So, The DEA can’t, like, create a regulatory program within a different agency, but if Congress says, hey, we want to legalize cannabis, like we did with hemp, remove it from the Controlled Substances Act and put regulatory authority in the states as overseen by USDA, ATF, whatever, some new agency, whatever, yeah, that’s possible.

But if we just go through this administrative process, no, that’s not going to happen. And DEA has never, I mean, I don’t want to say never, but can you ever imagine a situation where they’re going to say, we’re going to create a program to like allow states to sell cannabis legally within the DEA rules. I don’t see that happening.

it’s not even their mission. Their mission is to create a closed loop drug regulatory system. So yeah, I don’t, I don’t, I don’t know. Congress just, they literally can’t do anything right. They, this should be a simple issue to figure out. And, You know, it’s just, it’s proven to be impossible.

[00:19:32] Vince Sliwoski: Well, let’s, let’s switch tacks just a little bit.

And we’re getting a lot of interesting questions. Let’s talk about, States. Just for a minute. what do we think about, do we see, have you been, maybe I’ll ask this to Jesse, do we see any states coming online, new states in 2024, big developments at the state level, irrespective of all this federal noise?

you know, I’m

[00:19:57] Jesse Mondry: up to speed on some of it, but not all of it. You know, I think and I think that the what we see out, you know the East Coast. It’s increasingly kind of happening everywhere. The programs are starting to be more successful there. So those ones are sort of online, and I think we’re starting to see some movement even in the southeastern states, but I think it’s much slower there.

It’s happening sort of on the medical pace when we look at the Mississippi type places of the country and things like that. I think the big one that you know is in the news or that people are talking a lot about in the industry is of course, Minnesota. And I think that one is it’s moving slower. I think then.

Yeah. Then the industry would like it to, and especially people in Minnesota. I went to law school there, so I have, I have some, you know, familiarity with the place. And there’s a lot of people there who are kind of, they’re chomping at the bit to get into this. But the state’s moving pretty slow. you know, I don’t know if you, for folks who haven’t been following along that well, they, you know, last year, the program, you know, was, They’re still in the, they’re still in the phase of drafting regulations.

I think right now the Office of Candidates Management is seeking input on packaging and labeling requirements. They’re not anticipated to start accepting, license applications till maybe May of this year, but I can see that getting pushed back, there’s sort of a regulatory or, you know, oversight gap right now.

The first, Person that, the governor appointed to be in charge of the office of cannabis management ended up having to resign a few days later for allegedly. I think, you know, T. C. A. or something like that. I know hemp products that are beyond the legal limits. And so, you know, the, the agency is moving forward at a lower level and.

I think the Oregon Public Broadcasting recently put a report that they expect the legislature to revisit some of the, some cannabis rules and regulations, maybe looking at insurance requirement for these businesses, talking about the liability is going to be like, so I think that’s the big one that’s coming along, along there,

[00:21:48] Vince Sliwoski: along, just really, really big picture.

I don’t, I just, so I understand it is, is, is that program, it’s, it’s an adult use program, but also is it. Is it like Oregon where I’m sitting, where it’s just kind of like at the beginning anyway, there’s like unlimited license numbers and anybody can come in. Anybody can invest from anywhere you’d be from Mars.

We don’t care. Is it kind of a wide open program or how’s it shaping up so far?

[00:22:14] Jesse Mondry: Yeah, that’s a good, that’s a, that’s a great, so on the, sort of the big picture, I think, Minnesota state is, looks a lot different than the Oregon program. And it’s a bit of a. Sort of a conservative mix. I think that, or I would sort of look at some of the aspects of Washington, some aspects of Colorado.

So a big picture of the, there’s a Minnesota is doing like 14 different license types and they’re trying to avoid sort of the idea of big difference, sort of vertically integrated shops coming, coming into it. There are limits on sort of the number of licenses that you can own the square footage of canopy, you know, who can sort of, control the sort of production from the ground up.

When you can go really small scale to where you can get things that you can’t get an organ, like, for example, I can sort of if I had a small farm and I wanted to run a micro cannabis business, I could have that and sell the flower there and people could come and smoke it there. They’re also doing event licenses and public spaces where you can go and consume marijuana.

So, you know, that’s part of the good thing. so I guess 1 of the things I think that might be different as Minnesota comes online is we may not see the. The flood of sort of large scale investment capital that we saw in Oregon, you know, with the, with the Canadian public companies and things like that coming in because Minnesota system is designed to sort of not, not sort of have the big, you know, big players like out here in Oregon.

We’ve got, you know, their name escapes you right now, right? The place that owns like dispensaries. I don’t think you’ll even be able to do that in Minnesota. Right? And so I think that’s, I think it’ll, you know, I think there’s going to be a lot of opportunity there, you know, along this, particularly the metro areas when you get out of state, they’re allowing the counties to sort of do some regulation in terms of limiting businesses, but you can’t ban it entirely.

If you want to really limit it, you still have to allow I think it’s. At least one dispensary per 12,000 people, you know, in your county. So when you go out to sort of, you know, northwestern Minnesota or northern Minnesota, like, you take maybe Itasca County, you might be able to have, say, two or three dispensaries and they can cap it at that.

but, you know, down in Minneapolis where I expect they’re not going to put any caps on it, you can have, you know, you know, no limit to the number of people that can try to take a chance of this. So I think, you know, I think it’s just something to kind of keep them along the lines and watching and see.

I think a big question is going to be when do they open up the licenses and how are they going to do the license scoring? And I think that’s where we’ll start to see. You know, on the litigation front, similar to when, Oregon and California and Washington, you know, Illinois and everywhere started to legalize.

Some of the first litigation is about, you know, how did the, how did they do the scoring to see who gets the license? You know, who is, you know, challenges about land use and all these kinds of things. So that’s kind of, I think, the big exciting one that people are talking about.

[00:24:56] Vince Sliwoski: I always tell people that things just tend to slow down, like these things.

I mean, we saw it in New York. We’ve seen it so many times in places like these programs seem really promising and I hope it works out well for Minnesota and everywhere else, but it just. It’s just a slower process and things get delayed. And I mean, some are better than others, but I, if I were somebody looking and being all excited about a state like Minnesota, I would be all excited, but I would also kind of watch everything pretty carefully because it’s the old, it’s the old thing.

If you start raising a bunch of money now or paying rent now, or some, I mean, I’ve seen people do stuff like that. And it’s, you get into this, the old pioneers get slaughtered and all those types of things. It’s worth, it’s worth taking a measured approach. There will be opportunities there, but that’s kind of my old guy.

Sort of think trustee guidance on that stuff. I don’t know if you guys agree. Is New York sort of still

[00:25:45] Jesse Mondry: on almost on hold with some of their programs? And that’s just a result of the initial litigation that came right out. And so we’re, you know, what about a year and a half in into that when we thought New York was sort of be online, right?

And it’s and it’s just way.

[00:25:57] Vince Sliwoski: It’s coming in fits and starts and little pieces, but it’s nowhere near what it should have been there by now or where it was promised to have been by now and yeah, it’s being, it’s a morass of litigation and a lot of the states have sort of suffered those fates and their heart issues and sometimes I wonder why states don’t learn from watching other states and certain, like some of the things that they did in New York was just like, are you kidding?

Like, as we were watching it in real time, we were like, you are messing this up and I hope, you know, Minnesota doesn’t do that and I hope they learn.

[00:26:25] Griffen Thorne: I don’t think it’s possible for a state to get it worse than New York. I mean, I always thought California’s regulations were some of the worst regulatory programs in the country of anything, but New York has proved to be quite worse in many respects.

And I’ve done deals there. It’s, it’s complicated to say the least. And, you know, hopefully when states come online in the future, they, they learn, but I’m not too hopeful about that. As long as they don’t get as bad as New York, you know, it’s a low bar. Yeah,

[00:26:55] Jesse Mondry: it’s a low bar. Yeah, Minnesota is that they’re the, the tribes are, are able to sort of get going early.

So there’s already, you know, they’re the only ones running dispensaries in the state right now. And I think it’s Red Lake reservation, which is Northwest Minnesota and White Earth, which is sort of West Central. They’ve already have, you know, dispensaries open. And I think, Okay. So I think, you know, they’re sort of ahead of the head of the curve there, and it’ll be interesting to see if they could get, say, you know, the shock of people to walk and sue tribe, which is just south of the cities to jump in on that.

They could really kind of get a foothold in terms of being ahead of the game and things like that. From what I understand, there’s those, the ones that are open now are doing pretty well, but certainly there’s, you know, It’s the finances are incredibly opaque to see what they’re really doing, but yeah,

[00:27:44] Vince Sliwoski: somebody is asking a question.

I’m going to throw it out there. You may not know about it or have heard of it, but Griffin, you’re in California and Jesse, you’re a litigator. Somebody saying when y’all have time, can you weigh in on the new catalyst lawsuit against CDFTA in California and the viability of their petition? Do have you, have you guys come across that one or do you have thoughts on it?

It’s okay if you don’t. It’s a random question.

[00:28:05] Griffen Thorne: Okay. So we have the CDTFA, California Department of Tax and Fee Administration, does the tax, assesses taxes against cannabis businesses here. And one of the, they came out with a new regulation, I think late last year, that would change the way certain deductions are made.

And a company called Catalyst is challenging it. I’m not super familiar with the merits of the case and the arguments. I, to be honest, I haven’t read it all closely, but you know, I wish them the best. the taxes here are crazy, I’ll give you an example. If you are one day, not even a day, if you’re five minutes late in paying your taxes, you’re assessed a 50 percent penalty.

plus a 10 percent penalty, plus interest and other fees. So if you miss a 100, 000 payment because your computer froze and you entered it too late, you might end up having to pay 160, 000 plus. Again, it’s, it’s like ludicrous. And that’s not the, subject of the lawsuit, those penalties, which are baked into the state’s law.

that’s something else. I mean, my If, if anyone in this state actually cared about fixing things, they would revisit that policy immediately. but you know, that’s a different story, there’s a lot of businesses who owe almost as much money in, penalties and interest and whatnot as, as they do in taxes, which is just wild to me.

But, yeah, I, wish them the best. I think the state is in dire need of tax reform. We got some tax reform a few years ago, which didn’t end up being the, savior that people. You know, portrayed it to be, and, we need more. One

[00:29:50] Jesse Mondry: of the questions I always think about with California and you write about this a fair amount Griffin is, is that the effect of the sort of the illegal market on on the legal market and it sounds I mean, the way that California has regulated and just continue to regulate it.

I mean, there’s no end in sight. Is there it’s in terms of. Trying to sort of tamper sort of, I guess what I’d call the illegal market and have people go to the legal market. I in Oregon, you know, they’re doing a lot of enforcement down in particularly in Jackson County for it. And I think the evidence is pretty anecdotal.

Some people will say, oh, that that market is affecting the, the legal market in Oregon. I don’t see it as much. I think it’s, I think that’s Primarily stuff that’s exported that marijuana because it’s I think it’s an overproduction even of the of the legal market is what we have in Oregon here, right? I mean, it’s just drop prices through the nose.

So that’s good for consumers, I guess, in a way. But I mean, is there just any beyond the tax reform? What else do they need to do in California to Trying to make any headway, or do you think they’ve just given up

[00:30:45] Griffen Thorne: down there? I’ve said for a long time that they’ve given up. In fact, I’ve said it explicitly on our blog many times and that the regulators here, many of them probably need to just, we just need a new start.

Essentially. I think we need people who are. Open minded to changing things. I don’t think enforcement is the way to end the illegal, which, by the way, look, I read a study a year ago that said that the legal market was three times bigger than the legal market. I don’t believe it. I think it’s bigger than that because I think you also have to factor in stuff that’s leaving the state, you know, legal stuff that’s made here that leaves the state.

But even within the state. It’s not like there’s some rogue, fly by night stuff, which of course there is. There’s, like, literal illegal brick and mortar dispensaries in big cities that don’t get shut down. I mean, physical buildings with the green cross, it’s just, it’s wild that they don’t do anything about it.

That said, I don’t think that, like, the way to end that is via enforcement. I mean, I think you kind of need some degree of enforcement, which the state just doesn’t do. but I think the better way to end the illegal market is to make it Easy for people to get into the legal market. Look, enforcement didn’t work from 1970 until, cannabis was legalized here.

It didn’t work people still sold it , people just went to jail for a long time for it So why would it work now when there’s basically no penalty? It doesn’t like make any sense they need to make it, they need to basically make the taxes go way down, make it way easier to get a license, and make it way easier to comply with the regulations.

I’ll give you a great example, this is one I use all the time. We have a rule here that says that dispensaries and delivery services can only sell products between 6am and 10pm. the illegal market never stops, right? So if you want cannabis at 12 at night on a Saturday, you’re not getting it from a legal dispensary.

You’re calling up an illegal delivery service, right? There’s no rationale for that rule, as far as I can tell. It’s not in the statute. The agency just made it. There’s no reason to keep it, when you can go to the store and buy alcohol illegally until 2. When you can use an illegal delivery service, it only hurts the industry.

And I can point to 20 or 30 other rules like that. That just literally make no sense in context and don’t help anybody. it’s not like it protects children in any way. So, I mean, I don’t understand the rationale for a lot of these things. It’s so heavily regulated that it means operating is difficult.

And the average consumer who you talk to, I mean, I don’t think a lot of people understand, or even if they did, would care about buying it from illegal versus unlicensed dispensary when. For them, you pay less at the unlicensed place because they don’t have to worry about taxes, licensing, compliance, all these things.

So if the state really was, was interested in propping up the industry, it would cut taxes, it would cut unnecessary regulation and believe me, there’s plenty of them. And it would use enforcement, it would actually enforce, but against the truly bad actors, and so right now, none of those things are happening.

[00:33:48] Vince Sliwoski: Commenting it boils down to tax right now. It’s a price battle. Do you, do you think that’s the single biggest? Terrible troublesome issue in california just oppressive taxation or is it so much more than that even

[00:34:01] Griffen Thorne: it’s more than that I mean you well, first of all, it’s not just the state, right? You have 280e which could go away on a you know, perspective basis if federal law is rescheduled But we have bad taxes here in california at the state level We also have a lot of cities who do crazy stuff on the tax front.

So there’s often gross receipts tax I’ve seen it as high as 10 percent gross receipt tax. So you might be paying an insane amount of local taxes, an insane amount of state taxes, and then you can’t make deductions federally. I mean, like, how can you do business where these guys who operate illegally? 0 in taxes.

So, yeah, that’s a huge concern. I don’t think it’s the only one. I think you have the legal market. I think now another thing that’s competing with the cannabis, the state regulated marijuana industry, is these alternative hemp cannabinoid products, which is its own huge, It could be the topic of 19 webinars, but, yeah, there’s a lot of competition that these businesses have to face.

And then, like, just the fact that the regulations are so complicated that it can take a year or 2 to start operating, sometimes millions of dollars to get a facility built out. You have licensing fees, you have them. I mean, it’s just expensive, it’s not an industry that most people are going to be able to succeed in unless there’s big, big changes, which, you know, I don’t know what the federal law side is going to

[00:35:18] Vince Sliwoski: do right now.

I think, you know, I haven’t talked to you guys about this, but I’m like kind of coming around to like a really basic, simple theory of cannabis being unregulable, like at the state level, given the state of federal law. Law. I mean, I just think it’s impossible. I think these states are set up for failure and I can’t see any one state that I can honestly say is succeeding in the way that we’d like them to succeed.

Meaning businesses are pretty, the ecosystem’s pretty healthy. It makes sense. here in Oregon, people say, well, you have enforcement, you don’t have all these illegal stores like Los Angeles and stuff, but we, we also have probably three to five times as much production as we can use here in the state.

And it goes all over the country and all over the world. There’s just, it. These regulated businesses cannot compete, or they’re, they’re not on fair turf, I would say, with the unregulated businesses. States don’t have the time and the resources to enforce. States over regulate. When you don’t have interstate commerce, it becomes ridiculous.

I mean, why, why are we having these programs set up right now where weed is grown in, I don’t know, places it should never, ever be grown, right? Like, weed, weed should be grown in the Emerald Triangle and up to Oregon. And that’s kind of it and just like oranges are grown in Florida and they should be exported everywhere else because that makes sense, right?

That’s healthy and that’s economies of scale. We’ve got all these weird programs now where cannabis is grown in tents and greenhouses at bad latitudes And it shouldn’t be shipped anywhere, but it is shipped everywhere and state people are overwhelmed They don’t know they try to build these programs from scraps They don’t really get anywhere with them and thank you for listening to my ted talk but that that’s how I feel at this point about States wailing at windmills, trying to regulate cannabis.

[00:37:04] Griffen Thorne: It shouldn’t be regulated like almost at all. I think, and I, I’m not trying to sound crazy. I think like states should pick the things that matter the most preventing access to minors, preventing damaging environmental practices, like people who, you know, dump toxins in a river of other fertilizers and whatnot, all these things.

And then just do the bare to get you there. But for whatever reason, it’s often sold as a way to. Generate tax revenue and you know, then they have these uber regulated programs that are very difficult to put into practice and say, Oh, we’re going to get five licenses in this city. You know, it’s just, it’s never been set up in a way.

I mean, I think Oklahoma tried to make it. A lot more basic. I’m not as familiar with how it’s regulated there, though. I’ve heard about a lot of success stories, but I mean, for the most part, I think that if a state really wanted to do this the right way, it would make it as easy and simple as possible to do it.

I don’t see why you need to go through as many hoops as are you routinely put in place.

[00:38:12] Vince Sliwoski: So given all, all of these wild dynamics and sort of the inability for a lot of businesses to succeed in the regulated market, I want to talk a little bit about litigation just because we have Jesse here. What, Jesse, what are some sort of like trends that you’re seeing in litigation?

It may be driven or I’ll chime in because our deals are falling apart half the time, but what, what are you sort of seeing out there right now in 2024 with cannabis litigation, big picture. Yeah, the big

[00:38:37] Jesse Mondry: picture is, I think 2024 is going to look a lot like 2023 and the latter half of 2022. And by that, that I mean, I think the litigation is, it’s the kind of litigation you have, I guess, in an industry that’s not doing very well.

So we’re seeing, you know, increased number of the kind of partnership disputes, right? Yeah. Where, you know, investors aren’t happy. Owners can’t make ends meet. They can’t return, make any returns to people, or maybe they can. So you start to get a lot of sort of, unhappy members and LLCs and S corps and partnerships trying to get out.

And then this leads to, of course, you know, claims of breach of fiduciary duty and some, you know, litigation where people are sort of clawing at whatever, whatever they can try to get back. And one of the things that changed a lot in the litigation front from a few years ago is the ability to sort of raise capital.

So, you know, maybe four or five years ago when I’d have a case where, you know, there’s a disgruntled investor or, you know, maybe the manager hasn’t been doing a good job, right? you know, one of the option was, well, let’s turn around and we’re going to sell this dispensary, right? And we’re going to get a one X revenue multiplier or something good, right?

We have a way to get revenue in and everyone, you know, maybe people won’t get made whole, but they’ll be able to sort of recover some of their money. And, particularly in Oregon, along the West coast, that’s, it’s not really much of a viable option anymore, right? You can’t turn around and just sell your dispensary to sort of at a profit or even enough to make it out.

So there’s not the, there’s not the money there. Right. So that’s I think one kind of litigation that we’re going to see continuing what’s changed about it are sort of what are the available remedies and what’s what’s there. the other thing we’re starting to see more and more of, I think, our, our landlords having to deal with, cannabis tenants who essentially can’t make the rent and can’t pay the rent and, And then, you know, sort of, and sort of, how do you deal with these folks in terms of getting in there and, and, you know, getting seasoned, taking over the equipment. We’ve seen a number of people who’ve, you know, their cannabis tenant isn’t paying rent and the landlord’s sort of trying to work out a deal with them and, and the tenant just sort of leaves in the middle of the night and strips the building bare or takes a lot of the value out of it and actually causes harm.

And at some point, a lawsuit is almost not worth the money you’re going to put into it because maybe you can’t really find these people. If you can find them, you’re never going to get any money out of them. And even sometimes, if you can go in and get all the equipment, there’s not going to be a huge resale value there.

And in like the past, you’re not going to be able to go out and say, Hey, look at this. I’ve got a great, you know, 3,000 foot indoor grow turnkey ready to go. People aren’t hopping on that anymore, right? That’s nobody wants to sort of jump in and say, great. I’ll buy a license for, you know, 6 figures and I’ll, you know, invest this money to do it.

So I think that that’s 1 side. We’re seeing more and more of is the landlord side. I think, and then, you know, the other part of it is the, is this typical sort of your breach of contract was. you know, retailers not being able to pay their suppliers or playing them on timely. you know, I think, you know, the, I think, one of the interesting litigations and this is, I think, one of the things we’re going to be seeing and I, is that I think as more states come online is, I think that we’ll start to see attorneys generals getting more involved and sort of the regulatory part of it in terms of, the sale of sort of unlicensed or unregulated products.

Right? And I think the, the Connecticut attorney general just filed a lawsuit. Along those grounds against several retailers who are sort of selling essentially products that were, you know, unlicensed or unregulated or hadn’t gone through the proper channels. And that’s sort of what I think we’ll start to see more of that.

I think among states go and that’s at least in states where you’ve kind of got this hybrid, you know, Adult use cannabis plus you’ve got hemp, which maybe you’re selling Delta 8 and, you know, all these other things or, you know, all these sort of, I call them sort of the new chemical, you know, weed pills.

, you know, I kind of think old fashioned that way. So I think we’ll see some of that. I think another thing we’ll start, you know, maybe we’ll see is. If we, it’s something that may be challenged to these social equity programs, right? I mean, this is sort of what happened in New York, I think, quite a bit.

a Washington federal judge, though, just interest, I think two days ago issued a ruling, that sort of denied a challenge to block their social equity program, where the out of state plaintiff had made sort of dormant commerce clause argument. And, and they, and they denied it on the grounds that, look, You can’t really rely on the Dormant Commerce Clause because marijuana is federally illegal.

So, you know, Washington in some states, sort of at the high level, right, sometimes put in, rules or regulations designed to sort of, sort of limit the, the business opportunities to their local residents, right? We want Washingtonians to be the ones who are going to own the businesses, right? Or in Maine, I think a court came out the other way.

And so, you know, investors from out of state sometimes challenges and one of the arguments they make is called the dormant Commerce Clause argument, which we won’t get into the details here, but it’s sort of the idea that you can’t treat me unfairly just because I’m out of state. Right? This is very, very basic.

And I’m going to rely on this, this idea. so I think that’s an interesting decision. And I haven’t read that fully yet. on the private side of civil litigation again, I think You know, people, one of the things I guess we’re seeing, it’s starting to pop up again that I hadn’t seen for a few years, are issues with, tenants where the landlords have no rental agreement, right?

Where there’s nothing in place that defines things. And so, I’d sort of, You know, the sort of the litigation part is always the next part of the question is, how do I stay out of litigation? Right? And I think I would urge everybody on the call again to, you know, before you’re starting to do sort of deals or you’re downloading documents from the internet purchase and sale agreements or cutting deals and you’re, you know, you’re going to save, you know, 1000 or 2000, you know, 5000 in a lawyer.

Don’t do that because it’s going to cost you more later. And it’s, it’s just, it can be a real fight to have to go in under sort of litigation. State statutes dealing with sort of landlord tenant issues when there’s no clear agreement when there’s, you know, the right to possession isn’t there when people are filing, you know, liens and these kinds of things.

I think we’re, we’re starting to see some litigation to an Eastern Oregon and I think in other places of. Like the construction industry is starting to sue, you know, bringing claims against the cannabis industry for doing work that they can’t pay for. And so, you know, if you’re on that side of things, if you’re a service provider to these industries, I think you really want to look at, you know, getting personal guarantees, getting money up front to the extent you can, you know, don’t count on sort of this is all going to go great and we’re all going to be millionaires and we’ll pay you, you know, I guess like the sort of the wimpy argument, I’ll pay you on Tuesday for the hamburger today.

[00:45:02] Vince Sliwoski: look out for that,

[00:45:05] Jesse Mondry: that’s, there’s maybe kind of really high level, I think, of 2024 cannabis litigation on

[00:45:11] Griffen Thorne: that a little bit because, you know, this is Jesse touched on something that I’ve written about consistently for years. Which is handwritten deals handshake deals as opposed to contracts and look, I’m a lawyer We’re all three of us are lawyers.

Obviously it benefits us when people pay us to write contracts But you know what? You know, what’s even better is when people pay us to litigate cases because it costs a lot more money, right? I cannot tell you how many times I’ve had to tell people. Hey, I wish I could help you get You know, 50, 60, 80, 000 you’re owed, but it’s probably going to cost more in attorney’s fees to litigate against these people than it would have been to just get a contract in place that says you get your attorney’s fees when you win, because you don’t get that under a normal contract case, right?

So. If you pay a lawyer, it doesn’t have to be us, but if you pay a lawyer a couple hundred, maybe a couple thousand bucks to draft the contract, you might be saving fifty, sixty, eighty thousand dollars when the dispute comes around in the future. And right now, we’re seeing that a lot. If you follow California at all, there’s a huge problem with collections because retailers, a lot of retailers, not all of them, aren’t paying their bills.

And you’re seeing a lot of distributors fall apart, and other suppliers just fall apart and a lot of that is due to not having good contracts in place That give you that attorney’s fees remedy when you win, in the states, you know Doing what California does and has all these crazy proposal bills to like require people to snitch on each other if they’re not paying and Take away their right to do business.

It’s just crazy The easiest thing in the world is to invest a tiny bit up front To avoid a dispute that might cost six or seven figures down the road, where they’re, or, you know, like if you, if you don’t have a contract and someone skips out on a 20, 000 bill, it’s just not going to be worth, in most cases, litigating against them.

You’re going to spend more than that to get a couple of weeks into litigation in most cases. So, people know that and they take advantage of it, so I’ve been, you know, screaming mountaintops for years now. And I don’t, I still am having these difficult conversations. Like, I wish you would have come to me six months ago.

Could have helped you much harder now,

[00:47:22] Jesse Mondry: right? Yeah. I just want to pile on just a little bit more, which is I do see some people with written contracts that are essentially terrible because I don’t, I don’t know where they’ve gotten or how they’ve done them or that maybe the other side draft them. But, you know, the kind of people who I see particularly affected by this.

You know, the sort of cost benefit ratio of litigation. It’s not the huge cases, right? Like, you know, I have a client where there’s 6, 7 million on the line. It’s their entire business. That’s a case where, you know, they’re going to put in six figures or, you know, multiple six figures in attorney’s fees because it’s that level, but it’s sort of the almost the smaller, you know, mom and pop where if you’re, you know, your claim is 100, 000, which, you know, that’s real money to be sure.

150, you know, a couple hundred thousand dollars. Yeah. But the litigation side of it is you’re going to burn into 000 before even get close to the trial door, you know, trial room, right? And the reality is, is almost all these things settle right before you get to trial. And a lot of this litigation money is spent, you know, pushing things along to see, where’s that settlement going to be?

And if you have good contracts at the outset, the ability to negotiate a settlement and sort of, you know, a good settlement or not have to go to litigation in the 1st place is just increased dramatically. And. You know, I’ve had clients on both sides of this. We had, I think, a client out here in Oregon with a piece of equipment and, you know, came to us.

Well, you know, things kind of didn’t work out the way we wanted, the way we wanted. Well, looked at the contracts. They were really good contracts. The client, my advice to the client was there’s no point in going to court because you’re going to lose. Don’t spend money on me. Spend money trying to figure out how to resolve this, right?

And you want to be on one side of the other of that equation, right? you know, the folks that, Okay. You know, I’ve got a 150, 000 case or something like that. And, you know, there’s 000 in, in, into the litigation and their trials still six, seven months away, that’s almost impossible to sort of maintain. And so, you know, I just can’t recommend enough, getting a good contract and not just a contract or, or a handshake deal,

[00:49:23] Griffen Thorne: especially at that.

Not something you got on Google or chat GPT either.

[00:49:28] Jesse Mondry: Right. Yeah. Yeah. Don’t have to look up things. We got another question here. Maybe this one’s for maybe a Vince one, I guess. What’s your take on the battle between the small craft licensees and the big players? You think I’ll read it for the folks in attendance.

Do you think a future market landscape is possible in which we see craft players survive while the big players come in to drive prices down? Is there a legitimate comparison to craft breweries and big beer? And I think then it kind of goes on to talk about how craft breweries kind of have come and gone, but there’s some big players.

What do you think about that, Vince, in this sort of Craft versus the big money thing. I guess, you know, maybe Oregon.

[00:50:09] Vince Sliwoski: It’s a, it’s a good question. And we’ve talked about it for years. I like the end of the question to the person goes on. I can get more money by investing in a craft business is higher risk, higher reward.

I mean, I I’ll tell you, you. The only big cannabis businesses are all crappy to invest in right now. They’re all penny stocks. I mean, you look at them, they’re all the ones on the Canadian stock exchange. The financials are abysmal. I mean, I can’t even believe most of them are still operating. And that goes from the biggest cannabis businesses in the world on down and all the, you know, big businesses in the U S markets are.

Right. Penny stocks are privately held. So, You’re

[00:50:44] Jesse Mondry: worried and didn’t somebody just declare bankruptcy in Canada and then they sort of did a receivership here, one of the big ones here. Right. And yeah, I think the investors in that, in terms of stock got any, any return on anything.

[00:50:54] Vince Sliwoski: Oh, nobody got anything.

I mean, you’re, if you’re an investor, you’re way behind all the. Creditors secured, unsecured judgment, people, everything. So yeah, it was a big failure out here. It was one of the, I think it’s probably the biggest cannabis receivership to date. We talked early on briefly about how cannabis businesses generally can’t take bankruptcy.

There was one out here called Chalice Brands, which was listed on the Canadian stock exchange, but also a. A very large player here in Oregon and they went belly up and I mean, be glad you didn’t invest in that one because, you know, returns would have been 0 and 0 cents. I think, I, I think, so if you want to invest, I guess two parts of that question, if you want to invest, if I were investing money, I’d be really careful, really, really, really careful in this industry.

And it goes back to the conversation about getting a lawyer right away, because you want somebody who knows what’s going on to look at this stuff, especially the contracts. But I would say that Better opportunities to invest are in the smaller craft businesses right now. Find one that’s well run that’s been around for a while that they can explain to you their model when they show you financials, your financial advisor, or if you’re financially savvy, they make sense.

You understand when reading their operating agreement, shareholder agreement, when I put a dollar in, how does it come out? When does it come out? All of that sort of stuff. I think those are the investment opportunities. And I think you’ve got to, you can be cautious. The good news is. A lot of these businesses are hard up for capital, including well run businesses that are kind of profitable.

So I mean, as an investor, you’ve got leverage and you’ve got options right now, especially in this high interest rate environment, long term what’s going to happen about, you know, craft players trying to survive while big players, well, assuming some of the bigger players get their act together. And I don’t think there are going to be any truly dominant.

Big MSO type players until we get a change in federal law. It’s just too hard to move from state to state. But you know, I think at that point I, I envision like a dual track system like with beer. Yeah. To answer the question in a sort of a longer way, come back around. I think you’ll see some bigger brands, national brands.

We already kind of have some national brands, but they’re not super profitable. I think we’ll see some of those and I think you’ll see your craft people and a lot of people have loyalty to like certain Appalachians of cannabis right like what we grow out here where I’m sitting or Certain small businesses and things and at least I’m really hopeful it turns out that way but it’s hard to predict these things Does anybody have any other thoughts on that?

Before we get to the end, we only have seven minutes left and we, we’d be remiss not to talk about hemp. I mean, hemp is such a huge thing. And we briefly talked about all of these like THCA and other types of cannabinoids that are being derived from the hemp plant and the fact that, you know, we’re going to get some changes, hopefully in federal law this year, Griffin is the hemp expert in our firm.

I would say Griffin, can you just give us sort of anything that you’re thinking about in the hemp space lately? That’s interesting.

[00:53:44] Griffen Thorne: I mean, it’s hard to do in a short period of time. We should probably do a separate webinar just on this topic. But basically, you know, hemp was removed from the Controlled Substances Act in 2018.

There’s been a ton of just incorrect information on the internet ever since. and basically all that law did was create a regulatory program for the cultivation of hemp at the federal level. That’s supposed to be done. The state programs, right? It doesn’t legalize hemp products in the way that we think of like legalization.

The FDA is basically taking the position ever since that CBD and other potential cannabinoids are unlawful. States have done everything from ban it to completely regulate and allow it. and then the most recent thing that’s happened in the last couple of years is you start to see this explosion of intoxicating hemp cannabinoid products particularly in states with with no medical market Like I have some extended family in North Carolina when I go out to visit them There’s no medical or recreational marijuana.

So like you can buy delta aid at like every gas station C, right? It’s just it’s there and HHC and other stuff. it’s very difficult to talk about these things categorically. I think that for some of the cannabinoids, there’s good arguments for why they could be legal under the current text of the 2018 Farm Bill and the way it, as opposed to the Controlled Substances Act, like, so, for example, Delta 8, that’s derived from, from, well, that’s a complicated discussion.

I’ll, we’ll save that for a different webinar, but Delta 8, I think there’s good arguments in favor of it. THCA flour, I think the arguments are very unpersuasive. anything that’s like purely synthetic, I think the arguments are very unpersuasive. and so, you know, again, I’ve written about all this in our blog.

There’s one I did on THCA flowers specifically. We could get into that, but all of that could kind of be mooted in the near future. There’s going to be a re up of the farm bill. And there’s a lot of efforts underway to deal with these issues. Despite what a lot of people say, I think that it’s very clear that Congress did not intend to allow intoxicating hand cannabinoids.

, and I, look, I’m not taking a position on it. I’m just saying, like, I think if you look at all the facts, it’s very clear. but, you know, I think they’re going to rein it in to some degree, and maybe they’ll allow some things and not others, there’s, there’s a lot of efforts on both sides, frankly, to deal with this.

You have an interesting push where the marijuana industry is saying, hey, we need to rein this in because it’s effectively, like, Unregulated doing the same thing they do, especially if you talk about THC flour and other ones. but yeah, we don’t really know yet what’s going to happen. We have no real indication.

I’ve seen some sort of like proposals that are going on. I don’t know that any of it’s actually going to come to pass. someone’s asking about hemp derived delta 9. I don’t, I don’t think that, I don’t think that’s a persuasive one either. I mean, look, the DEA has said repeatedly that what you look, what they look at is whether or not it’s 0.

3 percent THC. So if something has more than 0. 3 percent THC, They treat it as marijuana, regardless of where it came from. Things get more complicated when people are like, well, I have something that has enough THC in it to get you high, but it’s not 0. 3 percent on dry weight of the whole product. Like it gets complicated, right?

And so this is why I say we could have it. We probably should, in fact, have a separate webinar on just this issue. The point I’m trying to make is that there probably will be some changes at the federal level when the new hemp bill, farm bill comes out. certainly there’s states that are trying to regulate this stuff out of existence.

And I don’t even think states really necessarily need to do that, what people don’t realize is that the FDA and each state has the power to take on, you know, adulterated and misbranded products, so called off their market. and they can do done that for other things like spice and K2 in the past.

And they could do that without creating all these crazy regulations in the future. So what I’m trying to say is that this space is extremely volatile, right? Things change all the time. There’s no guarantee the future could come from top down, could come from bottom up, could come from just regulatory action, claiming these things are unadulterated, like what they do with Kratom.

, and so, you know. 2024 could be a real interesting year in the space. And, again, I’m not trying to take a position either way here, but just to say that I think you’ll see a lot of stuff on the, if you Google is, you know, whatever cannabinoid legal, you’re going to find people who say yes, regardless of reality.

And I think a lot of these things, it’s just, it’s, there’s so much that’s unknown right now that we don’t know. And.

[00:58:34] Vince Sliwoski: Good. Thank you. I think that’s a good way to wrap up, guys. We have about a minute left, and I want to say two things in that minute. First of all, we will continue to cover all of this stuff on our blog. Many of you probably found us through the Canada Law blog, but that is a source of credible information.

So if you click on a link there, you can, we will stand by everything we say there, even if it’s not legal advice. Find us there. The second thing I want to say is, We are going to do another webinar February 28th and we’ll announce it formally, but that one’s going to be on cannabis loans and investments.

So if you’re somebody that, is looking at investing in a cannabis business, setting up your cannabis business to take on investment investors and a lot of other concepts related to that, mark your calendar right now for February 28th. That one will probably be at lunchtime too. And thank you for all the good questions.

We had a lot of good questions. Sorry, we didn’t get to any or all of them, but we enjoyed it. So that’s it for me. Any final

[00:59:30] Griffen Thorne: comments? Don’t forget the LinkedIn thing, Vince.

[00:59:35] Vince Sliwoski: What is it? Can you tell me, please?

[00:59:37] Griffen Thorne: So, Wednesday mornings on at 10 Pacific. Yeah. Yeah. And I just lost the thing on my

[00:59:46] Vince Sliwoski: computer.

That’s okay. Yeah, I forgot on Wednesday morning at 10 Pacific, we just started doing, it’s a weekly legal lunch bite series and we just talk about this and that. And it’s, it’s like this, it’s super ad hoc and fun and informal. We don’t take questions in those, but we interview some interesting person who knows what they’re talking about every week.

So tune into that one, but that’s kind of it guys. yeah. We will, and yeah, our staff is telling me that one’s only 15 minutes, so it’s not a big time commitment, and it’s sort of a standing event. That’s kind of it. We’ll probably replay this webinar like we always do on our blogs in case you feel like you missed anything and want to tune in again.

Thank you so much for your time. I’m going to sign off. Thank you very much. Thank you, everyone. Thank you, everyone.

[01:00:29] Jesse Mondry: Thank you.