Legal and Regulatory Issues in Emerging Industries: Cannabis
On November 5, 1996, California became the first state to legalize medical cannabis, thus starting a two-decade journey where several states enacted laws allowing citizens access to cannabis for medical purposes – creating a legal industry based on a substance that had been federally illegal since the 1930s. Often light on structure, many programs appeared unregulated; basically giving people access to cannabis under the guise that it was “legal” in the state while continuing to be illegal on a federal level.
On August 29, 2013, the U.S. Department of Justice announced an update to its federal cannabis enforcement policy. While not a change in federal law, the DOJ memo, often referred to as the Cole Memo, provided states with a framework for establishing regulated cannabis programs (medical and adult-use) that would defer general enforcement of cannabis-related matters to the states. Thus began the new generation of the state-legal cannabis industry. However, on January 4, 2018, Attorney General Jeff Sessions, the current head of the DOJ, rescinds the Cole Memo…now what?
As of today, 29 states plus Washington D.C., Puerto Rico, the Northern Mariama Islands and Guam have legalized medical cannabis; 9 states and 2 territories have legalized adult-use; and an additional 17 states have enacted CBD-only laws (cannabis containing less than .3% THC) – in total 95% of the U.S. population lives in a state where there is some form of legal cannabis. The legalized cannabis markets produced approximately $9.7B in sales in 2017 and that number is expected to surpass $32B in 2022. That said, cannabis remains federally illegal – the federal government providing only superficial guidance to states on how they can choose to enforce cannabis laws within their state (but only within their state because the federal government will not allow the product to cross state lines) – presenting some of the most unique legal and regulatory issues that any industry has seen.
This course is designed to acquaint students with the legal and regulatory challenges present in the emerging cannabis industry. We’ll take a look at the very interesting history of cannabis and cannabis legalization/illegalization in the U.S., the current state of federal law and the various state laws and the unique business issues that such conflicting federal/state laws present; we'll review a case study of a company(ies) developing multi-state operations; we’ll look at a recent trend that has US operators accessing the public markets in Canada while Canadian producers get access to the US capital markets; and we’ll look at the various directions that this industry is likely to go in the future.