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Emerge Law Group Challenges Sonoma County, California Policy of Fining Medical Cannabis Users as Illicit Commercial Growers

Sonoma County, CA, August 16, 2021 — Emerge Law Group has filed a Petition in California Superior Court challenging penalties of over $28,000 imposed by Sonoma County on a mother and daughter for exceeding the allowed medical cultivation of 100 square feet.

The Petition seeks to overturn the July 16, 2021 decision by an administrative hearing officer that approved the County’s practice of imposing huge fines, even without any evidence that the property owner sold cannabis to any other person.  The penalty approved by the hearing officer would, if not overturned in Court, be financially destructive to the mother and daughter.

Sonoma County contended at the administrative hearing that any cultivation area that exceeds 100 square feet “magically” becomes subject to prosecution as an illegal “commercial” cannabis business.  By simply exceeding the allowed square footage, a property owner engages in “commercial cultivation,” according to the County.  County officials said at the hearing that imposing the harsh fine schedule for illegal commercial growers in these circumstances is “easiest” for them.

The Petition filed by Emerge attorneys Timothy L. Alger and Delia Rojas asks the Superior Court to vacate the fines, order Sonoma County to stop its arbitrary and excessively punitive enforcement practices and seeks damages for violation of the civil rights of the mother and daughter. The Petition alleges that Sonoma County has adopted policies and practices that are unfair and designed to punish individuals who, often by inadvertence, become non-compliant with regulations allowing limited personal and medical cannabis cultivations.

The mother and daughter contend in their Petition that a Sonoma County enforcement official, when he conducted an unscheduled inspection, called one of the petitioners names and threatened the petitioners with $10,000 fines per day if the inspector was not immediately allowed onto the property.  The petitioners have had medical approvals for their cultivation, and there is no evidence that they ever sold cannabis to any person.  The petitioners assert that they always attempted to comply with County regulations and cooperated with inspections.

“This is an important lawsuit because it holds local governments to account for abusing their limited power to regulate cannabis cultivation,” said Emerge attorney Timothy Alger.  “Californians overwhelmingly approved at the ballot box the right of residents to grow cannabis for personal and medical use.  Minor violations do not entitle a city or county to treat people who are exercising their rights to personal and medical cultivation — and attempting in good faith to comply with complicated and often illogical regulations — as illegal commercial businesses.”

Emerge Law Group is a full-service law firm that focuses on representing companies in the legal cannabis industry.  It has offices in Irvine, Los Angeles, and Santa Rosa, California, as well as Portland, Oregon.

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From Three to One: California Consolidation

On July 12, 2021 Governor Gavin Newsom signed the Cannabis Trailer Bill, Assembly Bill – 141, which, among other things, consolidates the three California state regulatory programs—the Bureau of Cannabis Control, Cal Cannabis, and Manufactured Cannabis Safety Branch—into one state department, the Department of Cannabis Control (“DCC”). Newsome appointed Nicole Elliott as its first Director.

Nicole Elliott, Department of Cannabis Control Director

The DCC will oversee the licensing and enforcement of all types of commercial cannabis operations along with the state’s track-and-trace system. As part of the consolidation, one of the first major priorities of the DCC is to combine the three sets of cannabis regulations into one. The goal is to provide consistency within the requirements for each license and improve the regulations with further comment from the public. The DCC created a new website that includes information for all applicants and licensees and currently links licensees to the appropriate licensing system. Eventually, the DCC will combine the licensing systems as well.

The bill also extends the timeline for the DCC to issue and renew provisional licenses. Subject to the new eligibility requirements, an operator can renew their provisional license up until January 1, 2025, with all provisional licenses expiring by January 1, 2026. Regardless of whether the business is looking to apply or renew, moving forward, cultivation operators will need to submit additional paperwork to demonstrate the progress on compliance with the environmental standards in order to obtain or keep a provisional license.

Furthermore, starting January 1, 2022, the bill implements a prohibition on issuing a provisional license to an applicant or licensee if doing so would cause the operator to hold multiple cultivation licenses that would exceed an acre of outdoor or 22,000 square feet of mixed light or indoor on contiguous premises. Starting January 1, 2023, the DCC will not be authorized to renew a provisional license on the same basis. On its face, the bill prohibits the licensure of larger growing operations without first reaching full environmental compliance, which can take years depending on the area and size of the project.

Senate Bill 160 is a bill that quickly moved through the legislative process last week and was approved by Newsome on July 16, 2021. SB-160 amends AB-141 in various ways. Most importantly, the bill authorizes the DCC to the issue new provisional licenses until September 30, 2022, for general applicants and June 30, 2023, for equity applicants. A cultivation operator looking to obtain a new provisional license must submit an application to the DCC no later than June 30, 2022, or, if an equity applicant, no later than March 31, 2023, which is not much time for cultivators given the onerous environmental review that they each face.

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Open for Opportunity: 2021 Changes for the California Cannabis Industry

To say the least, 2020 was a year unlike any other, including for the cannabis industry.  California, among other states, declared cannabis “essential” during the pandemic – a vital win for the industry in a year short on wins.  The last few years have been nothing short of transformative – for many Americans, cannabis has gone from flat-out illegal to essential.  But the work is far from over, and more change is coming, certainly in California and some of its local jurisdictions.

California State Law and Regulations

Big changes are coming down the pike this year for the entire California cannabis industry. First, the industry awaits the completion of two key regulatory programs– the Cannabis Appellations Program (“CAP”) and the Certification of Cannabis Comparable to National Organic Program (“OCal”). CAP paves the way for cultivators to petition for and claim an appellation of origin, which is a protected designation that identifies the geographical origin of cannabis and how the cannabis was produced. CAP will provide meaningful support to small legacy farmers that represent California regions famous for their unique cannabis. OCal is a establishes a cannabis organics designation  program similar to the National Organics Program. The final regulations are expected to be released shortly.

Second, the state is working to consolidate the three state agencies that currently regulate cannabis – Bureau of Cannabis Control (“BCC”), California Department of Food and Agriculture – Cal Cannabis (“Cal Cannabis”), and the California Department of Public Health – Manufactured Cannabis Safety Branch (“MCSB”) – into one – the Department of Cannabis Control (“DCC”). to the consolidation will hopefully streamline the application process, lower barriers to enter the market, and result in a single set of regulations for all cannabis applicants. The DCC’s creation is set for July 1, 2021.

Lake County

In December 2020, the Lake County Board of Supervisors adopted an ordinance that imposed certain restrictions on “farmland” designated areas. The ordinance created new “farmland protection zones” in which outdoor cannabis cultivation is prohibited.  Outdoor cultivation may not even exist within 1000 feet of those zones, and any outdoor cultivation premises within a mile of those zones must install “vegetation screens” to block the cannabis operations from view.. The new ordinance also imposes setback requirements for outdoor cultivators on designated farmland outside of protection zones, including 500-1000 ft setbacks from “important highways” and may require additional vegetative screening as well.  The distances for the setbacks are still under review. The County also discussed applying the new rule to cultivators with pending permit applications and requiring some cultivators to “move” their canopy, though the County may provide exceptions to certain existing permit applicants depending on their circumstances.

Lastly, we expect the County to begin discussions on extending the deadline for the required registration with the California State Water Resources Control Board (“SWRCB”).  For local and state compliance, all cultivators must register their proposed water use with the SWRCB.  To receive a local permit, Lake County requires cultivators to apply with SWCRB prior to a specific date. The County has already moved this date twice, with the last deadline falling on October 31, 2020. Cultivators who failed to apply with SWRCB by that deadline are not qualified to apply for a local cannabis permit even if they’ve met all other requirements. Hopefully, the County extends the deadline and allows additional operators to enter the Lake County market. Discussions on this issue are expected to resume sometime this year.

Mendocino County

Mendocino County held a meeting on January 5, 2021 to discuss two cannabis-related topics: (1) the upcoming County legislative agenda, and (2) creating a process for cultivators to hire consultants to assist them with California Environmental Quality Act (“CEQA”) compliance. The County is ramping up its legislative advocacy in the coming year. The County plans to advocate on both the state and federal level regarding the state extension of the provisional license to January 1, 2024 (which would provide much-needed breathing room for cannabis licensees who are still waiting for their official annual licenses); removal of the 4-acre cap on cannabis cooperative associations; and efforts to legalize cannabis federally.

The Board also discussed the framework for helping its cultivators meet their extensive CEQA requirements. CEQA details over 20 review categories to ensure that the project does not heavily impact the surrounding environment. The review process for each cultivation site takes at least 6 months regardless of the jurisdiction. Given the County staff time required to conduct each review, the County signaled its desire to remove itself from the equation and allow operators to prepare their own packages for County approval with the help of CEQA consultants. Ultimately the County Board approved the creation of a framework to certify CEQA consultants and maintain a public list of approved consultants.

Lastly, and most importantly for new cultivators, the Board is discussing the new phase 3 ordinance on January 25, 2021. Currently, the County only accepts applications under phase 2 – for certain indoor and mixed light cultivation. Phase 3 is currently set to open on April 1, 2021, which would open the door for all cultivators to obtain local permits. Cultivators looking to cultivate in Mendocino County should start preparing now in anticipation of phase 3.

Sonoma County

After several delays, we expect Sonoma County to release its long-awaited cannabis ordinance some time in 2021.The ordinance is expected to streamline the local cannabis permitting process by treating cannabis cultivation similar to other agricultural uses and move the application review to the Agriculture Department. Without the ordinance, many local cultivators, who have already been waiting for local permit approval for two years or more, will continue to languish in line for approval with no end in sight. As of the end of October 2020, the County has only issued 6 cannabis-related conditional use permits. Hopefully, the County will release the ordinance ASAP to get the local permitting process back on track. If you are a part of the Sonoma County cannabis community who would benefit from the new ordinance, you may wish to contact your county Supervisor and urge him or her to prioritize cannabis in 2021.

Trinity County

On December 28, 2020, the Board of Supervisors moved to approve a new cannabis ordinance to implement certain “mitigation” measures required under CEQA.  The ordinance goes into effect on January 27, 2020. The ordinance includes numerous changes including new noise level requirements, screens for cultivation along county designated scenic roadways, prohibition on all cannabis cultivation in the 100-year flood plain, specific requirements for the required biological assessment report detailing potential environmental impacts, and a slew of other mitigation requirements for environmental protections. Most importantly, the new ordinance provides for “only one application countywide may be submitted per legal parcel.” This provision effectively limits each parcel to only one licensed facility.

Additionally, the County has taken steps to address the longer-than-expected delay in local permit renewals. To prevent widespread permit expiration, the Board passed an “urgency ordinance” extending the current local cannabis permits for an additional 6 months. The ordinance also prohibits further processing of new cannabis permit applications pending implementation of the ordinance’s other requirements.

2021 is gearing up to, once again, be a busy year for the California cannabis industry.  If you have any questions regarding changes to California state or local laws and regulations, don’t hesitate to contact Emerge’s regulatory attorneys for help.

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As More States Embrace Cannabis, One Oregon County Rejects It. Again.

States across the country have embraced cannabis law reform.  The 2020 election brought the total number of states to legalize recreational marijuana from 11 to 15, and the total to legalize medical marijuana from 33 to 35.  One in three Americans now lives in a state that legalized marijuana in some form.  But not everyone wants to live near cannabis.  A surprising exception to this green wave sweeping the nation is in our home state of Oregon.  The voters in Deschutes County, whose county seat is Bend, passed a measure to prohibit additional OLCC-licensed recreational marijuana production and processing businesses and additional OHA-registered medical marijuana processing sites outside city limits, effectively allowing Deschutes County to opt-out of cannabis legalization.

Since Oregon legalized cannabis in 2014, Deschutes County is the first county in Oregon to have initially opted out of the state’s recreational marijuana program at its inception, then opt in to the program in 2016, only to reverse course and opt out of the program again.  However, Deschutes County’s recent opt-out does not mean that it has completely rid itself of all cannabis.  Existing cannabis businesses are not impacted by the opt-out, and new recreational cannabis retail and wholesale businesses are still allowed.  Additionally, while the newly passed measure prevents the establishment of any new recreational cannabis producers and processors, as well as new medical cannabis processing sites, the County has provided some cover for producer and processor applicants who are caught in the middle, i.e., those who have already begun establishing their businesses in the County.

County Ordinance No. 2019-014, which became effective on August 19, 2019, established the opt-out measure that was referred to voters in last month’s election.  County Ordinance No. 2019-015, which became effective October 16, 2019, provides that the ordinance establishing the opt-out remains adopted, but also clarifies that the opt-out does not apply to:

“an applicant who as of the date this Ordinance is in effect has a pending production or processing license application before the OLCC and who applied for County land use approval/LUCS allowing marijuana production and/or processing prior to August 19, 2019.”

The effect of the clarification in Ordinance No. 2019-015 is to “grandfather” producer and processor applicants who had not yet received an OLCC license or County land use approval, but had a pending OLCC application in the queue and applied for County land use approval before August 19, 2019.

Given that cannabis sales in Oregon reached over $1 billion this year, Deschutes County’s decision to preclude additional recreational cannabis producer and processor businesses in its jurisdiction may also preclude a good opportunity for future economic development in the County.  But who knows, the County could decide to change its mind once again.

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Your Chance to Provide Input to OLCC on Proposed Rule Amendments

On November 1, 2019, the Oregon Liquor Control Commission (“OLCC”) released proposed amendments to the recreational marijuana rules and the significant changes would affect every licensee if approved. We encourage you to read the proposed amendments to see if and how they might affect your business.

Also, this is one of the few times during the year when you can make your voice heard by OLCC.  You may submit your comments regarding the proposed amendments (and any rule that contains any amendment) by emailing them to patrick.owen@oregon.gov no later than December 1, 2019.  You may also have your comments heard in person during a public hearing held on November 15, 2019 from 9am – 11am at OLCC’s headquarters in Portland.

Below is a short summary of some of the major proposed amendments, however, you should check out the full draft amendments for a comprehensive view of all the proposed changes. Keep in mind that these amendments are only proposed and are likely to change after the public comment period and hearing.  As always, please contact Emerge Law Group if you have any questions about how these proposed amendments may affect your business.

  • Financial Interests
    • The definition of “financial interest” would be broadened to include “domestic partners” who merely “share the same regular and permanent address and would be financially effected [sic] by the success or failure of the business,” not just adults who qualify for a “domestic partnership” under Oregon law.
  • Pending Application Transfers
    • Pending OLCC applications may not undergo a change of ownership prior to licensure (this rule would presumably only affect changes of ownership of 51% or more). This rule would be expanded to include all license types, not just producers.
  • New Application Deadlines
    • Applicants who submit applications after January 1, 2020 would have 60 days to “complete” the application process or have their applications placed in the “hold queue” for an indeterminate time period.
    • If an applicant cannot meet the 60-day deadline after the application is reassigned from the hold queue, the application would be “inactivated” (withdrawn).
    • Approved license applicants would have 30 days to submit payment of the license fee or the application would be inactivated.
    • If an application is inactivated, the applicant has 10 days to submit a written request for reconsideration (that may or may not be approved).
    • OLCC has authority to place an assigned application in the hold queue to “balance staff resources.”
  • Loss of Access to Premises
    • Licensees who will lose access to their licensed premises may be able to move their premises – if they can meet certain requirements – without losing their licenses.
  • No Tax-Free Sales to Patients
    • Retailers would no longer be able to sell marijuana items tax-free to OMMP patients and caregivers but may still sell to patients at a discounted rate or free of charge.
  • Fine Increase
    • Fine amounts for violations would double.
  • Camera Coverage
    • Required coverage would increase to certain “points of ingress or egress” that formerly did not require coverage.
    • All cameras would be required to capture at 10 frames per second.
  • Retailer Product Storage
    • Products would no longer have to be stored in a safe or vault during non-operating hours if storage meets other security requirements.
  • Extension of Allowable Transport Time Period
    • Product transport between licensees could be completed within 60 hours and allow overnight pauses in transport.
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What the New Deschutes County Ban on OLCC Processors and Producers Means for You

On August 19th, 2019, the Deschutes County Board of Commissioners voted unanimously to opt out of the establishment of “future marijuana production and processing businesses” in unincorporated Deschutes County pending a county-wide referendum vote in November 2020.  According to the County, it intended the ban to affect only “future” marijuana businesses.  However, we have been receiving differing opinions from the OLCC and Deschutes County regarding which businesses are actually affected.  Moreover, the state statute under which the County adopted the ban leaves room for interpretation. Does the ban apply to: (1) businesses who have yet to submit an OLCC application, (2) businesses who have pending, but unapproved applications in to OLCC, (3) businesses who have not yet received their Land Use Compatibility Statements (LUCSes), but have pending County applications, (4) businesses with existing OLCC licensees that are up for renewal, or (5) some or all of the above?

We are at work analyzing the applicable laws and are working with clients and public officials to get to the bottom of the ban and clarify who it affects and how.  If you have questions about how this ban may affect your business, please don’t hesitate to get in touch with Emerge for assistance.

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The Criminal Hemp Processing Case that Could Have a Profound Effect on the Oregon Hemp Industry

There’s a battle brewing in Oregon state court that may have a serious impact on Oregon’s industrial hemp industry. We’re writing to clarify the issues and provide additional context for this highly controversial case.

What’s happening?

Key Compounds (“Key”), an Oregon Department of Agriculture (“ODA”)-registered industrial hemp handler (i.e., processor) in Albany, Oregon, and its CEO, Alexander Reyter, were recently indicted on three counts of Unlawful Importation/Exportation of Marijuana and one count of Unlawful Manufacture of Marijuana.

It all began when Key allegedly shipped crude hemp-derived CBD oil to a facility in Massachusetts for further processing. When the resultant product was shipped back, the package’s “suspicious” odor evidently got the attention of local UPS workers, who alerted Linn County law enforcement. Some of the product which, according to the Massachusetts processor, was residual waste mistakenly included in the shipment, allegedly tested at 5% THC (above the 0.3% limit for hemp products). This prompted the Linn County Sheriff Department to raid Key’s processing facility in March. The raid revealed Key business records that, according to an investigator, indicated that over 900 pounds of Key’s hemp-derived extract had THC levels above 0.3%. The Linn County DA subsequently filed an indictment charging Key with the unlawful importation/exportation of marijuana (based on the Massachusetts shipments) and the illegal manufacture of marijuana (based on what the raid uncovered). The importation/exportation counts are at least understandable, given that the allegedly “hot” waste product was shipped across state lines.  The unlawful manufacture count is more troubling, however, because the alleged infraction took place wholly within the state, and, according to experts, resulted from a normal part of the hemp extraction process.

According to Reyter, the “hot” hemp products seized during the raid tested above 0.3% because they were a natural byproduct of the extraction process or because the products were “in progress” (presumably meaning the THC would be diluted or removed prior to finishing the process). However, the Linn County DA insists that the products qualify as “marijuana items” under criminal law, and therefore requires an OLCC recreational marijuana license to produce.

ODA staff has expressed support for Reyter’s explanation to the effect that, so long as the products test under 0.3% at two points in the manufacturing process—first, before the source hemp is harvested and second, before the finished products are sold to a consumer—ODA considers the product “hemp” throughout the process. However, Senate Bill 1544 (“SB 1544”), passed in 2018, defines “marijuana item” to include any industrial hemp-derived product that “contain[s] more than 0.3 percent [THC].” But, SB 1544 also states that “[a] person other than a marijuana retailer that holds a license issued [by OLCC] may not sell a marijuana item to a consumer” (emphasis added). When read together, ODA interprets those provisions to allow for a hemp product to exceed 0.3% THC so long as it is diluted back down below the 0.3% threshold prior to sale to consumers. But Linn County apparently takes a more restrictive approach: Any product that contains more than 0.3% THC, whether derived from psychoactive “marijuana” or hemp, is a “marijuana item,” which subjects its manufacturer to criminal sanctions (unless an OLCC-licensed processor).

What does this mean for the hemp industry?

The outcome of this case could have major ramifications for the Oregon hemp/CBD industry.  If the judge or jury sides with Linn County, any Oregon hemp handler whose process generates THC waste product (or includes a phase in which the hemp product temporarily contains THC in excess of 0.3%) could be targeted by local law enforcement for criminal marijuana violations.

Ideally, the Court will find in favor of the defendant and the Oregon Legislature will resolve this statutory discrepancy in favor of the industrial hemp industry before any other prosecutions occur. But the Legislature doesn’t convene again until February 2020.  In the meantime, however, if you are a hemp handler, hemp product seller, or otherwise deal in hemp products, you may want to bring this issue to the attention of your local legislator.

We’re also here to help with any questions you may have about this case or any other hemp-related issues.

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Public Service Announcement: City of Portland Marijuana Licenses

Public Service Announcement: All marijuana businesses located in the City of Portland must obtain a City Marijuana Regulatory License (“City License”)

There has been so much buzz about the Oregon Liquor Control Commission’s (OLCC) licensing process that many have overlooked the City of Portland’s licensing process.  However, if you are located within the City limits, you will need both licenses to operate.  Here are some steps you should take if you think you might be affected.

1.  Check to see that you are located within the City’s limits. A map showing the City’s limits is available here: https://www.portlandoregon.gov/bps/article/51672.

2.  Consider whether you are an affected business. All marijuana businesses must obtain a City License. This includes medical dispensaries licensed by the Oregon Health Authority (OHA). It also includes retailers, wholesalers, producers and processors who will be licensed by the OLCC.

3. Learn about the City’s requirements for obtaining a City License. We want to highlight a few key points:

  • A City License will not be granted to any medical dispensary or OLCC-licensed retailer that is within 1,000 feet of another medical dispensary or OLCC-licensed retailer.
  • The City’s license application review process will consider whether or not your proposed business is allowable under the City’s zoning code. You can do a preliminary review yourself by verifying your zoning code and reviewing the allowable uses in that zoning code. For more information you should consult a land use attorney.
  • Medical dispensaries must waive confidentiality with the OHA to apply for a City License.
  • Medical dispensaries and OLCC-licensed retailer applicants must pay a $975 application fee, and all other applicants must pay a $500 application fee. This fee is non-refundable.
  • Once licensed, OLCC-licensed retailers must pay a $4,175 licensing fee, and all other licensees must pay a $2,000 licensing fee.
  • A City License is valid for a period of one year and must be renewed annually.

The portion of the City’s code that addresses this licensing procedure, chapter 14B.130, is available here: https://www.portlandonline.com/auditor/index.cfm?c=69071.  Please note that this version of the chapter does not yet reflect recently adopted amendments.  To locate those amendments you should visit the City’s Pending Code Changes website: https://www.portlandonline.com/auditor/index.cfm?c=26653&a=23682.

 4.  Know if you qualify as a “grandfathered” dispensary. Grandfathered dispensaries are those dispensaries that meet either of the following criteria:

  • They (1) have been registered, operating and in good standing with the OHA since on or before July 1, 2015, (2) had a valid City of Portland Business License (i.e., tax registration) on or before July 1, 2015, (3) have no outstanding compliance issues pending with the OHA, (4) have not applied for or obtained another license to be a retailer within 1,000 feet of its proposed location, and (5) meet all other requirements in P.C.C. 14B.130.
  • They (1) have been registered and in good standing with the OHA since on or before September 30, 2015, (2) can demonstrate that they have incurred significant financial obligations prior to that date, using proof of a lease, hired employees, or investment in fixtures, (3) had a valid City of Portland Business License (i.e., tax registration) on or before September 30, 2015, (4) have no outstanding compliance issues pending with the OHA, (5) have not applied for or obtained another license to be a retailer within 1,000 feet of its proposed location, and (6) meet all other requirements in P.C.C. 14B.130.

5.  Be prepared to apply. The City will begin scheduling meetings to accept applications on December 1st. “Grandfathered” medical dispensaries can log on to the City’s website today to request a meeting.  Applicants seeking licensure as OLCC-licensed wholesalers, producers and processors can sign up for an intake meeting next Monday, November 23rd. Dispensaries and retailers that do not qualify as “grandfathered” dispensaries must also wait until next Monday, November 23rd, to sign up for an intake meeting; these businesses will be entered into a pool that closes on December 11th, and intake meetings will then be assigned to those in the pool on a random basis. Dispensaries and retailers that do not qualify as “grandfathered” dispensaries are subject to this drawing process because they are subject to the city’s 1,000 foot buffer, as mentioned above.

Log on to the City’s Marijuana Policy Program website for more information about the City’s application procedures, and to request a licensing meeting with the City’s staff: https://www.portlandoregon.gov/ONI/67575

You can also call the City’s hotline, at (503) 823-WEED (9333) with any questions.

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Gresham Marijuana Dispensary: When a yes is really a no

 

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The City of Gresham has been relatively opposed to allowing medical marijuana dispensaries to open within their limits. While located in a friendly county, Gresham has taken their time in determining how they were going address the ending of the 1531 moratorium. Even though Gresham voted in favor of 91, decisions around time, place and manner have been slow to come. Earlier this week they took a final vote and weed is finally coming (hasn’t it been there all along?) to Gresham.

Click here to view the map of permitted zones and the red-lined ordinance.

Here are the parameters:

– $250 to apply for a business license

– $5000.00 application fee and renewal fee paid on top of the $4000.00 required by OHA. These fees are non-refundable.

– All employees, not just the PRF will be subject to a background check.

– Only allowable zoning is commercial, industrial and mixed-use. However, if that zoning also has residential use then a dispensary is disallowed. See map above.

– The city will perform their own inspections on facilities above and beyond the OHA inspections. THIS MAY INCLUDE YOUR BOOKS AND RECORDS and whatever else they come up with.

– There are insurance and indemnification requirements.

– There will be lighting and waste requirements.

– Home occupation is prohibited. I will address this in a later blog post. This really is aimed at cultivation which is also addressed in this legislation.

– Gresham intends to do a deep dive into the owners and funders of facilities. They are requiring disclosure not only of the PRF but of all owners and funders- including lenders. Additionally Gresham wants to know who owns the real property being used.

– They will be asking for a business plan type disclosure. Gresham wants to know exactly what you plan to sell and how those products are cultivated or produced.

– They will require a plan to control odor prepared by a design specialist.

There is much more buried in the legislation so please feel free to call us with further questions. That being said, I consider this a NO. While Gresham is a prime spot for a dispensary and for indoor cultivation, this city should be a wait and see for entrepreneurs. The legislation is reactionary and intrusive. They want too much access and it is far too invasive (who knows who will be doing the training for inspectors or what kind of broad discretion they might have). As a criminal lawyer I never feel very good about having so much information gathering happening without a warrant or true good cause.

Finally, because we are not sure what the Oregon Legislature is going to do this session, or OLCC will do during rule-making, it is very possible that a disclosure made in this process could be prohibitive for getting a recreational license. And, there is really no guarantee that Gresham will even allow recreational stores to operate.

(I will be writing another post about cultivation in Gresham which is significantly addressed in the legislation as well)

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Clackamas Marijuana Dispensary Update

The Oregonian did a round-up of the Clackamas marijuana regulations pertaining to medical marijuana facilities now that May 1st has passed. Last February, during the supplemental session, HB 1531 allowed local governments to impose moratoriums on dispensaries until May 1st, 2015. Many people in the cannabis industry are interested in what actions Clakamas county and cities in Clackamas county, have taken as the deadline has passed. The interest lies not just in understanding where a facility may open. Cultivators, processors and potential participants also wonder if these decisions might be reflective of what is to come for regulating the rest of the medical cannabis industry as well as the recreational program.

We would caution not to extrapolate too much from these decisions. There are many months of the Oregon legislative session left and local preemption (not allowing cites and counties to make aggressive individual decisions) is an issue on the table.

Click here for a link to the entire Oregonian article and a summary is below.

Oregon City: No, indefinitely. Any dispensary trying to open in Oregon City would need a business license, and the city passed an ordinance in 2012 stating that no license shall be issued to any business prohibited by local, state or federal law.

West Linn: No, indefinitely. Without taking a vote, West Linn city councilors agreed on April 20 to support existing business license regulations similar to Wilsonville’s that disallow licensing medical marijuana dispensaries as long as they violate federal law.

Wilsonville: No, indefinitely. Like Oregon City and West Linn, Wilsonville is relying on business license limitations to prohibit medical marijuana dispensaries. However, the city took an extra step to send a clear message that dispensaries can’t locate there.

Milwaukie: Yes, conditionally. Of the five most populous cities in Clackamas County, Milwaukie is the only one to regulate, rather than ban, medical marijuana dispensaries.

Lake Oswego: No, not this year. Lake Oswego city councilors on April 21 passed an ordinance prohibiting medical marijuana dispensaries from locating in the city for another year.

Based on these individual jurisdictional decisions it is clear that many parts of Clackamas county have approached regulating medical marijuana dispensaries with an eye towards how to prohibit them and not to accommodate. Many of these decisions go far beyond just time, place and manner. We are assuming that a number of these jurisdictions may wind up in litigation.

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FRANCHISE LAW

Franchisors

Franchise law is a heavily regulated area of law.  We help clients expand their businesses through franchising and other distribution methods. We have experience in many industries including, restaurants, health, and beauty, alcohol, and cannabis among others. Our representative services include the following:

Franchisees

We also help potential franchisees interested in buying a franchise. We are able to assist with evaluation of franchise opportunities with respect to:

Alternative Structures

However, not all businesses are suited to franchise. We are also experienced with helping clients structure alternative distribution methods to prevent classification as a franchise.

MERGERS AND ACQUISITIONS

Our M&A attorneys are highly experienced in counseling clients who are considering acquisitions or exit strategies.  We have many years of experience handling deals of various types and sizes, ranging from sales of small closely-held business, private companies, and publicly-traded corporations.  We have represented business owners, private equity firms and investment banks in a wide range of industries. 

We have a deep business bench, and Emerge attorneys have handled transactions of all shapes and sizes.  Whether your deal is valued at $100,000 or $100,000,000, our experienced attorneys will guide you through the deal process.

We understand the intensity, technical skill and judgment needed to get deals done, and we provide our clients with timely, practical and cost-effective legal advice.  We are highly capable in all aspects of M&A, including the following:

CANNABIS INDUSTRY

Emerge Law Group is highly experienced in the cannabis industry.  We have helped many clients obtain state licenses and local permits to operate cannabis businesses throughout California, Oregon, and Washington.

Emerge attorneys were instrumental in the drafting and passage of Oregon Measure 91, legalizing marijuana in the State of Oregon, and have represented cannabis businesses well before many law firms were willing to enter the cannabis industry. As a firm that has provided legal services in the cannabis space for many years, we are familiar with the unique and complex issues businesses and individuals face in an emerging and highly regulated industry.

We regularly help clients with:

Cannabis laws and rules are also regularly changing.  Members of our team are dedicated to attending legislative hearings, state agency and local city and county meetings to stay up-to-date on any new changes and how to adjust to any new changes.

See our Cannabis Industry page for more information.

PSYCHEDELICS

There is tremendous excitement about the potential for psychedelic drugs to benefit a wide variety of populations, including terminally ill patients suffering with anxiety and depression. Until recently, psychedelic substances have been accessible only in the illicit market and are illegal under federal and state to manufacture, distribute, or possess. These substances have, since 1970, been treated as having no legitimate medical use, and no commercial application. As such, no one invested in this area or required legal services, outside of the criminal context.

Today, researchers in a multitude of clinical studies are proving the medical safety and efficacy of these medicines, with the objective of changing the treatment of these substances under the Controlled Substances Act. Companies are now actively raising money to develop intellectual property and seize market opportunities associated with psychedelic drugs.

In addition, advocates at the state and local levels are not waiting for the rescheduling of these substances and are active in undertaking efforts to decriminalize these substances and/or make them affirmatively legal under state and/or municipal law. Decriminalization already has occurred in cities including Denver, Oakland, Santa Cruz, and Ann Arbor. Oregon is poised to be the first state to make psilocybin therapy affirmatively legal. Emerge Law Group is working with a wide array of clients pushing forward in this emerging area.

See our Psychedelics Practice Group page for more information.

TAXATION

CORPORATE AND PARTNERSHIP TAX

Businesses of all kinds benefit from a customized but systematic approach to structuring legal relationships. Emerge Law Group helps businesses and business owners with a variety of tax planning matters.

Representative client services include:

ESTATE PLANNING

Estate planning encompasses everything from a will and power of attorney to combined estate and business succession planning. In almost all cases, the purpose of the plan is to help the client protect those they care about most in the event they can no longer be there for them.

Emerge Law Group has experience with a wide range of tools used in estate planning, including wills, trusts, and family business entity planning.

TAX CONTROVERSIES

Emerge Law Group can assist with the resolution of difficult tax controversies. Our areas of emphasis and experience include:

REAL ESTATE TRANSACTIONS

Emerge Law Group assists clients with a wide range of real estate transactional matters.  We regularly help clients with:

LAND USE

Emerge Law Group also assists clients with all aspects of local government land use and development processes, ranging from preliminary property analyses and building permit issues to complex land use reviews and hearings. Our attorneys are experienced in obtaining land use entitlements and development permits for a wide range of uses.

We regularly help clients with:

Above all, we understand the value of working with cities and counties to enhance communities while developing the land to its potential. We strive to create solutions to land use issues that serve to better our clients and the communities in which they live and work.

LITIGATION AND ALTERNATIVE DISPUTE RESOLUTION

The attorneys in Emerge Law Group’s Litigation and Alternative Dispute Resolution practice group litigate commercial, intellectual property, and public interest matters in state and federal courts, as well as private mediation and arbitration proceedings.  Our lawyers have represented national and regional financial institutions, major media, entertainment and technology companies, and other Fortune 500 companies in a broad array of high-stakes disputes.  Our team of litigators has handled leading cases that have shaped the law in cutting-edge business, technology, free speech, and public interest impact lawsuits in trial and the courts of appeal.

We have particular expertise in handling civil litigation and regulatory enforcement matters in the cannabis and psychedelic industries.  While many firms claim expertise in the these industries, few have our depth of experience successfully litigating contract, trademark, partnership, shareholder, land use, and real estate disputes in court and arbitration.  Even fewer firms have our level of experience handling writ of mandate proceedings against the government regulators.

Our litigators practice in California, Oregon, and Washington, but have appeared in state and federal courts nationwide.  Our knowledge of our clients’ businesses, goals and concerns, and our experience litigating at the highest levels, give us unique insight into possible outcomes and pitfalls as we continuously confront issues of new impression.

No matter what the industry, we pride ourselves in achieving our clients’ objectives through efficient and creative solutions primarily designed to avoid disputes in the first place—which is always the best litigation strategy.  Many times, our clients obtain excellent outcomes before or at the earliest stages of litigation because our adversaries quickly recognize the challenges they will face in litigating against us.  When litigation is unavoidable, however, we work hard to provide our clients with both cost-efficient and “big firm” quality representation.

 

INTELLECTUAL PROPERTY

Your intellectual property (or “IP”) strategy can harness your most valuable information and intangible assets including your name, your brand, your designs, your content, your services, and your products — what makes your business stand apart in a competitive world.  We can help you evaluate and build your IP portfolio, then secure it, monetize it, and protect it.

IP encompasses multiple areas of law and different types of information or material.

Our Intellectual Property practice focuses on:

TRADEMARK

Trademarks include names, signs, logos, designs, phrases, slogans, expressions, and sometimes even colors, sounds, or smells that identify or distinguish one business compared to others.  Trademark protection is fundamental in securing your “brand.”

COPYRIGHT

Copyright covers original works of creative authorship fixed in a tangible medium of expression.  This includes literary, dramatic, musical, and artistic works, such as poetry, novels, designs, movies, songs, computer software, and architecture. Copyright does not protect facts, ideas, systems, or methods of operation, although it may protect the way these things are expressed.  Depending upon the type of work, “moral rights” (such as the right of attribution) may be implicated as well.

TRADE SECRET

Trade secret laws can vary somewhat between states, but generally trade secrets cover information, including drawings, cost data, customer lists, formulas, recipes, patterns, compilations, programs, devices, methods, techniques or processes that derive economic value from not being generally known and are the subject of efforts that are “reasonable under the circumstances” to maintain secrecy.

PRIVACY

Depending upon where you live or operate, there is a special patchwork of laws and regulations that protect and regulate personal information.  If you are handling or giving out personal or potentially sensitive information, you may be implicating privacy laws.

PUBLICITY

Publicity rights address the commercial use of an individual’s face, name, image, or likeness.  These rights vary state-to-state.  Marilyn Monroe, for example, lived in multiple states which created complex questions about her publicity rights.

Our Intellectual Property services include:

FINANCIAL INSTITUTIONS

In states where new cannabis banking opportunities exist, Emerge Law Group has the proven expertise in creating canna-banking programs to efficiently capitalize on those opportunities. Our Banking Practice Group specializes in working with banks and credit unions to develop regulatory compliant programs and operational best practices. We also train banking staff to become experts in canna-banking so they can effective understand and manage the risk affiliated with canna-banking.

We regularly help clients with:

EMPLOYMENT LAW

At Emerge Law Group, we recognize that employees are the heart and soul of any successful business.  Our Employment Law Practice Group works with employers to help them effectively manage their workforce, navigate the complex web of federal, state and local employment laws and, if necessary, defend against claims before administrative agencies and in court.

We regularly help clients with:

CORPORATE FINANCE AND SECURITIES

Our corporate finance and securities lawyers are experienced attorneys who have practiced at large law firms, worked as in-house counsel for public companies and investment banks, and owned and operated start-up companies. We work with clients to help achieve their financing goals while safely navigating the highly technical securities law landscape. 

In addition to representing issuers, we also routinely represent institutional and individual investors, including in connection with fund formation and investments.

Our expertise includes:

We have a deep understanding of the financing options available to businesses, including simple unsecured loans, asset-backed financing, convertible debt, common and preferred equity, crowdfunding and various other structures.  We work closely with our clients to understand their business and financing needs, ensure they are prepared to approach investors and choose the right partners, structure and negotiate terms, navigate the due diligence process and successfully close the deal.

COMPLIANCE AND LICENSING

ALCOHOL AND BEVERAGE INDUSTRY

Emerge attorneys have represented businesses in the alcohol and beverage industry, including wineries, breweries, distilleries, restaurants, bars, movie theaters, golf courses, and gas stations.  We can help you vet new locations, acquire existing locations, and apply for the appropriate liquor license.  We also provide training to comply with applicable rules and regulations, prepare operating procedures, submit renewals, and keep clients protected in the event of any potential violations or administrative hearings.

CANNABIS INDUSTRY

Emerge Law Group is highly experienced in the cannabis industry.  We have helped many clients obtain state licenses and local permits to operate cannabis businesses throughout California, Oregon, and Washington.  We regularly help clients with:

Cannabis laws and rules are also regularly changing.  Members of our team are dedicated to attending legislative hearings, state agency and local city and county meetings to stay up-to-date on any new changes and how to adjust to any new changes.

See our Cannabis Industry page for more information.

PSYCHEDELICS INDUSTRY

Emerge Law Group is a leader in the psychedelics industry.  There is tremendous excitement about the potential for psychedelic drugs to benefit a wide variety of populations, including veterans struggling with PTSD and terminally ill patients suffering with anxiety and depression.  Until recently, psychedelic substances have been accessible only in the underground; they are illegal under state and federal law to manufacture, distribute, or possess.  These substances have, since 1970, been treated as having no legitimate medical use, and no commercial application.  As such, businesses have not invested in this area or required legal services, outside of the criminal context.

Today, psychedelics are proceeding toward legalization on multiple paths.  Researchers in a multitude of clinical studies are proving the medical safety and efficacy of these medicines, with the objective of changing the treatment of these substances under the federal Controlled Substances Act, opening legal access to them.  Private and public companies are now actively raising money to develop intellectual property and capitalize on the market opportunities associated with psychedelic drugs.  Opportunities to be early actors in this new arena are tremendous.

See our Psychedelics Practice Group page for more information.

BUSINESS AND CORPORATE

Our business transactions team is made up of highly experienced transactional attorneys who have practiced at large law and accounting firms, worked as in-house counsel for public companies and investment banks, and owned and operated start-up companies. We understand complex legal matters and provide high quality legal services in a cost-effective manner.  Our clients value our experience, knowledge and judgment.

ENTITY FORMATION

Our team routinely advises clients regarding:

CORPORATE GOVERNANCE

Emerge attorneys also advise on-going concerns with: