The cannabis industry continues to grow rapidly, even as state and federal laws remain mired in conflict. A majority of states have legalized cannabis for medicinal purposes, and many are moving forward with legalizing adult-use as well. In addition, following the passage of the 2018 Farm Bill, states have turned toward the production of hemp and cannabidiol (CBD) products. Though this explosive growth has led to tremendous opportunities in industries such as health and wellness, pharmaceuticals, personal care, and food products, businesses and investors still face unprecedented challenges in navigating complex and often conflicting local, state, and federal regulations.
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Success in this emerging and sensitive industry requires a legal team offering more than just knowledge of evolving cannabis laws. Equally critical is an understanding of the intersection of these laws with federal and state consumer protection regulations that impact an array of business and operational matters including licensing, marketing and advertising, product labeling, sales practices, consumer outreach, and compliance for physicians. Companies operating outside the cannabis industry must also contend with the impact on their operations as they develop workplace policies addressing matters such as employee cannabis use, drug testing, insurance, and workers’ compensation.
With previous experience as former state regulators, the M&S team brings an intimate and practical knowledge of the law and a nuanced approach earned through decades of working within other highly regulated industries. Whether you operate in the cannabis marketplace or are simply looking to manage the impact of medical marijuana in your workplace, we can help you understand, comply, adapt, and thrive against this evolving regulatory landscape.
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We provide our cannabis industry clients with a full range of legal services that address their current business challenges and proactively identify and protect against future threats, including:
Business Formation
Choosing the proper business structure is a critical first step in planning any business endeavor, and this is especially true in the cannabis industry. We help entrepreneurs and existing operators understand the tradeoffs involved in choosing various business structures, assist in navigating the legal and administrative process of organizing their business entity, and advise on best practices for administering their new or existing business.
Licensing & Registration
Permission to produce and sell cannabis products comes in the form of state licensure, which varies from state to state and by the nature of the entity. We assist businesses throughout the vertical – cultivators, processors, dispensaries, testing labs, even medical doctors – with obtaining and maintaining the licensing needed to operate legally. We also help ancillary businesses serving the cannabis industry understand the legal requirements necessary for them to serve their cannabis customers and clients.
Mergers & Acquisitions
As the cannabis industry continues to mature, opportunities abound for both new entrants looking to enter the space and existing operators seeking to buy and sell assets. From assisting with early-stage negotiations and letters of intent, through due diligence and the preparation of definitive documents, to administrative agency approval and closing, we represent both individuals and multistate operators in mergers and acquisitions in Ohio and throughout the Midwest.
Regulatory Compliance
Proactive compliance is critical to success in this sector, especially in complicated regulatory regimes like Ohio, home to some of the strictest industry governance in the nation. We advise clients on how to comply with the complex web of federal, state, and local regulations affecting cannabis businesses.
Compliance Audits
We provide comprehensive audits of our clients’ operations, vendors, and other partners to identify and remedy compliance gaps throughout the distribution chain. We also regularly conduct enterprise-wide compliance training to ensure employees understand applicable laws and the actions that can be taken to reduce risk.
Marketing & Advertising
Cannabis and CBD products are subject to some of the toughest state and federal regulations and oversight. Our team thoroughly reviews advertising and marketing materials across all media to ensure compliance with regulatory requirements.
Real Estate / Zoning
Site selection is one of the most critical components of successfully starting or expanding a cannabis business, and it is also one of the most difficult to execute. Complex laws and rules dictating where you can locate a cannabis business are not only tricky, they are changing all the time. We provide our clients with the knowledge necessary to make informed decisions on site selection to ensure that they locate their cannabis business on sites that comply with the laws and requirements of both state and local jurisdictions. We also assist them in securing all permits and entitlements required for their business to become approved and operational.
Labor & Employment
Cannabis laws impact every business and its employees. We advise clients on developing and implementing effective workplace policies that protect their interests, taking into account disability laws, drug testing requirements and practices, and insurance implications.
Physician Services
We help physicians comply with applicable regulations and develop best practices when recommending medical marijuana to their patients.
Litigation
The threat of litigation looms large in the cannabis industry. We bring deep trial experience and a thorough understanding of the complex, state-specific regulations unique to cannabis litigation to deliver wins in the courtroom and at the pre-litigation stage.
State & Federal Investigations
Regulatory enforcement actions can bring ruinous financial penalties, reputational damage, and operational disruption. We help businesses navigate and respond to investigations and enforcement actions brought by state regulators and federal agencies.
Regulatory Advocacy
Protecting our clients’ positions goes beyond the courtroom. We advocate for client and industry interests in policy matters at both the state and national levels.
Consumer Complaint Response
Consumer complaints are often “the canary in the coal mine.” We regularly assist businesses in responding to and resolving consumer issues before they lead to a government investigation or lawsuit. We also advise on how to use these complaints to proactively ward off future problems.
The emerging cannabis industry has tremendous potential but still faces growing pains. A web of stringent state and local laws combined with federal prohibition has created a challenging environment for cannabis businesses to overcome in order to succeed. While states look to consolidate and streamline administration of their cannabis programs, cross-cutting city and municipal regulations often leave a maze of jurisdictional differences that can be confusing and challenging to navigate. Whether you’re a cultivator, processor, dispensary, or testing lab, this complex regulatory landscape requires thoughtful counsel from experienced attorneys to ensure you can move forward with confidence.
For example, Ohio’s Medical Marijuana Control Program (MMCP) was originally comprised of, managed, and enforced by three separate agencies: the Department of Commerce (cultivation, processing and testing), Board of Pharmacy (dispensing), and Board of Medicine (prescribing). After just a few years, however, and in preparation for adult-use cannabis, the system was moved under a newly-created Division of Cannabis Control within the Department of Commerce. Our deep background in consumer protection law and experience as former state regulators enables us to better help our industry clients comply with these evolving regulatory structures.
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Every business should have a cannabis use policy. Even if you do not operate a cannabis business, you have to address the implications of the industry on your workplace and employees.
There are complications, partly due to conflicting state and federal laws. Employers must be prepared to deal with conflicting rules pertaining to, among other things, insurance and drug testing. They also must understand how to create and implement a cannabis policy, one that is reinforced and maintained through compliance monitoring programs.
While employer discretion with regard to cannabis use is generally the rule in most states, this must be buttressed against federal laws like the Drug-Free Workplace Act and the Controlled Substances Act. Understanding the nuanced interactions between these laws, whether you are in the cannabis industry or are simply evaluating your company’s cannabis policy, requires an experienced analysis.
Among other things, employers should focus on the consistency of policies, procedures, and practices with respect to their employees. It is critical to treat everyone equally and apply workplace policies consistently. For example, if the company policy permits use of medical cannabis for qualified individuals under certain circumstances, that policy should be applied equitably, and there should be no exceptions made based on individual supervisor decisions. Working with experienced counsel is necessary not only to ensure that your policies are compliant with employment and human resource laws, but that your practices are aligned with those policies as well.
When it comes to insurance coverage and liability, what a business can, cannot, or must do depends on the language of the contract. Have counsel assess your insurance contracts to determine what your rights and duties are with regard to cannabis and the company’s insurance. Businesses also must contend with the interplay between Worker’s Compensation benefits and medical marijuana, an evolving area of law.
Our attorneys closely monitor policy discussions, proposed legislation, and important court decisions at the state and federal levels. We also stay informed on industry developments through our active participation in the National Cannabis Industry Association and Ohio Medical Cannabis Industry Association.
We take seriously our charge to keep our clients informed on the latest developments and provide our own analysis and insights. We encourage you to sign up for our Cannabis News & Insights and for a more detailed evaluation of your business’s position, contact our team today.
Mac Murray & Shuster is a member of the National Cannabis Industry Association
