Welcome back to Higher Law, our weekly briefing on all things cannabis. I'm Cheryl Miller, reporting for Law.com from Sacramento. Remember 4/20? Me neither. I have to be reminded what day it is two or three times daily. So mark Monday on your calendar.

This week we're looking at: Cannabis lawyers' efforts to be included in federal coronavirus aid • A billion-dollar lawsuit filed by a hemp-growing company • A legal challenge to the so-called California Cannabis King • The NFL's relaxed marijuana rules

Thanks for reading. I always appreciate your feedback, thoughts and tips. Send them to me at [email protected] or call me at 916.448.2935. Follow me on Twitter @capitalaccounts.

 

 

Lawyers Plead With Feds for Access to Emergency Funds

Cannabis lawyers have a message for federal leaders as they mete out financial help for small businesses struggling in the pandemic don't forget about us.

The International Cannabis Bar Association sent a letter to congressional leaders this week asking them to lift the Small Business Administration's block on aid to so-called indirect marijuana businesses. The association's 700 lawyers and firms say the designation "could be interpreted to deprive broad swaths of the U.S. economy from much-needed financial relief that Congress has allocated to these small businesses in this unprecedented time."

"As applied, this 'Indirect Cannabis Business' exclusion is untenably broad because it excludes businesses from CARES Act relief that are not 'engaged in illegal activity' … Rather, the SBA has unilaterally prevented law firms and countless other professionals, which would otherwise qualify for financial assistance under the Economic Injury Disaster Loan (EIDL) and Paycheck Protection Loan (PPP) programs, from accessing much-needed financial assistance intended to save the very types of jobs we are now losing."

Chris Davis, the bar association's executive director, said firms are hurting with courts closed, litigation all but put on hold and transactional work drying up.

"For many firms, this isn't enough to keep the doors open for an extended dry spell," Davis said. "Some firms have a few weeks. Some a few months. But very few are not worried about the long term implications of this slowdown."

The Paycheck Protection Program, aimed at keeping workers on company payrolls, is supposed to work with expanded unemployment benefits. Without access to PPP funds, "firms are facing a really difficult time."

What's more, the federal government doesn't distinguish among companies that do an hour of work for a marijuana company or those that derive all of their income from industry players. "This strikes a ton of professionals from eligibility, and that is a huge, unrecognized, and unaddressed problem," Davis said.

Cannabis industry lobbyists, including those from Brownstein Hyatt Farber Schreck, are pressing Congress for help; the House of Representatives has been more receptive than the Senate, according to reporting by The Hill. Colorado Governor Jared Polis has also written to lawmakers, the Denver Post said.

"In an ideal world, Congress would include a provision in an upcoming bill guaranteeing that all state-legal cannabis businesses, direct and indirect, will be eligible for these loans," Polis wrote. "In the alternative, I hope that you can at least work with your colleagues to ensure that Indirect Marijuana Businesses will be eligible for the loans."

"To be clear: 4/20 will not be tolerated this year. Do not come to San Francisco to celebrate. We will cite people. We will arrest people if necessary. Order food. Watch Netflix. Stay home and stay safe."

- San Francisco Mayor London Breed

 

Hemp Grower Files Suit Over Crop Destruction

Three firms have sued California's Kern County and various state and local officials for $1 billion, alleging that authorities illegally destroyed 500 acres of Apothio LLC's hemp plants in 2019.

Yes, that's billion with a "b."

Lawyers with Roche Cyrulnik Freedman; Eskovitz Law and Brant Bishop say Apothio had the necessary permits and approvals to grow approximately 17 million plants in Kern County for research and commercial uses. Law enforcement ordered the grows bulldozed in October 2019 after some plant samples showed THC levels above 0.3 percent, the ceiling amount for hemp by definition.

As an established agricultural research institution, Apothio is allowed under state law to possess plants with a THC level above 0.3 percent if those plants contribute to the development of industrial hemp that complies with the 0.3 percent cap, the plaintiffs' lawyers argued.

In addition to the $1 billion in damages. Apothio is asking for a permanent injunction "forbidding defendants from testing, interfering with, tampering with, or destroying Apothio's hemp plants."

The suit was filed March 10 in the U.S. District Court for California's Eastern District. Kern County rejected a $1 billion government claim filed by Apothio in November, bakersfield.com reported.

 

 

Who Got the Work

>> Colorado-based cannabis company Redwood Green Corp. has named Patricia Kovacevic (above, speaking in 2017 at the Global Forum on Nicotine) as general counsel and head of external affairs. Kovacevic has held senior regulatory and compliance roles at companies including Philip Morris International and Lorillard. The Columbia Law School graduate also was formerly an associate at Linklaters. Bloomberg Law has more here.

>> Meland Russin & Budwick partner Eric Ostroff in Miami is suing the so-called California Cannabis King, alleging the marijuana entrepreneur illegally used a $3 million business loan to buy condos in South Florida, my colleague Raychel Lean writes in the Daily Business Review. Ostroff represents Delaware company GIA Investments LLC, which claims it was never repaid after loaning $3 million to California cannabis production and distribution companies Cannafornia Holdings Inc. and California New Wave I LLC.

"The complaint points the finger at CEO and self-professed king of cannabis—real name Paul King—for allegedly using the companies as 'his personal piggy bank.'" King's attorney, Stephen Boren of Boren Osher & Luftman, did not respond to the Daily Business Review's request for comment. Boren said in court pleadings that the loan documents were fake, according to the complaint, which included an email in which Boren called the lawsuit meritless and malicious.

 

 

In the Weeds…

>> The NFL has reached a new 10-year labor agreement that includes relaxed rules about marijuana. "One of the biggest overhauls in the agreement, though, was a change the league had long resisted: loosening the rules governing players' use of marijuana. Under the new collective bargaining agreement, players who test positive for marijuana will no longer be suspended. Testing will be limited to the first two weeks of training camp instead of from April to August, and the threshold for the amount of 9-delta tetrahydrocannabinol—or THC, the psychoactive compound in marijuana—needed to trigger a positive test will be raised fourfold." [NYT]

>> Many cannabis companies are facing doom, despite weed being "essential" amid the pandemic. "For industries like California's pot business that were already on the brink, the coronavirus crisis represents a make-or-break moment. Many retailers and restaurants have shut in the last month for the shelter-in-place order, unsure if they'll reopen when it's over. Like grocers, the marijuana industry's ability to operate during the pandemic offers a much-needed source of revenue. But for the pot business, the lack of a safety net, access to banking, or the ability to tap into federal stimulus dollars means the tiniest misstep could lead to bankruptcy." [The Washington Post]

>> A top Massachusetts cannabis regulator is stepping down. Cannabis Control Commission member Kay Doyle announced she is leaving the regulatory panel on May 8, four months before her term expires. The former deputy general counsel to the Massachusetts Department of Public Health said in a statement that she is returning to the private sector, although she did not say where. [MassLive]

>> An Amazon worker fired for medical marijuana use won a federal court ruling. The U.S. District Court for New Jersey returned a wrongful termination case brought by plaintiff "D.J.C." to state court, where it's likely to be viewed more favorably. The judge granted the plaintiff's motion to remand the case to New Jersey courts after DJC named his former manager as a defendant and dropped a claim under the federal Americans With Disabilities Act. [Marijuana Moment]

>> Missouri voters won't consider recreational use this year. Missourians for a New Approach committee announced Wednesday that it "simply cannot succeed in gathering sufficient signatures" amid pandemic-related restrictions on public gatherings..Advocates had to collect 170,000 signatures by May 3 to qualify a recreational-use measure for the November ballot. [AP]

 

 

The Calendar: Time to Mark It

April 21 – Duane Morris presents the webinar "Cannabis 303: Civil Litigation and COVID-19 Implications for the Cannabis Industry: An Unavoidable Consequence of a Maturing U.S. Cannabis Market." Scheduled presenters are cannabis industry group lead Seth Goldberg and associate Justin M.L. Stern.