California marijuana retailer sued by former chief financial officer

Image: MedMen Chief Executive Adam Bierman as reported by Los Angeles Times. Photo Credit:  Ricardo DeAratanha / Los Angeles Times.

Image: MedMen Chief Executive Adam Bierman as reported by Los Angeles Times. Photo Credit: Ricardo DeAratanha / Los Angeles Times.

MedMen, a major marijuana industry operator in California with 1,243 employees, faces a lawsuit by its former chief financial officer, the L.A. Times reports.

“As California’s marijuana industry works to project an image of mainstream respectability, one of its best-known companies has come under attack by a former insider,” the newspaper reports.

MedMen Enterprises Inc. is trying to bring pot sales into the mainstream by providing sleek, comfortable stores in high-profile locations, and its strategy often is said to emulate the Apple store model.

The marijuana retailer is being sued by its former chief financial officer, James Parker, “who alleges the Culver City firm forced him out for objecting to a variety of alleged misdeeds at the company, whose stock became publicly traded last year.” A MedMen official denies the allegations.

Parker’s suit was filed in Los Angeles County Superior Court following his departure from the firm on Nov. 5.

“After earlier rounds of private funding, MedMen went public last May through a reverse takeover — MedMen bought an existing Canadian public company — that enabled MedMen’s stock to be listed on the Canadian Securities Exchange,” the L.A. Times reports. “Although California and more than two dozen other states allow medicinal or adult recreational use of marijuana, cannabis remains illegal under U.S. federal law and thus the major U.S. stock exchanges will not list cannabis firms that operate in the United States.”

RICO law used to target marijuana businesses

herb-2915337_640An anti-mobster law, the Racketeer Influenced and Corrupt Organizations Act, has emerged as a tool to fight marijuana-related businesses, including a case in Massachusetts citing “pungent odors” caused by consumption of the substance, among other negative effects.

Bloomberg reports, “While pot remains illegal under federal law, Massachusetts voters approved medical marijuana consumption in 2012 and recreational use in 2016; the latter will kick in next year. The drug is legal for at least one of the two purposes in 29 states, the District of Columbia, Puerto Rico, and Guam. But that doesn’t mean everybody wants a weed business next door. That’s why the burgeoning $6 billion marijuana business in the U.S. should view the RICO suits as serious threats, says Sean O’Connor, faculty director of the Cannabis Law and Policy Project at the University of Washington School of Law. Even if all the litigation fails, he says, ‘it could have its intended impact.’

“A lawsuit against Healthy Pharms in Cambridge, Mass., argues the company “would operate in flagrant disregard of the federal law that categorizes cannabis as a controlled substance every bit as illegal as heroin or cocaine.”

A similar lawsuit, a nearly 3-year-old suit in Colorado, is scheduled to go to trial in July, reports Marijuana Business Daily.

“This is an existential threat to the industry,” said Brian Barnes, an attorney with Cooper & Kirk law firm, according to the MBD.

Valerio Romano, an attorney for one of the Massachusetts defendants, said “the real impact of RICO suits could be to simply scare entrepreneurs into quitting the marijuana business.”

Will Pot + RICO Challenge State’s Federalist Trend?

Marijuana plants grow at LifeLine Labs in Cottage Grove, Minn., in 2015. (Jim Mone/Associated Press)

Marijuana plants grow at LifeLine Labs in Cottage Grove, Minn., in 2015. (Jim Mone/Associated Press)

Writing in The Washington Post, legal commentator Jonathan H. Adler outlines both the context and challenges facing “legal” marijuana now that a law targeting gangsters is being used for civil resistance to state pot reforms. We’ve reported before that the federal 10th Circuit court has taken a stand and it’s significant.
 
Adler outlines the federal context, including how the U.S. Congress has linked marijuana to funding legislation, before going into the looming challenges.
 
He notes that “… a bigger potential threat [to state legalization efforts] comes from the fact that marijuana possession and distribution are predicate offenses under the Racketeer Influenced and Corrupt Organizations Act (RICO). This means that those who produce or sell marijuana are potentially subject to civil RICO suits, whether or not such activities are legal under state law. So held the U.S. Court of Appeals for the 10th Circuit earlier this year. A federal judge once described RICO as “the monster that ate jurisprudence.” Barring real reform at the federal level, it could be the monster that ate marijuana federalism, too. Here again, an appropriations rider is insufficient.

 
Adler is arguing that the RICO use is a threat to the “federalism” model for state control. 
 
Opinion | Will marijuana make federalism go up in smoke?

Unintended Consequences As Virginia Court Excuses Pot, But Ensnares Immigrants

Washington Post article, 3/10/17

Photo Credit: Washington Post article, 3/10/17

The Washington Post has a story illustrating how shifting legal landscapes can impact immigration practices. The paper reports that “… the Arlington General District Court this month imposed the new policy for handling many misdemeanor marijuana possession cases, a change the top prosecutor said would make the court process quicker and less stressful for first-time offenders. But the county’s public defender and immigration advocates are objecting because the shift also means that poor defendants in those cases will no longer get a free lawyer to help them understand — and perhaps fight — the charge.”

Because immigration issues are considered civil, not criminal, defendants do not have assurances of legal representation. Now, because “jail” is not looming they will not get legal representation – if they take the easy way out, just plead guilty, they may find themselves later banned from the country, even if they are here legally.

It’s a great example of how the legal system can confuse the issues:

Get caught with pot, don’t go to jail: Why not everyone is happy

California City Remains A Lesson In Pot’s Unintended Consequences

Robert Taft Jr., director of the licensed 420 Central dispensary, with Ocean Grown Jack Herer sativa. “I'm fighting for the patients we have. People want to go to a safe store.” Photo Credit, Orange County Register report, 3/29/16

Robert Taft Jr., director of the licensed 420 Central dispensary, with Ocean Grown Jack Herer sativa. “I’m fighting for the patients we have. People want to go to a safe store.” Photo Credit, Orange County Register report, 3/29/16

Confusion and civil lawsuits abound in the Orange County, California city of Santa Ana over legal marijuana sales –and the fringe shops that may or may not be legal.

Attorney Arthur Travieso is representing a shop called Live2Love and four other unlicensed pot shops in lawsuits against Santa Ana, claiming the city’s lottery process was unfair because it allowed multiple entries by the same individuals, as long they applied and paid a $1,690 fee. Some shops also say they are legal under the state’s medical marijuana law and don’t have to follow city regulations.

The OC Register newspaper also notes that “… Santa Ana police garnered unwelcome international attention after a May raid caught on video showed officers forcing Sky High customers to the ground and eating merchandise. Three officers involved in the raid were charged this month with petty theft and vandalism.” And, you guessed it, that brought more lawsuits.

Read the cautionary tale here: http://www.ocregister.com/articles/city-709935-shops-pot.html

First Court-Sanctioned Case of Interstate Medical Cannabis Commerce

A potentially precedent-setting cannabis case comes out of the Northeast this week. Linda Horan, a lifelong Labor activist, said her last fight would be to pave the way for medical cannabis to be used in New Hampshire. While the Legislature there authorized medical cannabis more than two years ago, the State itself was slow to implement the policy leaving legal medical patients in limbo. Until dispensaries opened, NH was refusing to authorize patient cards to qualifying residents.

Enter Horan. With Stage IV lung cancer, she argued that by the time the dispensaries would be open, she would be dead. While wasting syndrome took more than twenty pounds from her in just a few short months, her tenacity never failed her, or her team of supporters. She sued the State for the right to have her medical card, arguing that she could travel to the neighboring State of Maine where she could procure her medication under its reciprocity laws.

Maine has allowed medical marijuana since 1999, and authorized medical dispensaries in 2009. Both were passed at the ballot box while the NH law was passed through the Legislature. Unlike Maine, NH does not allow for so-called “home grow” where patients can grow a limited number of plants for themselves, leaving the only legal means for patients to procure medical cannabis through dispensaries.

Judge Richard McNamara, a broadly respected judge whose rulings are rarely overturned ruled in favor of Horan, directing the NH Department of Health and Human Services to issue Horan a patient card. The decision hinged upon the fact that medical cannabis was, in fact, available to Horan, albeit in a nearby State.

What sets this civil case apart from all others is McNamara’s explicit insistence that Horan could bring medical cannabis over the border, essentially ruling that NH would authorize interstate commerce. According to the Portland Press Herald, “In his ruling, McNamara rejected the state’s argument that allowing Horan to possess marijuana from Maine would destroy the tight distribution controls lawmakers envisioned in passing the law. He noted that the law allows visitors from other states to obtain marijuana in New Hampshire, suggesting that lawmakers knew other states would have similar provisions.”

At 4:30 PM the day before Horan was scheduled to drive to Maine, the NH Attorney General advised DHHS to authorize patient cards for all qualifying NH residents.

While McNamara is not a federal judge, it will be interesting to see what kind of a precedent this may set for future cases, particularly as Oregon’s adult use market comes online, immediately next to Washington State. While all eyes have been watching whether interstate commerce would be allowed there under the Cole Memo which requires legal states prevent diversion to non-legal states, a dying woman’s last wish for non-opiate palliative care may have just cleared the path for interstate commerce between legal, neighboring states.

For Horan’s part, she says, “I’m over the moon.”

Read more about Horan’s story at the Concord Monitor.

Court Tells Feds To Lay Off Medical Pot Providers

A federal judge seems to have settled an issue between federal law enforcement and local marijuana operations in states with laws allowing legal pot. At issue was an amendment to a federal spending bill saying that law enforcement cannot use federal funds to go after marijuana operations or users in states that have laws governing such things. As Washington Post blogger Christopher Ingraham explains, “… when the legislation was passed, advocates and lawmakers on both sides of the issue agreed that the bill basically prevented the DEA from going after medical marijuana dispensaries, provided that such dispensaries were acting in compliance with state law. The DEA, however, didn’t see it that way. In a leaked memo, the Justice Department contended that the amendment only prevents actions against actual states — not against the individuals or businesses that actually carry out marijuana laws”
 
The judge did not find that argument at all amusing. Read the results here: Federal court tells the DEA to stop harassing medical marijuana providers

First Product Liability Lawsuit May Challenge Marijuana Industry Growth

The LA Times Reports, "The list of ingredients on a LivWell container includes pesticides. The company says they are safe. (AAron Ontiveroz / Denver Post)" in its 10/8/15 "A first for the marijuana industry: A product liability lawsuit" article.

The LA Times Reports, “The list of ingredients on a LivWell container includes pesticides. The company says they are safe. (Aaron Ontiveroz / Denver Post)” in its 10/8/15 “A first for the marijuana industry: A product liability lawsuit” article.

You knew this was just a matter of time. A legal-marijuana user has filed a product liability lawsuit against a cannabis company alleging use of harmful substances in their production process.
 
The Los Angeles Times reports that the attorney representing the 24-year-old medical  marijuana user is seeking “class action” status for the litigation and expects more clients to join the lawsuit.
 

As Government Delays, Civil Lawsuits Set Pot Policies

As California considers a sweeping regulatory changes in how it handles marijuana use, the civil courts continue to define how laws will actually be applied. A good recent example, covered by NBC in San Diego, involves a “… couple whose home was raided by agents with guns drawn” who has filed a lawsuit against San Diego law enforcement, alleging their rights as medical marijuana patients were violated.
 
The report points out that “… the lawsuit filed in U.S. District Court is the latest example of the ongoing debate over the rights of medical marijuana patients in California – how their treatment is regulated and how, according to their attorney, these type of cases are perceived by law enforcement.” This particular couple had previously arrested and put on trial for marijuana infractions, but found innocent.

California Finally Moves To Regulate Legal Marijuana

The Golden State was the first to legalize medical marijuana, but was also the first of several states to drag its feet on how to regulate growing and selling the now-legal medicine. Now, 20 years after the Compassionate Use Act of 1996, the state legislature has passed several bills that establish “seed to sale” systems. Proponents of medical marijuana are wasting little time in urging Gov. Brown to sign the bills into law, noting that he did help draft the regulations.
 
The Los Angles Times has a fine editorial asking the gov to not only sign the bills, but take an active role in making sure they are implemented. The LAT says that previous efforts have “… provided little guidance on how the state could help ailing patients get the drug — or how to keep it out of the hands of those who weren’t entitled to it. Legislators repeatedly failed to develop rules, so cities and counties adopted a patchwork of policies, which triggered a series of lawsuits and judgments that created a confusing mess for patients, law enforcement, cannabis growers and dispensary operators.”
 
Read the newspaper’s argument, signed by “the editorial board,” here: Gov. Brown, sign the medical marijuana bills