Welcome back to Higher Law, our weekly briefing on all things cannabis. I'm Cheryl Miller, reporting for Law.com from Sacramento, where I'm hand-sanitized and ready to go.

This week we're looking at: • a federal subpoena of Weedmaps • a new cannabis practice leader at Fortis Law Partners • two new cannabis breach-of-contract suits • a review of community-host contracts in Massachusetts

Thanks as always for reading. Please send me your feedback, story ideas and Purell. You can email me at [email protected] or call me at 916.448.2935. Follow me on Twitter @capitalaccounts.

 

  

Feds Seek 'Weedmaps' Records

Federal prosecutors in Northern California are probing Weedmaps and some of the marijuana companies listed on the directory, Marketwatch reported this week.

A grand jury subpoena issued in September and reviewed by Marketwatch sought documents about those listed businesses as well as records related to Weedmaps' employees, investors accounting.and political spending. Prosecutors also demanded records tied to Terra Tech Corp. and CannaCraft.

What's going on? McGregor Scott, the U.S. attorney for California's Eastern District, declined to say.

A statement issued by Weedmaps said the company won't comment about specific legal matters.

"From time to time, Weedmaps receives requests for information from government agencies," the statement said. "We cooperate with these requests as we do with all lawful inquiries."

It's no secret that Scott has been unhappy with California leaders' embrace of a recreational market and inability to strangle illicit operations. He regularly reports prosecutions of unlicensed growers and fumed after the death of an El Dorado County deputy responding to a dispute at an illegal grow site.

State regulators have had their own issues with Weedmaps, ordering the directory in 2018 to stop listing unlicensed retailers on its site. After first questioning the state's authority to sanction them, Weedmaps executives last year agreed to block black-market sellers from the site.

Lori Ajax, chief of California's Bureau of Cannabis Control, told state lawmakers last week that "we're starting to see more success in engaging the Internet platforms" in removing unlicensed operators. But groups representing regulated companies said the state's high taxes and continuing illicit sales are threatening their existence.

"This shouldn't surprise anyone in #California," Harris Bricken attorney Hilary Bricken tweeted after news of the subpoenas broke, "If the state/locals won't/can't get their act together on #cannabis and enforcement, the Feds are bound to 'help' for better or worse."

 

 

Who Got the Work

• Greenspoon Marder and Perlman, Bajandas, Yevoli & Albright are representing Nevada-based Solace Enterprises in a breach of contract lawsuit filed Wednesday in the U.S. District Court for Nevada against Case Mandel and Trinidad Consulting Inc. Solace alleges Mandel inflated projections for his CBD business "to con Solace and its related affiliates out of well over $1.2 million through various transactions." Mandel and Trinidad Consulting have not yet filed a response.

• Alyson Jaen has been tapped to lead the Cannabis Practice at Fortis Law Partners, a boutique legal firm in Colorado. Specializing in cannabis law, licensing and regulatory compliance, Jaen has filed applications for an array of cannabis licenses in nearly every state that has a regulated legal cannabis industry, the firm said. Jaen was previously an attorney with Wysocki Justus PC and Messner Reeves.

• Counsel at Miller Nash Graham & Dunn are defending a breach-of-contract lawsuit against cannabis grower and processor BMF Washington, Golden Leaf Holdings and Peter Saldino in Oregon District Court. The suit was filed by Schwabe, Williamson & Wyatt on behalf of GL Management and Greenpoint Equipment Leasing.

• Minorities for Medical Marijuana, a Florida-based 501(c)3 has retained North Star Liberty Group to lobby on "marijuana access to financial institutions and removing marijuana" from the Controlled Substances Act, according to a recent disclosure filing. The organization's executive team includes general counsel Jessica F. Gonzalez, a cannabis and intellectual property attorney at Bressler Amery & Ross

 

  

In the Weeds…

>> Authorities are seizing hemp that's mistaken for marijuana. "While those changes expanded farmers' access to a potentially lucrative cash crop, they didn't address how to move hemp in states that still treat the plant as an illegal variant of cannabis. That is proving an obstacle for businesses attempting to embrace hemp's newfound legality to expand nationwide." [WSJ] Related: South Dakota drops marijuana distribution charges against hemp transporter. [Rapid City Journal]

>> Community host or heist? A review of 500 so-called host agreements between marijuana businesses and Massachusetts towns and cities found that 314 local governments asked for more than just standard fees from applicants. In Chelsea, for instance, one agreement requires the operator to give a one-time $100,000 donation to local drug and substance abuse programs and an annual $25,000 donation to local youth sports leagues. "It's extortion, straight up," said attorney Blake Mensing. "If it is charity, it should not be present in a legally binding contract. When someone is requiring that you give a specified dollar amount to a specified entity, that is no longer charity." [WGBH]

>> Michigan looks for a marijuana bankruptcy fix. Two pending bills would require state regulators to create a procedure for appointing a receiver to operate an indebted marijuana business. Because marijuana remains illegal at the federal level, "whether we like it or not, we in the state of Michigan in our court system are going to have to handle the fallout from every single marijuana facility that doesn't make it financially," Kent County Judge Christopher P. Yates told a House committee last month.[MLive.com]

>> Arkansas is issuing medical marijuana licenses again. Pulaski County Circuit Judge Wendell Griffen dissolved his week-old order barring new licenses after finding that dispensary applicant Medicanna had no grounds to sue state license regulators. Medicanna's owners had accused the state Medical Marijuana Commission of snubbing its application while awarding a license to a lower-graded applicant. [Arkansas Democrat Gazette]

>> The Senate will vote on pot banking in a matter of months. That was the recent prediction of Colorado Senator Cory Gardner when asked about the SAFE Banking Act, which would offer legal protections to banks that serve state-legal marijuana-related companies. "I believe that in a matter of months we can have a vote on a compromise version in the Senate that will have the support of 60-plus of my colleagues and of the House of Representatives," Gardner said at the Credit Union National Association Governmental Affairs Conference in Washington, D.C. The bill has been stalled in the Senate amid criticism from Banking Committee chairman Mike Crapo. [Banking Dive]

>> "Dad, I won chocolate!" An 8-year-old's pot surprise. A boy thought he had won a basketful of sweets in a raffle at a youth hockey tournament in British Columbia. Turns out the prize was actually $200 worth of cannabis products. Tournament organizers said the boy's father claimed the basket. [New York Daily News]

 

 

What's Next: The Calendar

March 5 - Expert Webcast hosts "Trends and Transactions in Cannabis M&A." at 1 p.m. PST. Dentons partner Michael Froy is a panelist.

March 10 - NJ Cannabis Insider presents the conference "The Road to Legalization" in Edison, New Jersey. Scheduled speakers include Fruquan Mouzon, of counsel at McElroy, Deutsch, Mulvaney & Carpenter, and Arlene Quiñones Perez, partner at DeCotiis, FitzPatrick, Cole & Giblin.