Welcome back to Higher Law, our weekly briefing on all things cannabis. I'm Cheryl Miller, reporting for Law.com from Sacramento.

This week we're looking at: The Cole memo author's thoughts on marijuana and the law • An ABA panel's views on cannabis and COVID-19 • Curaleaf's new chief compliance officer • Another NYC that may drop marijuana employment testing

Thanks for reading. I always appreciate your feedback, tips and advice for maintaining sanity while working from home. Hey chirpy bird, I'm on deadline here. Drop me a line at [email protected] or call me at 916.448.2935. Follow me on Twitter @capitalaccounts.

Sidley's James Cole Talks Marijuana, Federal Prosecution and Congress

The one-time former top U.S. government lawyer behind the so-called Cole memo still has some thoughts about federal marijuana laws.

James Cole, now a Sidley Austin partner and global co-leader of the firm's white-collar practice, was the U.S. deputy attorney general when he authored guidance in 2013 and 2014 that offered protections from federal prosecution to state-legal marijuana operators. That guidance was rescinded by then-U.S. Attorney General Jeff Sessions in 2018.

But as Cole told Sidley colleague and New York managing partner Samir Gandhi in a recent episode of "The Sidley Podcast," sometimes it doesn't seem like much has changed.

"There's not an overarching policy in the department that's been formally issued, like had been the case from the memo that I wrote, but you're not seeing prosecutions in any large measure different than what you saw when the memo I wrote was in effect," Cole said.

"It is still illegal, but it seems that the discretion of all the prosecutors and U.S. attorneys in the country is that it's not worthwhile for the Justice Department to go after these otherwise state-legal marijuana businesses as long as they're complying with the principles that were in the Cole Memo," he said.

And even after some states declared marijuana outlets "essential" during the pandemic, Cole doesn't think that makes the industry a good investment bet going forward.

"You can invest in a cannabis business if you're willing to take the risk that some federal prosecutor may prosecute you for doing that," Cole said. "At this point, it would be a very confused prosecution, obviously, but it's technically illegal under federal law."

Cole said Congress should, finally, act decisively on marijuana regulation.

"That's the only way we're going to start making any sense out of this and have some sort of regularized business environment," he said. "But if you have your business plan resting on action from the United States Congress, my advice has always been get a new business plan, because that's not always a reliable factor to count on."

>> You can listen to the full interview with James Cole here.

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ABA Panel Talks COVID-19 and Cannabis

The American Bar Association hosted a webinar last week on cannabis and COVID-19 and the irony that marijuana can be deemed essential by some states and illegal by the federal government. Here are a few takeaways.

>> Cannabis companies and ancillary businesses are lobbying furiously for inclusion in Small Business Administration relief. If Congress agrees, "that incremental win would be a huge turning point" in the push for national cannabis regulation, said Kelly Fair, U.S. general counsel for Canopy Growth Corp.

>> Are cannabis-backed municipal bonds an answer for recession-slammed local governments? Sal Barnes, managing director of MPG Consulting, talked about his firm's white paper on cannabis-based municipal bonds, which suggests states and cities could secure funding for major initiatives through cannabis-tax-backed vehicles. Of course, some states already have statutorily or even constitutionally mandated funding targets for cannabis taxes. Barnes noted that the concept works best in new adult-use markets. "New York would have been perfect," according to one of his presentation slides.

>> Andrew Kline, public policy director for the National Cannabis Industry Association, said there's more political momentum right now behind efforts to include state-legal marijuana companies in COVID-19 relief than other industry bills, such as one to expand banking services. "We don't want special treatment," Kline said. "We just want parity. These are requests to be treated like hundreds of thousands of other businesses in the country."

Who Got the Work

>> Former Finra executive James Shorris has been named chief compliance officer at Curaleaf Holdings Inc., Bloomberg Law reports. "Curaleaf Holdings Inc., one of the most valuable U.S. cannabis companies, has hired a new chief compliance officer following the departure of two former top in-house lawyers," the report said.

>> The city of Denver has created a working group to advise leaders on marijuana licensing issues, Westword reports.Group members include Anshul Bagga and Jason Moore of the Denver city attorney's office and Jessica Scardina, senior associate attorney at Vicente Sederberg.

>> Pomerantz has filed a securities class action in the U.S. District Court for California's Central District against PharmaCielo, a cannabis extract company based in Canada, and other defendants. The complaint alleges that PharmaCielo made misstatements or overly optimistic projections about the quality and conditions of its operations.Counsel have not yet appeared for the defendants.

In the Weeds…

>> High Times and Harvest Health reach a deal. Hightimes Holding Corp. will buy 13 active and planned retail dispensaries from Harvest Health and Recreation for $80 million in cash and stock in an agreement announced Tuesday.The Harvest locations will be converted into High Times shops complete with the company's logo and "aesthetic theme." [Yahoo Finance] A Harvest spokesperson told Law.com that internal counsel worked on the deal. Read the news release and purchase agreement.

>> A New York city weighs the use of pre-employment pot testing. Rochester, New York city leaders may stop testing job applicants for marijuana use. "Removal of pre-employment testing for THC avoids unfair discrimination against individuals for an activity conducted during non-work hours that may have no effect on their ability to perform the job for which they are applying," the city's mayor and council president said in a proposal. A city spokesman said such tests have flagged seven applicants for marijuana use among hundreds of tests in recent years. [Democrat & Chronicle]

>> Will a recession spur governments to chase marijuana taxes? "I think the issue is when you've got an enormous hole to fill–and every state will have just a colossal budget deficit–then filling it with a teaspoon of cannabis tax revenue doesn't really feel like the most productive thing you can do," said Roy Bingham, chief executive officer of pot data firm BDS Analytics. Another take: "Every state's going to need every single dollar they can get," said Matt Hawkins, founder and managing partner of private equity firm Entourage Effect Capital LLC. "As a result, once we get on the other side of this, you're going to start seeing a little bit more willingness to discuss, if not pure federal legalization, then quasi-legalization." [Bloomberg]

>> An appeals court sided with Cambridge's "empowerment" pot plans. The Massachusetts Appeals Court overturned a Middlesex Superior Court ruling siding with a medical marijuana company that challenged Cambridge's plan to only allow economic empower applicants to seek adult-use permits for the first two years.The plaintiffs, owners of Revolutionary Clinic, said they hope to have the original injunction reinstated on other grounds. [MassLive]

>> California growers are paying a high price for testing–and failing. A new study by researchers at UC Davis found that tests cost marijuana growers about 10 percent of the average wholesale price, with most of that cost coming from destroying product that doesn't meet California's stringent standards. Failure rates ran around 4 percent in 2019, according to the study. And growers can't just throw bad batches in the compost pile. [UC Davis]

The Calendar: What's Next

May 6 - Business Insurance presents the webinar "The State of the Cannabis Industry in the Wake of COVID-19." Panelists include Wesley Hein, head of legal, compliance and government affairs at Mammoth Distribution and Gary Kaminsky, director of legal compliance at Acreage Holdings. Wilson Elser attorney Dean Rocco moderates.

May 6 - The National Cannabis Industry Association hosts the webinar "Protecting Your Cannabis Brand." Speakers include Dickenson, Peatman & Fogarty partner Christopher Passarelli.