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: A two-pronged attack on the SBA's anti-cannabis stance • Another failed attempt to stop unlicensed cannabis ads in California • Cresco Lab's new board member, Michele Roberts • The lack of diversity in Denver's cannabis industry

Thanks as always for reading. Send your tips, thoughts and story ideas to [email protected]. You can call me, too, at 916.448.2935. Follow me on Twitter @capitalaccounts

Lawyers Target SBA's Blockade of Cannabis-Business Aid

Lawyers seeking to open the doors to COVID-19 federal aid for professionals serving state -licensed marijuana businesses are now taking two tacks: lobbying and (potential) litigation.

A coalition of law firms led by Yetter Coleman is trying to raise $150,000 to fund a lawsuit challenging Small Business Administration guidance that bars loans to companies "that advise or counsel direct marijuana businesses." The lead plaintiff will probably be a law firm whose Paycheck Protection Program application was denied because of its work for state-legal cannabis clients, the National Cannabis Industry Association announced this week.

The news followed an American Bar Association's letter sent to federal officials on June 5, urging them to rewrite the anti-cannabis guidelines.

"Most law firms qualify as small businesses, falling within the congressional [Coronavirus Aid, Relief, and Economic Security] Act intent to cover all businesses with less than 500 employees," ABA president Judy Perry Martinez wrote to U.S. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza.

But the SBA guidance on which companies can receive aid "is overly broad and establishes a very low standard for ineligibility, including 'a business that derived any of its gross revenue for the previous year' from such services," Martinez wrote. "Thus, a law firm where a single lawyer provided advice to a single marijuana business client on legal issues for a nominal fee would arguably be ineligible under this language for the SBA [Paycheck Protection Program] loan program."

According to the ABA, 78% of U.S. lawyers practice in jurisdictions where some form of marijuana sales are legal under state law.

"Under the current guidance, many of these lawyers and their firms could be disqualified from receiving PPP assistance," Martinez wrote.

The letter reflects the ABA's increased activity in the state-legal marijuana space. The association's Tort Trial and Insurance Practice Section last September sponsored the first-ever ABA-related event dedicated solely to state-licensed cannabis and hemp. And in February, the ABA's House of Delegates adopted resolutions calling for federal legislation to protect lawyers and banks that serve state-legal marijuana operators.

"We are thrilled that the ABA has signed onto this issue," said Christopher Davis, executive director of the International Cannabis Bar Association. The specialty bar sent its own letter to congressional leaders in April, asking that law firms be made eligible for COVID-19-related aid for businesses.

"The ABA has previously come out in favor of cannabis industry banking, and protections for lawyers from criminal prosecution for representing clients that operate in the state-legal cannabis industry," Davis said. "The current position is the logical conclusion of their prior positions—if it's legal to represent, take payment from, and pay taxes on revenue earned from these clients, then the same representation should not render us ineligible for disaster-related economic assistance."

SPONSORED BY ALM PARTNERS

Working from Home: 5 Productivity Methods You Should Try

Contrary to popular belief, employees who work from home tend to be more productive than their peers in the office. However, when you're struggling to stay focused on a task at home, that exciting productivity research will do you little good. Sometimes, the right productivity method can make all the difference. READ MORE

California Bill to Stop Unlicensed Cannabis Advertising Stalls

Here in California, regulators have struggled since recreational-use was approved in 2016 to stop unlicensed cannabis operators from advertising their goods. Another attempt fizzled Wednesday, when the author of AB 3330 stopped moving his bill.

AB 3330 would have prohibited anyone from charging money to advertise or market an unlicensed cannabis product. Violators would have been deemed public nuisances and subject to local authorities' related remedies. (An earlier draft would have subjected illegal advertisers to $30,000 fines.)

The bill did not directly target Weedmaps, although the online directory was opposed to an early version of the legislation. AB 3330 was supported by the Long Beach Collective Association and the United Food and Commercial Workers.

The bill's author, Assemblyman Patrick O'Donnell, D-Long Beach, did not offer a reason for shelving his legislation.

Who Got the Work

>> Michele Roberts (above), executive director of the National Basketball Players Association, has joined the Cresco Labs board of directors. She is the first African American board member. Prior to joining the NBPA in 2014, Roberts was a litigator at Skadden, Arps, Slate, Meagher & Flom where she focused on complex civil cases and white-collar criminal matters. "Drawing on her experience in leading one of the most important player organizations in the sports world and her expertise in law and litigation as a highly-accomplished trial attorney and educator, Michele will provide a unique perspective at a critical time of continued growth and expansion in the industry," Cresco Labs executive chairman Tom Manning said in a statement.

>> Boies Schiller Flexner partner Maxwell Pritt is representing Mark Vargas in a breach of contract suit against California cannabis company Golden Seed Inc. Vargas alleges that just as the company was receiving its first significant funding, his business partners "squeezed him out and stole his ownership interest." The suit is filed in Orange County Superior Court and has been assigned to Judge Nathan Scott. Attorneys for the defendants have not yet entered an appearance.

>> David Luck of Carlton Fields Jorden Burt has stepped in to defend CBD American Shaman LLC, American Shaman Franchise Systems Inc. and Shaman Botanicals LLC in a pending lawsuit related to the launch of a CBD retail franchise. The suit was filed April 22 in Florida Middle District Court by Florin Gray Bouzas Owens on behalf of Thomas O'Neal. The case is assigned to U.S. District Judge Thomas Barber.

In the Weeds…

>> FTC calls foul on CBD and cannabis COVID-19 claims. "Given the FDA's ramped-up enforcement efforts, it is anticipated that we will see additional warning letters, lawsuits, and injunctive action taken in the foreseeable future in order to protect consumers during the pandemic The FDA's position has been clearly articulated when it stated, 'Let's be clear: companies making these claims can look forward to an FTC lawsuit….'" [Law.com]

>> Marijuana class actions surge. Boston-based law firm "Goodwin recently published a report, "Update on Securities Litigation Against Cannabis Companies," that detailed 13 class action cases filed against publicly held marijuana and CBD companies in 2019, more than double the six cases filed the previous year." [Marijuana Business Daily]

>> Study: Denver cannabis businesses lack diversity. "According to Denver's Cannabis Business and Employment Opportunity Study, 74.6% of owners of licensed cannabis businesses within city and county limits are white, as are 68% of employees." A survey included in the study found that 56.9% of respondents rated the chance of owning a cannabis business "poor," with just under 77% citing the lack of access to capital as the biggest obstacle. [Denver Post]

>> A Pennsylvania budget item gives two donors a shot at a medical marijuana permit. Language added by an unidentified lawmaker gives the owners of Bay LLC, two GOP donors, the chance to secure a permit valued at $25 million. The entity had tried unsuccessfully to acquire a permit three years ago. Philadelphia lawyer Harry Cook called the budget language unusual. "You would think there would be a more deliberative process so you can flush out who benefits," he said. [The Philadelphia Inquirer]

>> Kern County leader to pay $4,000 fine for conflicted marijuana vote. In a stipulation filed with California's Fair Political Practices Commission, Kern County Supervisor Leticia Perez acknowledged voting against a proposed ban on cannabis sales after meeting with a client of her husband, a political consultant, who was seeking a lease for a cannabis operation in the county. [FPPC]

… And on the Calendar

June 16 - Farella Braun + Martel presents the webinar "Understanding Your Rights and Obligations as a Cannabis Employer." Senior Associate Rebecca Stephens will lead the discussion.

June 16 - ASD Market Week hosts the webinar "How to Market & Sell CBD Products Online." Speakers include Harris Bricken attorney Nathalie Bougenies.