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 brewing legal fight over federal access to California cannabis licenses • The Seventh Circuit's take on Indiana's no-smokable-hemp law • The slimmed down legal team challenging IRS tax law for Harborside • Clint Eastwood telling CBD companies to get off his trademark lawn

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

DEA Takes California Cannabis Bureau to Court to Force License Disclosure

The feds are pressing California cannabis regulators to cough up information about licensees. Why? They're not saying, at least not yet.

Lawyers with the U.S. Department of Justice on Monday asked the U.S. District Court for California's Southern District to force the state to comply with an administrative subpoena for records associated with six unnamed entities. The petition's filing was first reported by Marijuana Moment.

The U.S. Drug Enforcement Administration wants unredacted cannabis licenses and related applications as well as shipping manifests related to the entities and an ongoing investigation.. According to the lawsuit, the DEA served the subpoena on the Bureau of Cannabis Control in January. The state agency has not turned over the documents, arguing in a Jan. 21 letter that federal authorities have not demonstrated how the documents are relevant to their investigation. The state also argues that some of the license information and manifests must stay confidential under California law.

Bureau of Cannabis Control spokesman Alex Traverso declined to comment on the federal petition, adding that the agency had not been served as of Wednesday afternoon. U.S. Magistrate Judge Linda Lopez has ordered the bureau to respond by July 29.

"They're looking for the leaky product — the stuff that's fallen off the back of the truck," Sacramento criminal defense attorney Mark Reichel theorized. Reichel is not involved in the case but surmised the DEA is investigating whether the targeted license-holders are doing business off the books.

Three years ago I asked Bureau of Cannabis Control chief Lori Ajax if she worried that California's then-fledgling licensing system could provide a buffet of sensitive business information should the federal government ever crack down on state-legal cannabis.

Ajax said she "can't control what the federal government does at this point."

"If California has a model that everybody can look to and it's working, that's going to be the best thing for us to do to protect the people coming into the regulated market," Ajax said. "That's what I can control, and that's what we're working on."

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7th Circuit Says Injunction Blocking Indiana's Smokable Hemp Law Goes Too Far

Can a state outlaw the manufacture and possession of smokable hemp but still all allow shipments across its borders? Well, Indiana is trying to do something like that and the U.S. Court of Appeals for the Seventh Circuit seems inclined to let it.

The court recently dissolved a district court's injunction blocking enforcement of an Indiana law that criminalizes the manufacturing, delivery and possession of smokable hemp, a product that was expected to generate more than $70 million in sales in 2019, according to the Brightfield Group.

The appellate panel said the district court read the 2018 Farm Bill's preemption language too broadly in blocking the entire Indiana law.

Federal law "places no limitations on a state's right to prohibit the cultivation or production of industrial hemp," U.S. Circuit Judge Diane Wood (above) wrote for the court. "Thus, the part of Act 516 prohibiting the manufacture of smokable hemp does not fall within the ambit of the Farm Law's express preemption clause. We are also unconvinced that the express preemption clause, standing alone, precludes a state from prohibiting the possession and sale of industrial hemp within the state."

Wood's unanimous opinion did invite the district court to consider a more narrowly tailored injunction. "It may well be that Indiana, in proscribing the possession of industrial hemp, has illegally prohibited the transportation of interstate shipments of industrial hemp."

Shortly before oral arguments in the appeal, Indiana enacted legislation clarifying the prohibition on smokable hemp delivery doesn't apply to cross-Hoosier-State shipments from a licensed hemp producer in another state to a licensed handler in another state.

This week, the challengers, C.Y. Wholesale Inc., represented by Bose McKinney & Evans LLP, filed a petition for rehearing.

>> Harris Bricken's Daniel Shortt has an analysis of the panel opinion here.

Who Got the Work

>> The legal team making Harborside dispensary's tax case before the Ninth Circuit Court of Appeals has shrunk. Greenspoon Marder's Rachel Gillette and Allen Paxton have withdrawn from the case. James Mann is still representing Harborside, but he left Greenspoon Marder about three weeks ago, he told WeedWeek. Mann said he had "no incentive to work in a big office building any longer."

>> Reed Smith represented LeafLink and its cannabis supply chain financing arm, LeafLink Financial in closing a $250 million debt financing deal, the company announced Thursday. "The capital will be deployed to support the cannabis supply chain as a whole by providing liquidity directly to licensed businesses." The Reed Smith team was led by Jodi Schwimmer and Jeff Silberman and included Marc Hauser, Maria Earley and Dan Teplin.

>> Kevin Latner, senior vice president for marketing at the National industry Hemp Council, has been appointed to the Agricultural Technical Advisory Committee for Processed Food Products by USDA Secretary Sonny Perdue and U.S. Trade Representative Robert Lighthizer. "NIHC is honored to have been chosen to have a voice at the table to represent the interests of hemp farmers and the hemp industry," said Patrick Atagi, the hemp council's board chairman.

>> Dorsey & Whitney associate Sativa Rasmussen has been elected chair of the Washington State Bar Association Cannabis Law Section. Rasmussen's two-year position begins Oct. 1. She founded the law section in 2016.

>> Sharon Alice Urias of Greenspoon Marder has entered an appearance for AAXLL Supply Co. LLC in a pending trademark lawsuit. The suit was filed April 17 in the U.S. District Court for California's Northern District by Cooley on behalf of Charlotte's Web Inc. The case is assigned to U.S. District Judge Yvonne Gonzalez Rogers..

>> Adam Long and Austin Wolfe of McNees Wallace & Nurick have entered appearances for Harley-Davidson Motor Co.in a pending employment lawsuit related to a job candidate's use of medical marijuana. The complaint, filed June 3 in U.S. District Court for Pennsylvania's Middle District by Donham Law, pursues claims under the Americans with Disabilities Act and the Pennsylvania Medical Marijuana Act. The cas is assigned to U.S. District Judge Jennifer Wilson.

In the Weeds…

>> Clint Eastwood sues to block use of his name and likeness to sell CBD products. "Two lawsuits filed in federal court in Los Angeles include allegations that companies have spread phony articles reporting that the 90-year-old actor-director is quitting the movie business to focus on a CBD business." The suits names nearly 20 companies. Attorneys from Nolan Heimann are representing Eastwood and Garrapata, the company that controls Eastwood's trademarks. [AP]

>> A Nevada cannabis company faces record penalties. Nevada's Cannabis Compliance Board will revoke six of 14 licenses from CW Nevada and force the company to pay $1.25 million in fines "to settle allegations that the company had large quantities of marijuana off-the-books, sold cannabis that appeared to be untested and destroyed evidence." A receiver said the revoked licenses are valued between $4.5 million to $6.75 million. [The Nevada Independent]

>> California weighs new fines for illegal marijuana abettors. "Those who provide assistance to illegal pot sellers would face civil fines of up to $30,000 per day under legislation approved unanimously by the state Assembly that is now pending in the Senate." California has struggled to tamp down its illicit market. The California chapter of NORML opposes the bill, calling it overbroad and heavy-handed. [Los Angeles Times]

>> Foes of recreational marijuana legalization want the issue off Arizona's ballot. In a suit filed in Maricopa County Superior Court, Arizonans for Health and Public Safety allege that advocates misled residents into signing petitions qualifying the measure for November's election. Legalization campaign chairman Chad Campbell called the lawsuit "ludicrous." [Arizona Capitol Times]

>> A Florida couple says "I do" amid the buds. A Matlacha, Florida man and woman exchanged vows recently at a Columbia Care dispensary in Cape Coral. Jerica and Jason Cole were going to get married on 4/20 but the pandemic scuttled those plans. So they waited until 7/10. "We're both cannabis users. We're both cardholders and it played big roles in both our lives, so we just thought it was appropriate," said Jerica Cole. [WZVN]

The Calendar: Time to Mark It

July 24 - The International Cannabis Bar Association presents "The Cannabis Regulatory Rounds," five hours of streamed continuing legal education. Panelists include Josh Kappel of Vicente Sederberg; Genine Coleman, executive director of Origins Council; and Mai Dinh, assistant general counsel of the U.S. Department of Agriculture.

July 29 - Duane Morris presents the webinar "Tax Strategies — Building the Strongest Tax Toolbox for Cannabis Businesses." Participants include Duane Morris partners Michael Schwamm, Stephen DiBonaventura and Thomas Ostrander.

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