By Marijuana Business Media staff
Raids creep back into the headlines, Maryland indicates it will rework proposed MMJ fees and a lawyer warns of new legal challenges for edibles companies.
Here’s a closer look at several notable developments in the cannabis industry over the past week:
The Dreaded ‘R’-Word
Raids were a common occurrence in the marijuana industry several years ago, as local officials and federal agents looked to crack down on cannabis businesses.
Such enforcement activity eventually died down, and raids largely seemed a thing of the past.
Until now.
On Tuesday, several cultivation sites in Denver were raided in what one law enforcement official described as a “very large and successful” operation. This comes on the heels of raids last week involving marijuana businesses in California and Michigan.
Collectively, the raids targeted everything from dispensaries and grows to private homes connected to those operations, and they involved local police, federal officials or a mix of both.
As usual, the law enforcement community has been less than forthcoming with details on why the raids took place.
But it seems that in each case authorities felt the businesses were engaging in clearly illegal behavior and violating state or local cannabis laws.
“If this was simply about somebody selling marijuana in West Hollywood, the DEA wouldn’t be here,” an agent with the Drug Enforcement Administration in California told The Huffington Post.
As for Colorado, one local TV station drew a connection between the raids and a man who was busted in 2006 for orchestrating a marijuana and ecstasy ring. And in Michigan, police seized not only cash and marijuana, but also 14 guns.
There’s no reason to think this signals a return to the days when raids made headlines frequently. But the recent activity shows that the DEA and local cops are keeping a close eye on the marijuana industry, which should serve as a reminder of the dangers of pushing the envelope and trying to cut corners.
A Good Delay
It initially sounded like bad news: Earlier this week, Maryland officials delayed finalizing regulations on the emerging medical marijuana industry.
Normally, delays in the rule-making process are worrisome, as they often signal discord among lawmakers. They also mean it will take longer for dispensaries, cultivation sites and other medical marijuana businesses to materialize.
But this delay could in fact be good news for the industry. An official on the commission finalizing the rules said the group is working to lower at least some of the proposed fees for business licenses, according to the Baltimore Sun.
Under the current proposal, Maryland would have one of the highest fee structures in the country, with dispensaries forced to shell out $40,000 annually and cultivation sites required to pay $125,000 every two years. This led to an avalanche of complaints from advocates and prospective applicants, who said heavy fees will block out small businesses and raise the price of medical marijuana.
The commission seems to be taking these concerns seriously, though how much it will lower the fees remains to be seen.
Still, the group is listening to feedback. It already postponed approving a final draft of the rules back in September after advocates urged it to develop regulations specifically for extracts – a key component of the market in other states.
These should be seen as positive signs. Rather than rush through the process and risk releasing an ineffective, incomplete set of rules, the state is trying to get it right the first time around.
Edibles Makers, Beware
On Tuesday, a Seattle attorney issued a warning to marijuana edibles companies: learn about product liability, because there’s a chance you could get sued.
Hilary Bricken, a lawyer with the Canna Law Group, made her remarks at an infused products symposium in Denver. She said that civil claims against marijuana companies is an emerging trend in the legal world, and she expects the number of cases to grow in proportion to the industry.
A fact of business life is the bigger you get, the more of a financial target you become. And that’s what is starting to play out in the marijuana industry.
“Strict liability is a monster” for businesses of all sizes, Bricken said, emphasizing that companies are often held liable for millions in damages even if they’re not negligent. She cited several cases of major corporations having to pay out millions of dollars to former customers who were harmed in various ways by products such as exploding soft drink bottles and coffee that was so hot it caused burns.
This could extend to employees as well, Bricken said. She hypothesized that workers at marijuana cultivation facilities could potentially sue if they’re made ill by pesticides used by the grower. Bricken pointed to asbestos cases as precedent. It’s a legal realm called “toxic tort.”
Already in Colorado there was a well-publicized case of a Wyoming student eating too much of an infused cookie and subsequently jumping off a hotel balcony to his death. A lawsuit from the family against the cookie’s manufacturer is not far-fetched, Bricken said after her presentation. In fact, it’s precisely the kind of situation that often results in a lawsuit.
“This is not a conspiracy. Any business in this nation has had to deal with these issues,” Bricken said.
Bricken urged edibles companies to take particular care with everything from their design phase to product labeling to the manufacturing process. All three can be – and, Bricken says, will be – focal points for lawsuits.
John Schroyer and Chris Walsh contributed to this report.
