cannabis law 101 - geniecast...missouri overview amendment 2 passed nov. 6, 2018 mo. constitution...
TRANSCRIPT
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Cannabis Law 101Sorting Through the Weed(s)
Jeffrey L. Wax & Scott D. Levine
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AEGIS Law
Cannabis Industry ExperienceManufacturers & Extractors, Cultivars,
Investors
Scott Levine
Robert Gold
Jeff Wax
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Missouri Overview
Amendment 2 Passed Nov. 6, 2018
Mo. Constitution Art. XVI, § 1
Mo. Dept. of Health and Senior Services Rules at 19 CSR 30-95.010 – .110
Certification and Licensing Regime Patients/Caregivers
Physicians
Businesses
Deadlines and Fees
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Qualifying Conditions
Cancer
Epilepsy
Glaucoma
Intractable migraines unresponsive to other treatment
“A chronic medical condition that causes severe, persistent pain or persistent muscle spasms”Ex. MS, seizures, Parkinson’s disease,
Tourette’s syndrome
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Qualifying Conditions
“Debilitating psychiatric disorders … if
diagnosed by a state licensed psychiatrist”
Ex. PTSD
HIV or AIDS
A “chronic medical condition” normally
treated with addictive medication when
physician determines marijuana could be
effective and safer
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Qualifying Conditions
Any terminal illness
“In the professional judgment of a physician, any other chronic, debilitating, or other medical condition”
Ex. hepatitis C, ALS (Lou Gehrig’s disease), inflammatory bowel disease, Crohn’s disease, Huntington’s disease, autism, neuropathies, sickle cell anemia, agitation of Alzheimer’s disease, cachexia, and wasting syndrome
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Business Licensing
Cultivation
Infused-Product Manufacturing
Dispensaries
Testing
Transportation
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Minimum Licenses
Minimum
Cultivation 60
Manufacturing 86
Dispensaries 192 (24/Cong. Dist.)
Testing No Min. (but Max. 10)
Transportation No Minimum
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Pre-Filing Statistics
Minimum Pre-Filed Applications
(as of May 31, 2019)
Cultivation 60 155
Manufacturing 86 82
Dispensaries 192 (24/Cong. Dist.) 289*
Testing No Min. (but Max. 10) N/A
Transportation No Minimum N/A
*All but Districts 6 and 8
exceed 24 applications
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Key Considerations
Structure
Location
Experience and Diversity (the Team)
Business Plan
Federal Law Complications
Financing/Raising Investor Funds
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Other Topics
Facility Requirements
Applications and Fees
Physicians
Patients and Caregivers
Timeline
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Structure
Majority Owner Rule
Licensee entity must be “majority owned
by natural persons who have been citizens
of the state of Missouri for at least one
year prior to” application. Mo. Const. art.
XVI § 1.7(3); 19 CSR 30-95.040(3)(B)
“citizen” = “resident” (Id.)
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Structure
Majority Owned “More than fifty (50) percent of the economic
interests and more than fifty (50) percent of the voting interests of an entity, including any parent or subsidiary entities.” 19 CSR 30-95.010(18)
Economic Interest “Rights to either the capital or profit interests
therein, or a combination thereof; or, in the case of a corporation, rights to some portion of all classes of outstanding stock of the corporation.” 19 CSR 30-95.010(10)
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Structure
Capitalization Requirements
Choice of Entity
Departmental Approval of Changes
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Location
Site Control and Plans
Friendly Municipality
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Location
1000 Foot RuleNo facility shall be “sited within one
thousand feet of any then-existing elementary or secondary school, child day-care center, or church.” Mo. Const. art. XVI §1.7(11)
Measured by “shortest path … that can be lawfully travelled by foot.” 19 CSR 30-95.040(4)(B)
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Experience and Diversity
Professional Backgrounds
Diversity
Other Team Members
No “disqualifying felony offense”
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Business Plan
Experience and Diversity
Capitalization
Financial Plan
Market Analysis
Expected Revenues and Expenses
Marketing Plan
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Business Plan
Insurance
Inventory Control
Security and Loss Prevention
Odor Control Plan
Low-Income Qualifying Patients
Employee Recruitment/Training
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Federal Law Complications
Schedule I Controlled Substance
ExamplesMarijuana
Heroin
LSD
Peyote
Quaaludes
Ecstasy
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Federal Law Complications
Schedule I Controlled Substance
FactorsHigh potential for abuse
No currently accepted medical use in treatment in U.S.
Lack of accepted safety for use under medical supervision
Cannot be prescribed
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Federal Law Complications
Schedule I Controlled Substance
Unlawful to “manufacture, distribute, or
dispense” or “possess with intent to
manufacture, distribute, or dispense”
Cole Memorandum
Issued Aug. 29, 2013
Rescinded Jan. 4, 2018
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Sidebar – Practice Note
Sample Fee Agreement Language
The Client acknowledges and understands that the cultivation, production, and/or distribution of marijuana or products containing marijuana or other cannabinoids is illegal under Federal law and that the Client is subject to arrest, prosecution, and forfeiture of assets by Federal authorities for engaging in these activities notwithstanding Article XVI of the Missouri Constitution and any statutes or regulations promulgated thereunder.
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Federal Law Complications
Internal Revenue Code § 280E No deduction or credit shall be allowed for
any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
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Federal Law Complications
Internal Revenue Code § 280E
Pay taxes on $350,000, not $150,000
Example
Gross Income $1,000,000
COGS $650,000
-----------------
Net Income $350,000
Expenses $200,000
-----------------
Profit $150,000
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Federal Law Complications
Financial Services
Banking Services Generally
2014 FinCEN/DOJ Memo
What can’t be done?
SAFE Act
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Financing/Raising Investor Funds
Stage-Specific Fundraising Needs,
Compliance Strategies, Challenges
Stink by Association
Unique Disclosure Strategies for
Issuers
Recent Cases by SEC and DOJ
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Facility Requirements
Generally 19 CSR 30-95.040
Single licenses, consolidation
Facility Agent ID Cards
Inventory Control System
Packaging and Labeling
Free from Contaminants
Waste Disposal
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Facility Requirements
Generally 19 CSR 30-95.040
Security Plans and Equipment
Signs and Advertising
Employee Training
Inspections
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Facility Requirements
Cultivation 19 CSR 30-95.050
Manufacturing 19 CSR 30-95.060
Dispensaries 19 CSR 30-95.080
Testing 19 CSR 30-95.070
Transportation 19 CSR 30-95.100
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Application and Fees
Fees
Application, Annual, Renewal
Minimum Standards
Additional Evaluation Criteria
10 Criteria
Adjustments
Commencement Inspection
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Physicians
Not a “prescription”
Certification Requirements
Patient Exam
Qualifying Condition
Discussion of Risks
Written Consent for Minors
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Patients and Caregivers
Annual Certification from Physician
Apply for ID Cards
Patient Cultivation
Purchase and Possession Limitations
Miscellaneous
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Timeline
June 4, 2019 –Applications Available
July 4, 2019 – Patient/Caregiver Applications Accepted
August 3, 2019 – Licensee Applications Accepted
August 17, 2019 – Licensee Application Window Closes
December 31, 2019 – Deadline to Issue Licenses
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Resources
Mo. Department of Health and Senior Services http://medicalmarijuana.mo.gov
Missouri State Medical Association http://www.msma.org/medical-marijuana.html
National Cannabis Industry Association https://thecannabisindustry.org/ncia-news-resources/state-
by-state-policies/
AEGIS Law – 314-454-9100 http://www.aegislaw.com Scott Levine, x101, [email protected]
Robert Gold, x128, [email protected]
Jeff Wax, x124, [email protected]
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Thank you!
Questions?