Monthly Archives: May 2015

San Jose’s Last Stand

The fate of medical marijuana in San Jose hangs in the balance, and it is time to make an informed decision. A certain degree of regulation is necessary to ensure a functioning decriminalized market for any goods, including medical marijuana. While under-regulation breeds social harms like crime, over-regulation also has a detrimental effect on lawful enterprise. With 89 dispensaries operating within its city limits, San Jose needs to be able to effectively regulate the medical cannabis industry. San Jose’s newest ordinance, No. 29420, however, overregulates land use issues to the point of extinguishing the medical cannabis industry, thereby denying safe access to its sick residents and denying the city a potentially significant source of income. Land use for medical marijuana in San Jose can be more effectively regulated by enforcing legislative intent, making more gradual carveouts, and keeping the problems that come with cultivation sites separate from retail medical cannabis dispensary locations. Additionally, despite the ordinance’s emphasis on revising land use provisions, San Jose’s answer to effective medical marijuana regulation may not be contained in land use at all.

San Jose Should Enforce Legislative Intent Over the Letter of the Law.

Per se regulations should not be strictly enforced when they betray the legislative intent. The distance requirements contained in the new ordinance were created as buffer zones to sensitive areas. Thus, individualized distances for are set for distinct sensitive areas (1,000 feet from parks and schools, 500 feet from rehabilitation centers, and so on). While these distances provide a quick rule of thumb for attempting compliance and enforcement, the city of San Jose should exercise greater discretion in enforcing the letter of the law.

Santa Cruz’s “intensity” approach to distance requirements is a great example of a municipality effectively exercising its discretion. Rather than strictly adopting the state’s per se distance rule of 1000 feet from sensitive areas, Santa Cruz only asks its dispensaries whether their intensity of use is compatible with nearby residents if located within fifty feet of a residence. While Santa Cruz permitted only two dispensaries, fourteen others made the requisite showing of compatibility with nearby residents allowing them to be immunized. This was a rather clever way of Santa Cruz to establish regulations that will maintain the public wellbeing, but also made the regulations feasible enough to encourage compliance.

As I mentioned in my original article on San Jose, the city is strictly enforcing the per se 1000 foot distance provision. The purpose of this provision is to act as a buffer zone between something like cannabis and sensitive areas like where children or recovering addicts may be expected to be found. By strictly enforcing the 1000 foot buffer, San Jose will be shutting down dispensaries that are within a nearly impassable 1000 feet, or are within 1000 feet of places where children might be expected to be found, but in reality are not. In both cases, strictly enforcing the distance provision will not achieve what the provision was designed to. By adopting a provision or degree of enforcement that could reasonably assess the potential for harm in each situation, San Jose might find itself enjoying the similar results of dispensary compliance.

Gradual Zoning Carveouts Maximize Public and Municipal Welfare

San Jose can maximize public welfare, safe access, and municipal income by engaging in a more gradual zoning carveout. The new ordinance rezones dispensaries such that they will only be allowed to operate in a warehouse district in the south eastern corner of San Jose. Dispensary owners have expressed concern over this extreme zoning restriction due to the unrealistic volume of business that would be required to operate in retail spaces of 20,000+ feet, especially once rents are driven up by the monopolistic hold these land owners have on dispensaries. Rather than enacting zoning restrictions that fall just short of an explicit moratorium, San Jose can benefit from experimenting with more gradual carveouts.

Clark County in Washington was a great case study of a municipality that experimented with its zoning carveouts for regulating medical cannabis. The Washington and California statutes and initiatives closely mimic each other. Both Initiative 502 and Proposition 215 gave the citizens of each state the right to use cannabis in a decriminalized setting (albeit recreational in Washington and medicinal in California). Sections 69.51A.140 and 69.51A.200 in Washington were analogous to the ruling seen in City of Riverside v. Inland Empires as both give local control for municipalities to choose the extent to which they would follow the newfound freedom in each state’s respective initiatives that decriminalize cannabis. Washington had a very specific subset of commercial and industrial zones in which cannabis dispensaries could be located. Clark County used the default regulations handed to it for two years before making adjustments that best suited the needs of their community.

When Clark County made these changes with a new amendment, the land use aspects they changed pertained to cultivation. Section 6.88.430(E) of San Jose’s new ordinance also changes zoning in regards to cultivation by requiring that cannabis sold at dispensaries be vertically integrated and produced by the owners of the dispensary itself. Juxtaposing the Clark County model with San Jose’s suggests that San Jose’s new ordinance is excessively restrictive. Were San Jose to attempt a more gradual zoning carveout as seen in the Clark County model, it might be able to maintain public welfare by simply adjusting its zoning restrictions in regards to cultivation and allow the city’s dispensaries to continue to operate and provide tax revenue for the city.

Requiring Vertical Integration of Cultivation With Retail Dispensaries Breeds More Transgression Than Compliance

Requiring vertical integration of cultivation with dispensaries mistakenly groups land used for cultivation with land used for retail medical dispensaries. Additionally, restrictions on land used for cultivation are often met with transgression. Vertically integrating cultivation with retail sales will unnecessarily result in retail medical dispensary non-compliance. Santa Cruz also has made modifications to reduce land use as applied to cultivation. Like Clark County, Santa Cruz found after years of its legal experiment that “the creation of rules contains an inherent assumption that people will follow them. Our experience has been to the contrary when it comes to cannabis cultivation.” Requiring cultivation to be vertically integrated places more restrictions on using land for cultivation. By imposing these greater restrictions, San Jose can expect a comparable result to what its neighbor Santa Cruz experienced; transgression rather than compliance.

Rezoning Might Not Be The Answer

There are more effective ways to achieve public welfare through regulation than rezoning medical cannabis dispensaries and cultivation sites. Ordinance No. 29421, amending Title 6 of the San Jose municipal code, sets out a multitude of other regulatory provisions separate from zoning requirements. From the dispensary owners I spoke with, this list of provisions is already proving problematic. Nevertheless, the majority of the provisions can realistically be achieved through diligence. Both the city of San Jose and dispensary owners could greatly benefit by focusing on these more effective, achievable provisions, and scaling back on unachievable land use provisions whose ability to ameliorate the public welfare is limited at best.

Oakland has been on the progressive side by consistently being at the forefront of passing regulations for medical cannabis and has focused more on regulatory provisions unrelated to land use. It had the wherewithal to see the gaps in Proposition 215. In 1998, only two years after Proposition 215 passed, and six years before the state would pass SB 420, Oakland passed an ordinance to establish a committee to regulate medical cannabis locally and added a chapter to the municipal code for medical marijuana. When the number of dispensaries grew large enough to earn Oakland the nickname of “Oaksterdam” in the early 2000s, the city passed a new ordinance that established a permitting system. Soon after that, Oakland would go on to pass Measure Z, largely affecting medical cannabis taxation. The interesting part about tracing Oakland’s regulatory development for medical cannabis is the lack of land use provisions it enacted. Oakland finally enacted a broad zoning and 600 foot distance requirement, but otherwise has enacted regulations for taxes, permitting, and enforcement as avenues for achieving public health and safety.

This provides a potentially valuable lesson for San Jose. While both seem to agree that there needs to be some sort of distance between cannabis and sensitive areas, Oakland is significantly less restrictive in its zoning. While taking Oakland’s approach might not make San Jose the next Amsterdam, it does suggest that there are other avenues by which it could regulate its medical cannabis industry without hurting a great source of income for the city.


I do not doubt the need for structure and regulation in a newly decriminalized market like cannabis. Even with some desperate need to enact new, more restrictive regulations like other municipalities, there are degrees and routes of regulation that maximize the public welfare better than others. Sometimes it is important to focus on the spirit of the law when enforcing its letter will betray its intention. Strict enforcement of distance requirements may not actually be preventing social harm, but actively harms a local industry. Sweeping zoning provisions that monopolize real estate and groups dispensary locations and cultivation sites with known compliance problems creates a proverbial scorched earth policy where the city and its sick residents could otherwise reap the fruits of the medical marijuana industry. What if Napa had rezoned its vineyards to unworkable land? It would not be the world class destination that it is today. Like Napa, San Jose should take measures to safely embrace this new industry rather than shun it by rezoning it to untenable corners of the city.

What About the Children Who Grow Up?

Occasionally, I’ve been asked why I chose to focus on children as my topic for Drug Law and Policy Blog. For many who knew me prior to law school, my interest in juvenile issues came as somewhat of a surprise. If you had asked me even two years ago what kind of law interested me, criminal juvenile issues would have been a) far too specific for my overwhelmed first-year brain to handle and b) not even in the realm of possibility. I’m just not a person who has ever enjoyed hanging out with kids. My motivation for choosing to focus on juvenile issues for Drug Law and Policy therefore came from a place of curiosity, not an already known passion. Over the course of the semester, both through writing for this blog and working extensively with youth in juvenile hall, the meaning behind my interest in juvenile law has shifted substantially. The two perspectives I have, the one I had when I began writing What About the Children and the one I established over the course of several articles, are in many ways very different, though I think each are equally relevant.

As I began writing, I believed that it was important to talk about the children because the effect of legal adult-use marijuana on children is one of the most common arguments used against legalization. I thought if I could shed some light on how much prohibition negatively impacts kids, then a lot of those counter arguments could be muted. My opinion at the time was that talking about the effects of legalization on children was only one way to discuss legalization. While that opinion hasn’t changed—surely we need to sort out taxes, how legal marijuana is going to be distributed and consumed, and what we mean when we talk about “legalization”—I’ve developed a more sincere belief that when we talk about any change in criminal law, we have to talk about the kids.

Talking about kids is important not because children are innocent or deserve special treatment but because children grow up. They grow into the adults that will live in the world tomorrow. I don’t mean this in a lovey-dovey, “the children are our future” sense, just that literally, the children of today will run the government—and populate the prisons—of tomorrow. So when laws or policies adversely affect children, or a specific group of children, that adverse affect carries on into our future.

Per labeling theory, as I discussed a couple installments ago, it then follows that children who are prosecuted for marijuana possession and see themselves as criminals, on the outside of normal society, are more likely to continue to see themselves that way into adulthood. This may mean those adults feel less obliged to follow whatever framework we instate for legal adult use, and instead function within the black market. It also means they may be more likely to function generally, not just in reference to the legal marijuana market, on the fringe of society, and be more likely to continue to be criminally involved.

Labeling theory creates enough of a propensity problem that we should consider changing how we address criminally involved youth. Yet there is another, compounding factor that needs to be discussed before we can fully grasp the vicious cycle of our criminal justice system. That factor is race. As I mentioned in my last article, we know suspensions and expulsions adversely affect students of color. For those of us living in the United States with an internet connection, it should come as no surprise that we also know the adult criminal justice system adversely affects people of color, both in incarceration numbers and treatment by police. Working in Santa Clara County, I have firsthand knowledge of how overrepresented Latinos are in the California criminal justice system. Yet when I began researching the numbers, I came into a bit of a problem. According to the statistics, Latinos are not egregiously over represented. By the numbers, Latinos make up 38% of Californians and 41% of incarcerated individuals—which is over representation, but nowhere near as egregious as the 6% to 27% Black Californians represent, respectively. Suspensions and expulsions were similarly only slightly disproportional when it came to Latinos.

So I tried going local with my research. Finally, I found this Santa Clara County Juvenile Justice System Annual Report, and things made sense. The report is very informative and I highly recommend reading through its entirety, but for summation purposes this table speaks volumes.

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Much like the statewide statistics I’d found earlier, the Santa Clara County statistics indicate a huge disparity between the Black population and arrest rate. However, the disparity between the Latino population and arrest rate is more impactful given the overall population. The above table, and the report at large, indicates that Latino youth in Santa Clara County are 3.7 times more likely to be arrested than their White counterparts. Arrest rate doesn’t necessarily represent prosecutions, or in the case of juveniles, petitions, but sociology and labeling theory tells us the damage is done when a youth is arrested. The mere fact that children of color are more likely to be arrested, regardless of whether their case ends up on some kind of permanent record, is cause for concern. Youth who are arrested are more likely to see themselves as outcasts and criminals, and are more likely to disregard laws. Combine this with the known bias of police officers to target people of color, and it is no wonder the United States has giant problem incarcerating people of color. Given the disproportionate arrest rates of Latino youth in some counties (table above), that problem will be growing in years to come, when arrested teenagers turn into incarcerated adults.

Labeling theory, and the ripple affect it has on children who grow up, is why I think every criminal law discussion needs to include the kids. The impact arrests alone have on children is why I think legalizing marijuana for adult use is such an important step towards reforming our criminal justice system. While adult-use marijuana (obviously) won’t legalize possession for children, it will allow marijuana crimes to simulate alcohol or tobacco crimes more. Underage drinking, while serious, does not often result in arrests. In fact, I could nary find a study, document, or statistic about underage drinking arrest rates. Instead, what are readily available are studies on the risk and damage of underage drinking, treating the issue like a mental health problem. Taking a mental health approach to substance use will have a net-helpful effect on our kids, without the damage caused by arrest and (juvenile) prosecution. Further, if California chooses to maintain its current framework for simple possession, requiring infractions rather than misdemeanors for possession of up to an ounce, arrests, and the harm that comes with arrests, are almost entirely avoided.[1]

For those of us drafting polices for legalizing adult-use marijuana, juvenile issues are likely not a priority. The nitty-gritty issues of licensing, land use, marijuana business, and DUI enforcement are complex enough and important enough to occupy a significant portion of time. But for those of us voting, and those of us who may hesitate to support legal adult-use marijuana due to the access it grants children, juvenile justice issues must be discussed. The criminal justice system has incredible power over all our youth, both those who have fallen under the jurisdiction of the system and those who live cautiously to avoid contact. It is important for us, as adults and voters, to ensure that the juvenile justice system does not do unnecessary damage to our children.

Clare McKendry for Drug Law and Policy – Follow us on Twitter @DrugLawPolicy

[1] In some jurisdictions, police officers are not required to issue uniform traffic or infraction tickets (New York is one), and may technically be allowed to take people into custody for infraction offenses (though it rarely happens). It’s further worth mentioning that if someone with a marijuana infraction fails to appear for a court date, a bench warrant will usually be issued, and the next time the person comes into contact with police they will be arrested.

The Oaksterdam Model

We have all heard of the laissez-faire marijuana laws that go on in Amsterdam, so adopting the moniker “Oaksterdam” only made sense when the city of Oakland became one of the most progressive places in California for medical marijuana regulation. Perhaps almost as notorious as Amsterdam is for its marijuana laws, Oakland is also known (amongst many other things) as a place with a high crime and murder rate. Given how active Oakland has been in regulating its medical cannabis industry in a place that is no stranger to attendant social harms, Oakland is an ideal case study in assessing the way land can be used to help achieve a municipality’s goals.

Oakland has perhaps the most extensive history with cannabis regulation in California since Proposition 215 passed at the end of 1996. In 1998, the city first attempted to fill the legal vacuum caused by the vagueness of Proposition 215. While referencing medical cannabis supporting legislation reaching as far back as March 1996, Ordinance No. 12076 established chapter 8.42 (now found under chapter 8.46) in the Oakland Municipal Code. This chapter would be Oakland’s first set of regulations that would apply interstitially to proposition 215. 12076 was enacted with the goal of making medical cannabis accessible to qualified patients in Oakland, to prevent diversion to illegal markets, and to ensure that cannabis users in Oakland would not face prosecution. The ordinance then set out to achieve these goals in some interesting ways. To ensure that people would not face prosecution for possessing medical cannabis under state law, the ordinance made cannabis possession the lowest priority for Oakland law enforcement. The ordinance also established a single agency to regulate the distribution of medical cannabis in Oakland. This agency was to implement the marijuana distribution plan the city set out in what is now chapter 8.46 of the municipal code. Perhaps not willing to take on the burden themselves, the city designated the Patient ID Center, known as the Oakland Cannabis Buyers Cooperative at the time, to administer the city’s distribution plan.

The Oakland Cannabis Buyers Cooperative (hereafter “OCBC”) was a dispensary whose mission statement sounds relatively typical. It wanted to provide safe access to cannabis to people with valid medical recommendations from their physicians. Like other dispensaries, the OCBC wanted to provide access to cannabis in a legal manner so as relieve people of the unintended ills of federal prohibition. They saw their legal channel of distribution as a way to help people avoid prosecution and the dangers of the black market. In line with its goals as a dispensary, OCBC took on the role of implementing the city of Oakland’s distribution plan. In line with its goal of ensuring that medical patients would not face prosecution for their medicine, OCBC would come to be in charge of an identification system that would allow for law enforcement to easily verify an individual’s patient status. As its current name, the Patient ID Center, would suggest, this system has proved to be largely successful. As can be evinced by changing their name from “Cannabis Buyers” to “Patient ID Center”, it was not long until this dispensary also became typical in not being able to provide safe access to medical cannabis.

Oakland presents a prime example of a municipality running into federal pre-emption conflicts. Soon after OCBC took charge of Oakland’s distribution plan, the federal government ordered a preliminary injunction that was eventually carried out in October of 1998. While police padlocked their doors and physically enforced the injunction, OCBC voluntarily cooperated after six days. Then, only eight days after that, the city of Oakland responded aggressively by invoking California Government code 8630 and declaring a public health emergency that would return power to provide access to medical cannabis to the city. Oakland’s struggle with the federal government would continue for years, with back and forth politics that touched on land use issues (like threatening land owners who leased their property to cannabis dispensaries with forfeiture). While I encourage my readers to look into the intense battle that has occurred between the federal and local governments, I raise what the federal government did next for purposes of showing the development of Oakland’s local regulation. I will continue to focus on the local land use regulatory issues the city of Oakland experienced throughout its medical cannabis social experiment.

Oakland took its next major step in medical cannabis regulation in 2004 by passing Ordinance number 12585, adding chapter 5.80 to the city’s municipal code. This chapter sets out a permitting system by which the city may award a medical cannabis dispensary the right to operate. While there are a multitude of provisions, it is interesting to note that there was only one provision regarding land use. The language of 5.80.020(d)(1) largely reflects the regulations that had already been set out in the then recently passed State Bill 420. This new chapter required dispensaries to be located at least 600 feet from sensitive areas like schools, parks, residential areas, among others, a looser regulation than the state’s requirement of a one-thousand-foot boundary. Also on the broader side are the zones in which this chapter allows dispensaries to be located. Whereas other municipalities specify different categories within which dispensaries may be located, this chapter of the Oakland municipal code simply requires that a dispensary be located within any type of industrial or commercial zone. This ordinance focused on regulating the cannabis industry through restricting the maximum number of dispensaries rather than rezoning.

Oakland residents also passed the landmark Measure Z in 2004. Measure Z primarily reemphasizes cannabis infractions as lowest priority, creates a committee to handle licensing and taxation, and establishes policies for enforcement. This monumental piece of legislation for Oakland does not make any changes to the broad ability for medical cannabis dispensaries to be licensed if they are, among other regulations, only located within a commercial and industrial zone. In noting this omission, I draw on a larger point. Many municipalities have similar, if not the same, goals of things like public health and safety. The city of Oakland has at least as many issues in these departments as any other municipalities, and yet it is interesting to note the way in which it approaches its solutions. Rather than adjusting relatively broad zoning and land use provisions, the city of Oakland looks to taxation, methods of licensing, and policies for enforcement to maximize the well-being of its residents who are now living with this new industry.

Years have passed since Oakland residents passed Measure Z, and the city has naturally had more legal developments and ordinances passed. These new developments and challenges, however, have largely been in the form of interactions with the federal government. For example, in 2012, the federal government sent letters to the owners of buildings who rented to dispensaries claiming that they would seize the owner’s property if they continued to allow businesses that operate in contravention to federal drug law. While this was more a federal pre-emption battle than an example of local land use regulation, this was an important chapter in Oakland’s medical marijuana experiment and touches upon a specific area of land use.

Oakland has been through a lot of changes and is progressive in its approaches to regulating medical marijuana. It maintains the same kind of goals all municipalities have for its residents like maintaining their health and safety. Rather than seeing this emerging industry as a threat, the language of the legislative intent describes medical marijuana as an opportunity to protect people’s rights, and to take an existing demand for a product or medicine, take it out of the hands of criminals and those who would do harm, and put it back in the hands of law-abiding citizens. Regardless of whether a municipality views medical marijuana as an opportunity or a scourge, there is a lot of room for creativity in how to maintain public health and safety. The choices, however, come with different effects and consequences. Rather than achieving its goals by altering zoning laws, Oakland chose to achieve these goals by developing regulatory schemes like a patient ID card system and a governing body to provide oversight. Admittedly, this creates an ever present issue of funding, especially since the taxes promised by Measure Z can only be accrued if and when California legalizes cannabis for recreational use. Nevertheless, Oakland does not seem concerned with medical marijuana reaching sensitive areas, even after loosening the state’s 1000 foot restriction to only 600 feet. As such, Oakland can be a lesson that there are various approaches that can help a municipality achieve its goals without harming its local businesses in the process.

Stay tuned for the conclusion of the battle of San Jose! I’ll be looking back to San Jose and apply the lessons we have learned by exploring the regulations implemented by other municipalities. After having looked at how other municipalities regulate land use for their medical cannabis industry, we can finally make an informed evaluation of San Jose’s newest medical cannabis ordinance.

Medicated Patients Facing Eviction: Because Most Landlords Are Not “Pot-Friendly”

A few weeks ago, I came across an article in The Weed Blog instructing tenants who use medical marijuana to “BE A NINJA AND DON’T LET YOUR LANDLORD FIND OUT.” The article appears to suggest that if a tenant is suspected of using marijuana or being in possession of marijuana on the premises, the landlord may simply call the police and hope that the police will use their discretion to take the bad tenant away. It goes on to say, “only after lawyer’s fees, blood, sweat, and tears are you returned to your original place.”

While it may be in a patient’s best interest to “be a ninja,” tenants also enjoy many protections under both state and federal law. Despite the many laws that protect tenants from being mercilessly thrown out of their apartment, many people are not aware of the necessary steps a landlord must take to legally evict a tenant. This post will explain why it’s not as simple as it may seem for a landlord to evict someone for medical marijuana use (or anything else, for that matter).

First, forcible evictions, also known as “self-help” evictions, are highly discouraged under the common law of property and are illegal under California law. In other words, a landlord who has not gone through proper court proceedings cannot: forcibly remove a tenant’s belongings from the unit, “lock a tenant out” of his unit, or prevent him from entering his unit. A tenant may actually call the police himself if the landlord is attempting to evict him without going through the proper court proceedings.

Second, under California Law, tenants enjoy the right to “exclusive possession” of their unit for a fixed period of time (as specified in the lease agreement). For example, a tenant that has entered into a lease agreement for the term of twelve months cannot be evicted before the twelve-month term expires so long as he is in compliance with the terms and provisions of his lease agreement.

And third, as discussed in my last post, landlords can typically terminate a tenancy for a “material breach” of a provision of the lease agreement. Under California landlord-tenant law, a landlord to evict a tenant by simply giving the tenant a “3-Day Notice” if the tenant: fails to pay rent on time, damages the property, uses the property to do something illegal, or becomes a serious nuisance by disturbing other tenants. As such, a breach to the “no smoking” provision of a lease agreement may form the basis for an eviction action where medical marijuana is involved. A landlord may also argue that the tenant’s marijuana usage is illegal and has become a serious nuisance.

Whether and how a landlord may argue that marijuana use or possession constitutes a material breach of the lease agreement is the subject of the next post. However, in either of these instances a landlord may move forward with an eviction action by serving a tenant with either “3-Day Notice to Perform or Quit,” or a “3-Day Notice to Terminate Tenancy.” The former requires the tenant to “cure the breach” by refraining from smoking marijuana on the premises within the next three days or leave. The latter does not give the tenant the opportunity to “cure the breach” and requires him or her to move out within three days. Landlords are provided a substantial amount of discretion in deciding whether to give a tenant the opportunity to cure or not.

Simply stated, while a landlord is under no obligation to treat medical marijuana use as a protected activity or recognize state laws that have legalized or decriminalized marijuana, they must still go through the Unlawful Detainer Process before evicting a tenant. And that process begins with the much dreaded “3-Day Notice.”

The “ninja” approach mentioned in the Weed Blog reminded me of a time when I arrived at my apartment and noticed a blue piece of paper taped to my door. Many questions ran through my mind as I rushed to read that little blue piece of paper: Was my landlord raising my rent? Was I being cited for breaking a rule? Or worse, was I being evicted?

Having spent the past year doing eviction defense work, I have developed a vicarious fear for the dreaded “3-Day Notice” that brings my clients into my office. That little blue piece of paper triggered a sense of fear despite the fact that I’m aware of my rights and I was sure I hadn’t done anything wrong. Upon receiving a “3-Day Notice” many of my clients are similarly afraid and often believe that landlords hold limitless power and that they may freely enter their unit and lock them out.

The chart below provides an overview of the unlawful detainer process and the issues that follow a “3-Day Notice.” It also clarifies the tenant duties and responsibilities.

The Process: What this means to you as a tenant:
Tenant is served with a 3-Day Notice to Quit. You have 3 days to leave the unit, unless the notice gives you the option to “cure.”
Anytime after the third day, the Landlord may go to the court and file an eviction proceeding against you. This is commonly referred to as “the complaint.” (UD 100)

Some landlords are very proactive and will file the complaint on the fourth day following your 3-Day notice. Others may take up to a week.

Nothing yet. You are not legally required to vacate the unit. While there’s nothing you can do until the papers are handed to you in person, you can call your local court to find out if there is an action pending against you. Don’t ever assume the landlord will forget or will not move forward with the eviction
After the complaint has been filed, the landlord may then serve you with “Summons and Complaint—Unlawful Detainer.” This will include the complaint as well as some other court documents. You have five calendar days to file an answer with the court in which it was filed. (UD 105) It is extremely important to file your answer within the five days. If you need assistance, you may reach out to your local self-Hhlp center to assist you with filling out this form out.

You are still not legally required to vacate the unit.

At this point, the landlord cannot take any action against you. Once the complaint has been filed, the landlord must wait for the five calendar days to run before he can take any other action. If you’ve filed an answer, the landlord must wait for a “Notice of Hearing.” If you have submitted your answer, you will receive a letter in the mail giving you a “Notice of Hearing.” Your hearing date will be set for approximately 7-10 days after you filed your answer.

You are still not legally required to vacate the unit.

Once the hearing date has been set, the landlord or his attorney may reach out to you to try to negotiate a deal before your court date. You can negotiate a deal or wait for your day in court. It is crucial that any agreement you reach is in writing and that you still show up to court.

It’s important to keep in mind that many eviction actions are settled on or before the scheduled court date. While the entire eviction process takes approximately twenty days from the time of the first notice to terminate tenancy, there are many options for a tenant once a judgment has been entered against him. My next blog post will provide a detailed overview of the actual court filings, the “material breach,” and how an eviction for medical marijuana use is likely to play out in court.

In case you’re wondering about the little blue notice on my door: The notice read, “Attention Neighbors: We are remodeling the exercise room.” It went on to inform me of the days I would be unable to use the exercise room. I smiled sighed with relief because I wasn’t being evicted…Not yet, anyway.

Disclaimer: This post is intended to provide general information about your rights as a tenant. It should not be understood to provide legal advice. Should you receive any court documents, please contact an attorney regarding your particular issue.


What About the Children Who Need Public Benefits?

In my last article I discussed some of the ways marijuana convictions can prevent older “children” from getting financial aid. Financial aid is just one of many public benefits that take marijuana convictions into account. Conveniently, at least for discussion purposes, the guidelines for financial aid are spelled out, and it is relatively easy to look up how a marijuana conviction affects a student receiving aid.

There are many other public benefits that are less clear. Federal housing subsidies, like Section 8 housing, is complicated enough that one of my Drug Law and Policy colleagues, Ruby Renteria, is working on only that issue. Today, I am going to focus on two public benefits that affect children most directly: the foster care system and public school access.

Foster care in the state of California is a fairly difficult thing to discuss as far as across-the-board policies, since counties share and move children around depending on where beds are available. To be compatible with the system, foster assistance programs are often area-based. The one that I am most familiar with—and which I will use for purposes of this brief discussion—is the Court Appointed Special Advocates, or CASA, program. CASA appoints individuals to be constant advocates for youth in the foster system. Since lawyers and child protective services agents may change, the idea behind CASA is to give a child someone who will be more constant and not have any agenda other than supporting the child.

Programs like CASA are, perhaps unsurprisingly, sparsely funded and difficult to implement where there is need. It takes time to train advocates to understand the needs and concerns of the average foster child. Children with exceptional needs, like those with criminal records, tend to be harder to place with a CASA, and given the number of children without special needs who are awaiting a CASA, those youth with criminal records become less of a priority. In some instances, it may even disqualify the youth from receiving benefits.[1] So, if a child has a criminal record, or even a permanent non-criminal record of some kind, involving marijuana offenses, it will likely be a challenge for them to receive equal or optimal treatment in the foster system.

A public benefit that affects far more youth in California, however, is public school access. The data I gathered focuses on high schools, since high-school-aged children are probably using marijuana most. I also focus on high school because it, as an American institution, is held up on an alarmingly high pedestal. Homecomings, proms, and grandiose graduation ceremonies are featured in just about every “classic American” teen movie I care to think of. Being expelled from high school, or suspended and excluded from such traditional markers of acceptance, is therefore exceptionally disruptive.

To understand what happens if a child is caught with marijuana at school, it is perhaps best to have a bit of a primer in the California public education system and its disciplinary practices. Unlike foster care and its auxiliary programs, California education data is fairly accessible, and be forewarned: this is a bit of a downer.

Thousands of children are expelled from high school each year, and hundreds of thousands are suspended. California has been criticized over the last several years for its high rates of school discipline, so there has been significant effort to reign in overzealous districts, and the numbers have been dropping. And certainly, many students are expelled for meritorious reasons, like bringing weapons to school or sexual assault. However, the California Education Code’s grant of broad discretion to school administrators allows many children accused of lesser offenses to be uprooted and booted from their home school districts. Being forced to move away from their home school districts means that, among the confusion and general disarray that is caused administratively, students are also being removed from their peer groups. If they are not outright expelled, students with prior suspensions are often the first to be prevented from attending social activities like school dances and even graduation.

The California Education Code section 48915 outlines expulsion guidelines in detail for both violent and substance-related offenses. Regarding violent offenses, the Education Code requires explusion for students accused of bringing a firearm, brandishing a knife, possessing explosives, or sexual assault. The Education Code “expects” students accused of lesser violent crimes, including assault and battery, robbery, and possessing a knife, to be expelled. Finally, the Education Code allows discretionary expulsion of students who damage property, inflict mild physical injury, and possess “dangerous objects,” among other offenses. For the most part, these are guidelines that reflect the importance of keeping our youth safe while they are at school.

The Education Code’s take on drug offenses, however, is a little more difficult to swallow. The Education Code requires expulsion of any student who unlawfully sells a controlled substance. It expects expulsion for possession of any controlled substance, with an exception carved out for students who are caught for the first time possessing less than an ounce of marijuana. Finally, the Education Code allows discretionary expulsion for possessing any “drugs or alcohol,” selling substances that look like drugs or alcohol, and selling drug paraphernalia.

There are a number of things I find bizarre and concerning about these outlines. First, selling drugs at school is statutorily punishable in the same way as bringing firearms and explosives to school. This may be appropriate, though I am still concerned about foolish children getting caught up in a code section intended for hardened drug dealers and violent offenders. Recall from my last article how easy it was for Luis to be convicted of “giving a gift of less than ounce” for giving his friend a joint; had his friend handed him a dollar at that exchange, he likely would have been guilty of “sale” as defined by this Education Code section. More alarming is that in the “expulsion expected” category of offenses, possessing any drug is equated to violent robberies and causing serious injuries. Finally, “discretionary expulsions,” just like every kind of discretion, can be abused.

So, what are kids actually getting expelled for? As it turns out, students get expelled and suspended from schools for a veritable menu of offenses. The three largest groups of expulsions for the 2013-2014 school year were “Caused, Attempted, or Threatened Physical Injury,” “Possession, Use, Sale, or Furnishing a Controlled Substance, Alcohol, Intoxicant,” and “Disruption, Defiance.” Notably, all these expulsions were made under section 48900, which outlines the suspension and expulsion procedures for school administrators; a far smaller number of incidences cited section 48915, which outlines expulsions only (as discussed above).

I dug through significantly more data from the California Department of Education DataQuest site to try and figure out if there was a way to determine how often kids are disciplined for marijuana possession. It turns out it’s pretty much impossible to determine. The construction of the Education Code means that marijuana offenses are lumped together with alcohol and other drugs for reporting purposes. When considering how these numbers may change if marijuana is legalized for adult use, it would be useful to look at the alcohol and tobacco school discipline rates. Unfortunately, even alcohol is lumped together with other intoxicants and can’t be pulled apart to examine. Tobacco is not, and it may be a small beacon of hope to highlight that, although over 10,000 students were suspended for tobacco use in the 2013-2014 school year, only 110 were suspended.

While it may not be possible to try and predict the effect legalizing marijuana for adult use will have on school expulsion and suspension policies, I believe we nonetheless need legalization to impact school disciplinary policies. Why? To begin, anecdotal stories from across the country demonstrating strict policies on marijuana possession are becoming all the more frequent. Secondly, there is mounting evidence suggesting the zero-tolerance attitude towards marijuana is having the exact opposite effect desired, and actually makes students more likely to use marijuana. Finally, we know suspensions and expulsions disproportionally adversely affect students of color.

It is perhaps unsurprising at this point that foster youth in California are also disproportionately children of color. Next time in What About the Children, I plan on discussing the issue of race, as well as why talking about children of color is so important.

Clare McKendry for Drug Law and Policy – Follow us on Twitter @DrugLawPolicy

[1] Due to so many of these programs having differing policies from county to county, I had trouble finding a valid citation for this fact. The best, anecdotal citation, I can provide is that I have several friends who are CASAs who have described their chapter’s policy, or de facto policy, as excluding youth with criminal records.

So What Should California Do with On-Site Consumption?

In the 2016 election, California has important decisions to make regarding legal recreational marijuana beyond simply whether to allow it or not. Where and how consumers access the marijuana market is an equally important consideration that bill crafters and policymakers must give serious forethought to. Luckily, Colorado, Washington and the other legalized states have provided living laboratories for the different means of controlling and regulating a legalized recreational marijuana market.

My past have detailed the different legal and regulatory systems that Colorado, Washington, and other recreational marijuana states have implemented for their marijuana markets, specifically regarding on-site consumption businesses such as marijuana lounges, and how such businesses organize and operate themselves within the crisscrossing legal frameworks created by state anti-smoking laws, local ordinances and regulations, and the requirements of the marijuana bills themselves. From the patchwork of pros and cons observed from each regulatory system, patterns have emerged that can guide California policymakers and bill drafters to best craft sensible recreational marijuana laws that carefully balance the potential for state and business revenue against the perceived social costs and negative externalities of legalized recreational marijuana.

In this post, I will detail the recommendations for how California could craft sensible policy for the creation of on-site marijuana consumption businesses, including retail point of sale consumption (RPOSC) businesses, made throughout my previous blog posts. I will offer further guidance on how marijuana RPOSC businesses—distinct from the marijuana-lounge type enterprise which has been the predominant business form within the fledging marijuana hospitality market—can be used to redevelop areas within cities in a similar manner to the effect craft breweries, wine bars, and urban gastro-pubs have had in underdeveloped areas across the state. I will highlight the potential sales and business tax income that previously legalizing states have left on the table by not providing clear guidelines for the creation of businesses in the secondary marijuana hospitality market. Lastly, I will explain what can be done to best foster an environment where business, local government, and social health issues are all accommodated.

Increased tax revenue from new marijuana markets has been cited by advocates as an important reason to legalize recreational marijuana. Recent reports project the amount made in taxes for the last twelve months by the state of Washington at $44 million, while Colorado projects total revenue for the year since legalization at $69 million. Differences in the way marijuana is taxed in each state account for much of the differences in revenue, although experts still believe money is being left on the table by states who still allow relatively unfettered access to medical marijuana markets which aren’t subject to the same degree of taxation as recreational cannabis, and thus, sell at lower prices. The still substantial black market also still supplies a large share of the cannabis consumed in Colorado: a 2014 Colorado Department of Revenue report stated that of the roughly 130 metric tons of marijuana consumed in the state that year, only 77 tons of it was sold through medical and recreational dispensaries. As increasing data shines light on the potential state and local revenue lost to the black market, California can observe the patterns and better craft the laws governing its recreational marijuana market.

Indeed, in order to avoid many of the problems posed by the black market’s continued existence in recreational marijuana states, California must find a way to convince many of the growers and sellers in its black market to fold their historically illegal or quasi-legal (via the states barely regulated medical system) enterprises into the legal marketplace. This is represented most visibly by the Emerald Triangle in Northern California (Humboldt, Medicino, and Trinity counties), which has a long history with black market marijuana production. Allowing regions and cities to create tourist and entertainment destinations could be one way to convince otherwise reticent regions to join the legal market, especially if federal trademark law eventually allows marijuana entrepreneurs and regions to trademark particular “terroirs” or “appellations” as used in wine to differentiate growing regions, as well as marketing marijuana as specifically from the Emerald Triangle or grown through organic methods or by a particular grower. In fact, organizing the various growers in Humboldt County into a market resembling the wineries in Napa Valley is a goal of the Emerald Growers Association and the California Cannabis Voice-Humboldt, two industry advocacy groups for Northern California and the Emerald Triangle.

Experts such as Mark Kleiman from the University of California, Los Angeles, have also noted that if the increasing supply due to the newfound ease and legality of growing cannabis causes the retail price of cannabis to drop below the roughly $10-$20 a gram in current recreational markets, tax percentages tied to the value of sold marijuana would cause revenues to drop further. He offers two answers: a specific excise tax based on the quantity sold rather than the price, or a tax on the potency of the marijuana gauged via the THC content of the product, similar to the different taxation levels for beer and hard liquor. Taxes such as these could serve to simultaneously squeeze out the black market while reducing societal harms from increases in substance use disorder, similar to other “sin taxes” on cigarettes and alcohol.

While the question of how to correctly tax marijuana to balance the social costs and revenue for the state while maintaining a healthy market is a complicated one (see this series of blog posts by fellow classmate/blogger Alexa Quinn for an in-depth analysis of the tax issues related to marijuana), policymakers should also look for complementary means to generate revenue from the recreational marijuana market. This could be done by allowing the creation of entertainment/hospitality industries serving the marijuana market like the aforementioned RPOSC businesses from my other blog posts. These could be bud-pubs in the style of craft brewpubs, or cannabars attached to marijuana greenhouses like wine bars attached to vineyards in the Napa Valley which were mentioned above as potential industry models.

RPOSC businesses can also provide opportunities for the generation of state and local tax revenues beyond what is traditionally been generated by the cultivator-processor-seller cycle of the marijuana market. For instance, lawmakers could add another level of taxation by requiring taxes to be charged when the grower/processor sells to the RPOSC business like a budpub, and again when the budpub sells to the customer to be consumed on premises. This style of taxation would be similar to the way Washington state taxes its marijuana market, i.e. a sales tax for growers to processors, processors to retailers, and retailers to customers. This tax would be likely be passed onto the final price of the marijuana for the consumer, although if wholesale prices continue to fall as expected in recreational markets, the final price tag would only be slightly higher relative to the price when buying at a retail cannabis dispensary, analogous to the difference paid by purchasing a six-pack of beer or bottle of wine at a grocery store versus a pint of beer or glass of wine ordered from within a social bar setting. Whether the tax is based on a percentage of total sale price, quantity of product, or more sophisticated method like THC percentage would be up to policymakers and as noted above is its own complicated issue.

Fortunately, the organizations who are jockeying to craft the resolution that will be on the California ballot in 2016 have so far understood that the on-site consumption issue is a missing link to a complete and healthy marijuana market. The first submitted version of the proposed recreational marijuana bill for California’s 2016 election, titled “The California Craft Cannabis Initiative,” creates a new agency called the California Cannabis Commission which may develop a licensing system for retail locations where marijuana products “may be purchased, sold, served, consumed, and otherwise disposed of in a licensed premises in a manner similar to licensed premises serving alcoholic beverages,” i.e. RPOSC businesses. The bill also contains various zoning requirements banning craft and commercial marijuana grows from residentially zoned areas, while permitting municipalities to draft additional zoning laws for cultivation, processing, and on-site consumption businesses. This language shows the support and understanding from industry advocates not just for the development of a viable recreational marijuana market, but also for actual RPOSC businesses where cannabis is sold and consumed on premises. Future lawmakers should focus their efforts on the above mentioned form of RPOSC business, as opposed to on-site consumption business-types where customers are only allowed to bring and consume their personally acquired cannabis, rather than cannabis products sold from the cannabar, due to proprietors having to shoehorn their business model within conflicting marijuana laws not designed with on-site consumption enterprises in mind. Hopefully, other future recreational marijuana initiative proposals being written for California will also allow RPOSC businesses.

For municipalities and lawmakers, future RPOSC business forms have a number of advantages over the currently existing smoking lounge format seen in Colorado Springs and Nederland, Colorado. First, allowing the sale and consumption of marijuana on the premises allows for safe and easy monitoring of customer intoxication and age levels via carding and employee monitoring. This is augmented by providing opportunities for the business and consumer to be informed about the particular strains and form of the marijuana product (flower vs. concentrate vs. edible) through labeling and “menus”, and also how it will be consumed (vaporizing vs. concentrate/dab “rigs” vs. traditional smoking vs. eating) in a safe manner.

Second, by allowing these businesses to operate kitchens and/or other forms of entertainment like the pool tables, televised sporting events, parlor games, live music or DJs seen within currently existing lounge or pub-type establishments, the businesses could become profitable and desirable entertainment locations for 21 and up crowds outside of their attraction as cannabis consumption locations. This could reap additional taxes through food and drink sales and the corresponding corporate/income tax increase from a successful business. In addition, if considering the long term development of the area around a RPOSC business standing alone or as part of a larger marijuana tourism district, popular RPOSC businesses could increase property values and the economic activity of secondary businesses in the area (like other entertainment venues and restaurants/eateries) in a manner similar to the revitalization seen caused by new craft breweries in under-developed urban areas within California cities like San Diego, San Francisco and Oakland.

Third, legalizing recreational marijuana into a system similar to how California regulates alcohol and providing social settings for marijuana consumption via RPOSC businesses­ that only allow certified-legally grown marijuana—similar to the manner alcohol is sourced, purchased, and consumed at bars and entertainment venues—would create larger demand for marijuana grown and produced within the legal system. In this system, it is likely that user preference between different marijuana products in the marijuana market would necessitate patented, trademarked or otherwise certified strains, varietals, terroirs, appellations and marijuana business copyrights to handle the vast proliferation of products within the new marketplace.

For various reasons, the current smoking lounges existing in Colorado have not spurred this described proliferation of commercialized marijuana strains and brands. One reason could be because the marijuana smoking lounges in Colorado generally operate by requiring customers to bring their own marijuana products in order to maintain their anti-smoking exemption as “social clubs” under a state’s Clean Air Act (explained in greater depth in Additionally, some businesses that allow on-site cannabis consumption decline to personally sell recreational cannabis products due to local ordinances banning recreational marijuana sales. Although important for black market concerns, business owners have no easy way to determine whether the cannabis products their customers are consuming originate from legal growers, and likely don’t want to know. Thus, cannabis lounges that don’t sell marijuana products would seem to be less effective at stimulating overall tax growth and compliance with the legal scheme for recreational marijuana than RPOSC businesses because the marijuana consumed within is not guaranteed to come from the legal market. The equivalent access to social marijuana lounges, along with the lower prices, provides an continuing disincentive for consumers to purchase marijuana from the legal recreational market; conversely, RPOSC business in California that only sell legally grown and sourced bud, and do not allow in outside products similar to bars, could be a constructive tool for communities to reduce their black market grower and seller populations.

As noted above, future RPOSC businesses should be required to stock marijuana products grown from sellers operating within the legal market as certified by an agency responsible for monitoring that market.  As examples, the previously legalized states have often tasked their agencies controlling alcohol or revenue with the additional marijuana responsibilities. Colorado created the Marijuana Enforcement Division out of its Department of Revenue, while Washington expanded the mandate of its Liquor Control Board to also handle marijuana licensing and enforcement. Oregon vested its Oregon Liquor Control Commission with the authority to implement and enforce its new recreational market. What agency will take the lead in California is unknown, though the concept is clearly in play as evidenced by the California Craft Cannabis Initiative’s aptly named California Cannabis Commission. Whatever agency ends up with lead enforcement should be capable of monitoring simultaneously the production, processing, and retail sale aspect of the recreational marijuana market, and will likely need funding from the state’s budget in addition to a specific percentage of funds allocated from marijuana tax revenues.

Additionally, California’s federal lawmakers should make every possible effort in lobbying the IRS and major banks for changes to the way the financial system treats cannabis businesses. Currently, most business done by marijuana businesses in Washington and Colorado is conducted in cash due to reticence by banks to accept deposits from an industry that is still federally illegal. The IRS does its part in Section 280E of the federal tax code by denying tax deductions from marijuana businesses other than for costs of goods sold even for dispensaries operating within the law in legalized states. As Forbes notes, this means deductions can be taken on “wages, rents, and repair expenses attributable to production activities,” but not for wages, rents or repair expenses related to general business or marketing activities such as the actual maintenance of a storefront for the direct sale and consumption of cannabis products. If RPOSC businesses eventually settle into business and revenue cycles similar to bars and restaurants, they will need access to deductions from their state and federal taxes to remain viable investment and business opportunities.

Lastly, the interaction between RPOSC businesses and California’s Clean Indoor Air Act must be legislatively clarified to provide clear guidelines to future businesspeople who seek to invest in the cannabis entertainment and hospitality industry. The California Craft Cannabis Initiative’s language makes no mention of how the Clean Air act affects the potential business forms taken by RPOSC businesses, just that the Commission “may” create licenses for a business where cannabis is consumed onsite.

As I mentioned in my previous blog post, current guidelines (PDF) issued by the California Attorney General at the end of 2011 indicated that serving food or drink relegates the “primary purpose” of smoking-related business away from “smoking,” which previously qualified them for the workplace exemption to the Clean Indoor Air Act. This provision could be an issue for RPOSC businesses seeking to allow marijuana smoking inside their business, as they could not qualify for the same exemption that hookah bars and cigar lounges receive. This could be solved via a simple legislative amendment, though holding the California legislature to the same level of political cooperation and proactivity displayed by the Colorado and Washington legislatures in legislating fixes to their respective recreational marijuana markets seems an unsafe bet at best. It would be easier to write the amendment into the final initiative’s language, although this would make future efforts to amend it difficult due to the vagaries of the California initiative system.

All in all, California has a number of options about how to create a viable marijuana market in 2016 that addresses issues raised by the states that have previously fully legalized marijuana. However, it will require political will and cooperation between the various interested factions within the California marijuana market, from southern California storefront retailers to Bay Area intellectual property entrepreneurs on up to Emerald Triangle growers and cultivators to properly create a uniquely Californian market that best serves California’s varied regions and constituents, while simultaneously providing a successful example for recreational legalization efforts across the country. Along with many other important decisions in the 2016 election, California’s voters will get an opportunity to collectively choose their state’s future and relationship with legal recreational marijuana: hopefully, this blog has educated you, the reader, be you citizen, policy maker and/or entrepreneur with a stake in the market, about the efforts being undertaken now and in the past to shape the form and nature of the nascent marijuana market by California and her sister states, and what relationship we, as citizens, want our state to have with recreational marijuana.

Private Censorship in the Marijuana Industry


Private Censorship in the Marijuana Industry Tech entrepreneurs are no strangers to the marijuana industry: just ask the teams behind Leafly or Weedmaps, two websites making millions off of their presence in the App Store and Google Play. With limited options to market and advertise, marijuana businesses often take to these types of apps and social media outlets to advertise their products and services.

Take Instagram, for example. Now owned by Facebook, Instagram is a popular photo editing and sharing app that can be found on the App Store and Google Play. With over 300 million users, Instagram is one of the largest worldwide social networks. To gain popularity on Instagram, people use hashtags (#) to categorize photos so that others can easily search and browse through different photo collections. In recent years, large and small companies of many different industries, including marijuana, have allocated thousands of dollars to market their brands and products to the masses on Instagram.

If you wanted to check out some photos of marijuana on Instagram, the first thing you might do is search by the hashtag “weed” (#weed).


You’ll notice in the screenshot above that #weed doesn’t even exist on Instagram. What is the reason for this?

One theory is that Instagram is doing this to protect its users. Part of posting a photo on Instagram is geo-tagging the photo so that other users can see where the photo was taken. Recently, police across the country have been using this Instagram feature to pinpoint the whereabouts of lawbreakers and bring them to justice. Because posting photos of marijuana to social media sites is considered “reasonable suspicion,” police are using Instagram as a resource to supplement their more traditional efforts of law enforcement.

Another theory is that by allowing its users to freely post pictures of marijuana, Instagram executives, along with Instagram users, could be held criminally liable. A quick scan of Instagram’s Terms of Use reveals that:

“6. You may not use the Instagram service for any illegal or unauthorized purpose

14. You must not, in the use of Instagram, violate any laws in your jurisdiction”

Because marijuana is still federally illegal, Instagram can find a violation of terms #6 and #14 in just about any picture of or relating to marijuana. A possible justification for these broad terms is that, legally, allowing any picture that solicits the sale or promotes the use of marijuana – activities that still remain felonies under federal law – could put Instagram affiliates in harm’s way.

From Instagram’s perspective, censoring marijuana related photos might be in the company’s best interest. In 2011, Google executives faced potential incarceration for allowing Canadian pharmaceutical companies to advertise illegal prescription drugs via AdWords to consumers in the U.S. Since then, companies that rely on their own large ad platforms to generate revenue, such as Facebook and Google, strictly prohibit marijuana and related paraphernalia from their ad programs.

Although Instagram isn’t technically an advertising platform, their business model makes them responsible for controlling the content that is posted to their servers. Perhaps it is just not worth it for a company as reputable as Instagram to test the boundaries and risk their livelihood.

But one man’s ash is another man’s soil.


Just ask Massroots – the marijuana tech start-up that is building an online community of cannabis consumers. From an objective view, Massroots is literally an Instagram clone. The only real difference is that Massroots is exclusively for marijuana related pictures and videos. Growing from 20,000 to almost 300,000 users in just over a year, Massroots recently filed for an initial public offering, and as of April 9th, is trading publically under the ticker MSRT.

In this instance, private censorship gave rise to a new (but hardly unique) business that was willing to take risks that others wouldn’t. This is yet another example of the marijuana industry beating the odds and finding a way to grow.

Jeff Madrak for Drug Law and Policy – Follow us on Twitter @DrugLawPolicy

Greedy Lawyers Are Good for the Environment: Controlling the Environmental Effects of Marijuana Cultivation through Private Enforcement

As momentum grows for marijuana legalization, many are worried about the environmental impact of cultivation. Enacting laws to control the manner of marijuana cultivation may protect California’s water and wildlife, but such laws are only effective if they are enforced. The 2014-2015 budget for California earmarked 3.3 million to help prevent destructive marijuana cultivation, (see p. 108-119) but with legalization on the horizon, the market for marijuana could dramatically increase and more funding may be needed. However, the responsibility of combating illegal and destructive cultivation does not have to lie solely with the government. Instead, private individuals can be incentivized to sue those who operate illegal grow sites. Forcing violators to compensate the cost of private enforcement will give a sufficient monetary incentive for private parties, as well as deflect costs and labor away from the government and its agents.

Both the state government and environmental groups are concerned about the environmental damage caused by marijuana cultivation. A study by the California Department of Fish and Wildlife (CDFW) on Humboldt County found that the water demand for cultivation often exceeded stream flow, causing streams to go dry around large scale growing sites. Scott Bauer, an environmental scientist with the CDFW estimates that over 95% of grow sites divert water without an official permit. Furthermore, he points out that growers also clear forest areas to make way for cultivation. In considering these issues, both the CDFW and the Nature Conservancy support an increase in funding for state enforcement to stop and deter harmful cultivation.

While tax revenue from marijuana can be diverted to provide for any increase in the costs of environmental enforcement, groups like the Nature Conservancy are worried that the laws surrounding marijuana legalization will not set aside tax revenue for environmental concerns. Such is the case in Colorado, where there is no tax revenue specifically set aside to manage the environmental hazards of marijuana cultivation. (See pg. 19-29.) Even if marijuana taxes are used to pay for enforcement, the price of marijuana may fall after legalization, to the point where tax revenue is unable to pay for enforcement. This fear of insufficient funding is built upon the idea that public enforcement, rather than private enforcement, is the primary method to carry out state rules and regulations.

Public enforcement is when sanctions against violators are carried out by government agents, either directly or by their consent. This is found in criminal law, where violations of the Penal Code, such as grand theft and murder, are asserted by the police and district attorney. On the other hand, private enforcement is when private persons and organizations are allowed to sanction violators without government initiative. This is often found in tort law where the California Civil Code defines and permits legal actions like negligence and products liability, but it is private parties who bring suit rather than government agents.  Private enforcement would alleviate the issue of government funding, as the cost and labor of enforcement would primarily come from private parties rather the state of California.

While there are environmental tort actions, they are effectively personal injury suits based on exposure to toxic chemicals. These “toxic torts” have been criticized for their lack of effectiveness in reducing environmental harm. Albert C. Lin in his article Beyond Tort: Compensating Victims of Environmental Toxic Injury points out the following faults of environmental tort actions: 1) injury and causation are difficult to prove; 2) environmental harms are often so diffuse that individuals do not have incentive to bring suit; and 3) the aforementioned issues lead to little deterrence, since the risk of liability is low.

Under the Clean Water Act and Clean Air Act, the US government has established provisions that allow for citizen suits based on statutory violations related to water pollutants and air emissions. (33 U.S.C. § 1365; 42 U.S.C. § 7604.) These allow any person to commence a civil action on his own behalf against another who is in violation of a standard or limitation of either act. These citizen suits also require a plaintiff to prove injury and causation, but the sufficiency of proof seems significantly easier to meet compared to toxic torts. (See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 183-85 (2000).) However, since injury and causation are still technically required, the concerns of Mr. Lin are still relevant and there may be risk of underenforcement.

There is another private enforcement option that makes it possible to avoid the issues of injury and causation. Qui tam is a legal concept that allows a private party to sue, despite not being personally harmed by the defendant’s conduct. While citizen suits are brought by persons on their own behalf, qui tam actions are brought by people on the government’s behalf. Essentially, plaintiffs filing a qui tam action are not trying to redress any personal injury, but instead are seeking enforcement of the government’s laws.1 For this reason, qui tam actions bypass the issues of harm and causation.2

Currently, qui tam actions are only allowed in federal “whistleblowing” suits – a common name for actions against federal contractors for defrauding the government.3 For these federal whistleblowing suits, liability is established by statute under 31 U.S.C. section 3729, which defines the actions that would be unlawful. A separate provision in section 3730 allows qui tam actions on behalf of the government.

Controls on marijuana cultivation could be set in a similar way. Statutes could establish legal requirements for cultivation that would encourage best practices, and failing to grow within the requirements would result in liability. For these statutes, a provision for qui tam actions on behalf of the government would also be included.

A plaintiff would only need to show that the defendant had violated a marijuana cultivation statute, making this a far more accessible action than toxic torts or citizen suits, as personal injury and causation would be irrelevant. Allowing qui tam actions would resolve the injury and causation issues, but for there to be adequate enforcement, a private incentive must be created.

Because environmental harm is generally diffuse, halting unlawful cultivation may not be enough incentive by itself, as the cost of litigation may exceed any personal injury. The solution is to create a provision that would allow courts to award the cost of litigation to the prevailing party, to be paid by the opposing party. This is already widely used: provisions for awarding the costs of litigation are available for citizen suits under the Clean Water Act and Clean Air Act, as well as for qui tam actions for federal whistleblower suits.

On top of awarding litigation costs, some monetary incentive must be established to allow plaintiffs to profit from a successful suit. While an award of litigation costs would create a supply of willing lawyers, there also must be an incentive for lay people to hire them and direct their attention to unlawful cultivators.

The federal whistleblower law awards the plaintiff a bounty for a successful suit. (31 U.S.C. § 3730(d).) This bounty consists of a percentage of the monetary damage that the government suffered as a result of the fraud. In the context of marijuana cultivation, a monetary award based on environmental damage would be difficult, as it would bring about the issues of injury and causation. Instead, the statutory requirements for marijuana cultivation could include fines for violators, where the plaintiff would be awarded some percentage. By awarding a portion of the fines to the plaintiff and compensating his attorney, the qui tam action would be adequately incentivized and create a private market for enforcement.

The award of fines and litigation costs can be further modified to encourage efficient and considerate enforcement. For example, the award can be increased or decreased based on the severity of environmental harm, either actual or potential. That way, the more egregious violators are prioritized in the private market. In order to discourage frivolous suits, the award of litigation costs could work similar to the attorney’s fee provision for civil rights actions, where a judge can award attorney’s fees to the prevailing defendant if the suit brought against him was “unreasonable, frivolous, meritless or vexatious.” (Christiansburg Garment Co. v. Equal Employment Opportunity Comm’n, 434 U.S. 412, 421 (1978).)

With the proper statutory framework, a provision for qui tam actions could establish an efficient enforcement method that works around the issues of injury and causation. Along with adequate monetary incentives for attorneys and their clients, it could create a private market of enforcement that would not require significant expenditures by the government. It shows that public enforcement is not the only way to dealing with the environmental problems caused by marijuana cultivation, and private enforcement solutions should not be ignored, but seriously considered for the cash-strapped state of California.

1. Evan Caminker, The Constitutionality of Qui Tam Actions (1989) 99 Yale L.J. 341, 344-45
2. Id.
3. Id. at 342-43

Green Money: The Basics of Investing in Marijuana


It’s not often that an industry with multi-billion dollar growth potential materializes out of thin air. Despite the morality issues, legal risks, and ethical concerns that plague the marijuana industry, investors – big and small – are buzzing about the rise of marijuana. Whether you are an activist, looking for any way to help push the industry forward, or simply have dreams of doubling and tripling your money overnight, here is what you need to know.

Investing in Public Companies

If you are an average person with no in depth marijuana industry insight or business experience, the easiest way for you to get a piece of the marijuana industry is by buying stock. A good place to find marijuana companies that are offering equity to the public is

The first thing you might notice is that shares in the marijuana industry are not listed on the major exchanges and are instead available over-the-counter (OTC). If you are not familiar with OTC trading (otherwise known as penny stocks), OTC or off-exchange trading is done directly between two parties, without any supervision of an exchange. It is contrasted with exchange trading, which occurs via exchanges. A stock exchange has the benefit of facilitating liquidity, mitigates all credit risk concerning the default of one party in the transaction, provides transparency, and maintains the current market price. In an OTC trade, the price of shares is not necessarily published for the public. There is an inherent danger in this as there is reduced oversight, and therefore increased risk with OTC stocks.

In regard to marijuana stocks, The Financial Industry Regulatory Authority (FINRA) recently warned investors about potential scams associated with marijuana-related stocks. In particular, FINRA warned about the well-known ‘pump-and-dump’ scheme, in which, fraudsters lure investors with aggressive, optimistic — and potentially false and misleading — statements or information designed to create unwarranted demand for shares of a small, thinly traded company with little or no history of financial success (the pump). Once share prices and volumes reach a peak, the con artists behind the scam sell off their shares at a profit, leaving investors with worthless stock (the dump). If you’ve seen the popular movie “The Wolf of Wall Street,” the pump-and-dump scheme is the same method employed by Jordan Belfort and his associates to defraud investors and make millions.


For example, Growlife (PHOT), a large ancillary marijuana company that develops, markets, and deploys horticulture equipment and supplies, had the trading of its shares temporarily suspended by the Securities and Exchange Commission (SEC) in April of 2014. The SEC cited “questions that have been raised about the accuracy and adequacy of information in the marketplace and potentially manipulative transactions” in its shares. The root of Growlife’s problem was that a few unaffiliated investors decided to send fraudulent and misleading ‘blast’ emails through promotional websites and email addresses under their control with the intent of increasing demand for the stock. After several weeks of vigorous promotion, Growlife’s stock price artificially increased from 2.5 cents to 50 cents per share. The shares were then dumped for a profit of $223,000.


Once the SEC got involved, Growlife fell back down to 2.5 cents a share and now, a year later, is being traded at 2.4 cents a share. Although this occurrence was not completely Growlife’s fault, reduced oversight and regulation of the penny stock market allows for scenarios like this to transpire and are exactly what potential investors in the marijuana market must be wary of.

Investing in Private Companies – Angel Investors

Rarely will you invest thousands (or millions) of dollars into an unknown penny stock and see your money double overnight. If you are looking to make an investment in the marijuana industry with potential for sky-high returns (but also unmeasured risk), you might consider making a private investment.

Sky-high returns are routinely found in one place – heaven – and to get there, a pair of wings, and maybe even a halo, are essential. Enter the angel investor – an individual who provides capital to a business start-up in exchange for convertible debt or ownership equity in a company. Angel investors are usually affluent individuals who buy in to early-stage start-up companies in order to obtain a high return on their investment.

The best angels are experts at spotting emerging markets and utilizing their keen business instinct and knowledge to help young companies find success. If you are interested in this type of investing, a good place to start is a website like AngelList. At AngelList you can sign up, connect with marijuana start-ups, and apply to invest in companies looking for funding.

A more serious angel might consider joining an investor network like The ArcView Group. ArcView is a company that “facilitates the emergence of the legal cannabis industry by connecting investors and visionary entrepreneurs in an effort to meet the expanding and changing needs of responsible cultivators, dispensaries, and customers nationwide.” As a member of ArcView, early stage marijuana companies that are serious about getting funded come to you to pitch their ideas. However, you must be an accredited investor in order to participate, and you can be sure that there are fees associated with becoming a member and making investments. To date, The ArcView Group claims to have funded over 50 companies with over 40 million+ dollars invested.

Venture Capital

When deciding whether to invest in a particular market, a good way to measure the investor safety and security of the industry can be by watching what the big venture capital firms are doing. Similar to angels, Venture Capital (VC) firms also make high-risk high-reward type investments, but usually invest millions (as opposed to thousands) of dollars into earlier stage companies. Venture Capital firms normally have access to a large pool of capital that includes contributions from pension funds, private individuals, and other sources of big money. A key difference between VCs and angels is that VCs normally invest substantial time and money into due diligence (background checks, financial, market, and legal analysis) before they make an investment. When the time finally comes that a reputable VC firm invests in a company, there are usually several compelling justifications underlying why the investment is warranted.

Recently, Founders Fund, an investment firm created by Peter Thiel, joined a Series B round of funding worth $75 million for Privateer Holdings. Privateer, as I discussed in my last post, is a large marijuana-centric private equity fund that is investing millions into large-scale marijuana ventures throughout North America. Founders Fund did not disclose the exact amount of its investment in Privateer, beyond mentioning that their contribution was worth “multi-millions” of dollars.

To date, the investment by Founders Fund is undoubtedly the highest profile investment in the marijuana industry and could be a telltale sign that the time is now to invest in marijuana.

The Payoff

Similar to owning a business in the marijuana industry, finding success at investing in the industry has a lot to do with your own personal tolerance for risk. If you aren’t the risk taking kind, you might stay away from the industry all together and wait until marijuana becomes more nationally accepted. If you really want to play it safe and position yourself for the future of the industry, you might look to big tobacco stocks for safety – one of the most probable industries to expand into marijuana. If you want to test the penny stock market, do your research before you invest and be wary of suspicious stock price movement. If you want to break into the market as an angel investor, learn the business landscape and invest in companies that you truly believe in. Additionally, know that the biggest risk of all is that the federal government could, at any time, decide to pull the plug on the entire marijuana legalization movement. And lastly, remember, the higher the risk, the higher the reward.

Jeff Madrak for Drug Law and Policy – Follow us on Twitter @DrugLawPolicy

Licensing High Technology; Cannabis and Corporations

In a recent and excellent blog post, Jeff Madrak, a colleague of mine, addressed the current growth of “Big Marijuana.” The trick is lots of water and sunlight, but mostly it is careful adherence to the law. Cannabis’s legal status is a figurative hydra; ask a question about protecting children and you find yourself having to answer what harms current prohibition has and the long term effects of that regime; ask about taxing cannabis, and then you’re raising questions about specific tax types and similar industry approaches; and so on. Similarly, for every clever business strategy and solution, for every big picture analysis raised by that post, I found myself wondering about the policies served – if such solutions are “good” in more than a business sense, if society should punish or reward these “ganjapreneurs.”

Tackling that hydra is a task that is literally Herculean. This is cold comfort for business people, because business thrives best when the legal framework is well developed: such a framework reduces uncertainty, which reduces risk, and lower risk means greater long term return on investment. I want to address what I found to be a surprising result and a happy coincidence of law: namely the interaction of licensing intellectual property and the legal fiction of the corporate form.

An industry built on cannabis cannot operate on an interstate market without violating federal law and policy. Note the Cole Memo priority of “[p]reventing the diversion of marijuana from states where it is legal under state law in some form to other states” is facially violated even if marijuana is legal in those other states. Interstate commerce is the prerogative of the federal government, so Big Marijuana is restricted to operating on a state by state basis. However, the intangible nature of intellectual property and the economic convenience of the corporate form can provide an avenue between states that is already being explored by some.

The corporate form. It already sounds like a flimsy pretense, a phrase someone might casually drop as a parenthetical at a cocktail party and be met by a collective eye rolling of all within earshot. These days, the idea of the corporate identity is not only much more prevalent in the social dialogue but it is also more akin to an incantation. It is some sort of legal witchcraft, seeming to afford businesses protections traditionally reserved for actual people. I certainly have a degree of initial discomfort with corporate personhood.

Which isn’t to say there are not benefits to allocating personhood to a corporation. Probably the best justification for identifying a corporation as a legal individual is the allocation of liability. For one thing, investors are protected from personal liability, which promotes risk taking and innovation. Additionally, anyone harmed by the activities of a corporation can name this identity as a defendant in a court of law. In fact, a “person” can sue another “person” so long as they have standing. Standing is basically when one person has an injury that another person caused and the courts can give a remedy to, like Apple v. Samsung.

Legal personhood could also be applied to resolving unusual problems, such as an endangered animal being granted personhood via statute, allowing others to sue “someone” on behalf of that animal if that “someone” poses a threat to them or their habitat. While it has been indicated as possible for congress to grant such standing (an extraordinary step, indeed), courts have rejected standing for cetaceans, and declined to address the standing of sea turtles and birds. Not to digress too far into the realm of the Lorax, what is pertinent here is that our legal system defines “person” in a precise and artificial way to enforce certain rights and responsibilities.

Corporate persons generally have residency where they are incorporated. This is another convenience because courts are able to discern what laws apply to that corporation, and corporations are able to determine which state gets their taxes. Cannabis’ current legal hodgepodge makes this particular simplification incredibly useful. A business can very specifically choose a single state and act within those borders in both a literal and transparently legal sense. This distinction not only allows businesses to choose their laws, it also allows businesses to limit the federal illegality of their endeavors.

The California Artisan Cannabis initiative provides that “[a] person who is not a California resident, or not incorporated in California, shall not be qualified for a [cannabis] license.” (emphasis added). So the legal form, in this specific case, allows the legal cannabis market to thrive while limiting the breaking of federal laws, and promotes state self-governance. Finally, it keeps all of the profits and commerce contained within state limits, thus minimizing the effect of state legalization on neighboring states.

This raises the issue of licensing agreements between corporations in different states. Do such agreements subvert the policies and priorities of the individual states and the federal government, or do they, like the corporate form, actually work to preserve what few clear lines exist in the current legal schema? It is most likely that licensing agreements do neither of those things, but they do allow businesses to continue to flourish and to set up strategically for any potential federal-level changes in the legality of cannabis.

Intellectual property comes in various flavors, but is generally understood to refer to the protection of a particular expression of an idea. Intellectual property law is also often under the jurisdiction of the federal government, which, given the apparent contradictions between federal and state law, can lead to some interesting legal dilemmas. Licensing, however, affords private parties simple and interesting solutions to these problems.

Intellectual property is intangible. When you license someone to use it, you transfer legal rights, not an actual object. Normally a sale between a business in one state and a business in another state would be interstate commerce. Does a license to use a particular expression of an idea qualify as a transfer between state lines? Generally, no.

Without getting too silly, intangible properties, like debt, have no real location and so they are not physically transferred from one place to another. This legal technicality is important because the federal government only has jurisdiction over interstate commerce. In U.S. v. Lopez a federal statute barring guns from public schools was deemed unconstitutional and later had to be rewritten to include only those guns that have “moved in or that otherwise affect[] interstate or foreign commerce.”

Often, licensing will have territorial restrictions. With the current legal classification of cannabis, this is not only desirable and probably legally necessary for business, it also serves the voters’ preferences in determining the legality of cannabis for their state. Common intellectual property licensing practices come with various pros and cons.

What is interesting to this discussion is the availability of arbitration and non-assertion clauses, and the antitrust considerations raised by the latter. Arbitration agreements are a way to provide legally binding resolutions to any disputes that arise. They are wonderful because they avoid the public costs of a court, the individual costs of an attorney, and because they are not part of the court system they can be much more efficient, quick, and accessible to the poor. Of course, the flipside is that there are no fairness guarantees, appealing a decision is difficult, one party often has much more bargaining power and influence in the choice of arbiter (you’re probably bound to one with your credit card, your cell phone, your car, and so on), among other concerns. The primary focus of these concerns relates to labor agreements, or the protection of unsuspecting consumers.

I assume these business licenses are conducted by corporations that are legally savvy and cooperative, so many of those concerns are not present. Which is to say, arbitration agreements would largely function to save taxpayer money by keeping inter-business disputes out of the courts. An additional benefit of keeping disputes out of the courts is that courts would not have to weigh in on the divisive political debate over the legality of cannabis, arguably outside the purview of the court since strategy on how to enforce federal law is up to the executive branch.

Similarly a non-assertion agreement is a contract to not sue over certain property right infringements (often as part of a settlement in an infringement claim). This serves much of the previously mentioned arbitration benefits by keeping such controversies out of court but raises different concerns. Patents, specifically, grant a temporary monopoly on an invention and the dangers of monopolies have long been recognized. A non-assertion agreement can lead to a small group of businesses acting as an oligarchy by contract. Further, such an agreement potentially protects invalid patents from being challenged by competitors – certainly not a win for society since we prefer the full use of ideas in the public domain.

In conclusion, it appears that the legal technicalities of how corporations exist as entities and the intangible nature of intellectual property actually serves to avoid many of the legal problems surrounding cannabis.   While my initial impression was that corporations could use legal maneuvers to essentially be an interstate cannabis operation, the actuality is that these legal hoops need to be jumped through and actually function as further restrictions on interstate commerce for Big Cannabis.

Additionally it would be wrong to condemn a business for working within the existing legal framework. Furthermore, if they were trying to abuse that framework, courts are equipped to see through manipulations of the corporate form. Through these legal fictions, society is served by confining cannabis commerce to those states that wish to allow it without violating federal law and also potentially without placing unreasonable burdens on the judicial system.