Medical Marijuana/Cannabis Law

With legalization of the medical use of marijuana expanding throughout the US at a rapid rate, medical marijuana law has become a growing and challenging area of practice.   Medical marijuana (often combined with cannabidiol, or CBD, which is generally derived from hemp) shows great promise in treating medical conditions ranging from dementia to cancer to seizure disorders, often when other treatments have proven ineffective.  The legalization of medical marijuana, and the concomitant increase in research regarding its uses and effects, may open the doors to significant relief for many suffering people.

Marijuana and hemp are different varieties of the same genus, Cannabis, and the same species, Cannabis Sativa.  The difference between the two is a matter of definition, based on the relative percentages of CBD and tetrahydrocannabinol, or THC (the principal psychoactive constituent of marijuana) in the plant, and varies from state.

It should be noted that CBD can be used separately from THC and has been shown to be effective in treating many conditions.  Hemp can be grown in the US only under very limited circumstances, but CBD producers are able to import it.

Interestingly, hemp and marijuana production were legal in the US until the 1930’s.  Until that time, all ropes, rigging and sails, paper, and many other products were made from hemp fiber.  In 1619, because hemp was such an important resource, it was illegal not to grow hemp in Jamestown, Virginia.  Massachusetts and Connecticut had similar laws.  During the 1700’s, subsidies and bounties were granted in Virginia, Pennsylvania, New York, New Jersey, North & South Carolina and the New England states to encourage hemp cultivation and the manufacturing of cordage and canvas.  A major reason that hemp and marijuana were made illegal was that hemp competed with paper made from wood and other hemp products competed with such things as synthetic fabrics.

On the federal level, marijuana is classified as a Schedule I drug.  There are five schedules of drugs.  Schedule I drugs are considered the most dangerous class of drugs with a high potential for abuse and potentially severe psychological and/or physical dependence, and include heroin, LSD, ecstasy and methaqualone. Federal prosecutors continue to pursue cases against medical marijuana businesses and providers and marijuana business expenses are not tax-deductible (although medical marijuana is taxed by most states where it is legal).  Xanax, Soma, Darvon, Darvocet, Valium, Ativan, Talwin, Ambien and Tramadol are Schedule IV drugs, which means that they are deemed to have a low potential for abuse and risk of dependence.

Senators Kirstin Gillibrand (D-NY), Senators Cory Booker (D-NJ) and Rand Paul (R-KY), have introduced a bipartisan bill to recognize that marijuana has accepted medical use.  Among other things, the bill would do the following:

(1)   Recognize states’ responsibility to set medical marijuana policy and eliminate potential federal prosecution. Patients, providers and businesses participating in state medical marijuana programs will no longer be in violation of federal law and vulnerable to federal prosecution.

(2)   Reschedule marijuana from Schedule I to Schedule II.  Schedule II drugs are deemed to have a high potential for abuse, with use potentially leading to severe psychological or physical dependence and are considered dangerous.  Many supporters of medical marijuana believe that it should be a Schedule IV or V drug, or not scheduled at all.

(3)   Amends the Controlled Substances Act to remove specific strains of CBD oil from the federal of definition of marijuana. This will allow youth suffering from intractable epilepsy to gain access to the medicine they need to control their seizures.

(4)  Doctors in Department of Veterans Affairs facilities are currently prohibited prescribing medical marijuana. The bill would allow VA doctors to recommend medical marijuana to military veterans.

(5)   The bill provides a safe harbor to banks and credit unions, their officers and employees that provide financial services to marijuana-related businesses that engage in activities pursuant to state law.

(6)   Remove unnecessary bureaucratic hurdles for researchers to gain government approval to undertake important research on marijuana.

New York state lawmakers voted to legalize marijuana for medical use in 2014, and Governor Andrew Cuomo signed the bill into law in June of 2015. The new law took effect on January 6, 2016.  Among the 23 states that allowed some form of medical marijuana in January of 2016, New York is among the most restrictive. Only “severe debilitating or life threatening conditions” qualify for a prescription and doctors are required to take a four-hour course at a cost of $250 to be licensed to prescribe it.  The state will provide two-year licenses to only five organizations to manufacture and dispense it.  Each organization can product only up to five brands of medical marijuana, one of which must contain a low tetrahydrocannabinol (THC – the principal psychoactive constituent of marijuana) content and high CBD content, and at least one brand with approximately equal amounts of THC and CBD.  Each can open up to four dispensaries.  The dispensaries cannot be within 1,000 feet of or on the same street as a school or religious institution (bars can be closer).  This can make it very difficult to establish a dispensary in a crowded city and for qualified patients to obtain medical marijuana.

The qualifying conditions are cancer, HIV/AIDS, ALS (Lou Gehrig’s disease), Parkinson’s, multiple sclerosis, intractable spasticity from spinal cord damage, epilepsy, inflammatory bowel disease, nerve damage, and Huntington’s disease. State officials refused in early 2016 to add Alzheimer’s, muscular dystrophy, dystonia, PTSD, and rheumatoid arthritis to the list.

Approved forms of medical marijuana in New York include liquid or oil preparations for metered oral or sublingual administration or administration per tube, metered liquid or oil preparations for vaporization, and capsules for oral administration.  Smoking or growing marijuana is still strictly forbidden.  In a letter sent to the New York state legislature, New York Physicians for Compassionate Care — a group that represents more than 650 doctors who support medical marijuana — stressed that numerous scientific studies have shown that smoking cannabis is generally safe and can be beneficial in some cases. The letter also voiced concern that tinctures or extracts — which have higher levels of THC — might prove too potent for patients accustomed to self-medicating by smoking.  In addition, oils and tinctures require a great deal of marijuana to make just one gram, which in turn drives up the prices for patients, who will ultimately be paying out of their own pockets as medical marijuana is not covered by insurance.

As of March 8, 2016, New York had registered 455 physicians for the medical marijuana program, and 1,565 patients had been certified by their doctors, according to the state’s website.

The legal services that medical marijuana business involves, among other things, are

  • licensing
  • regulatory compliance
  • the formation and structuring of business entities
  • arrangements with investors, including structuring returns on investment and additional investments, if necessary
  • tax considerations
  • financing arrangements
  • real estate
  • branding and intellectual property considerations
  • commercial contracts with suppliers and others

Nonetheless, the cannabis business is one of the most rapidly growing businesses in the US and continues to gain legitimacy among entrepreneurs and investors.  The 2016 Marijuana Business Factbook predicts that the cannabis industry will grow from a $14-$16 billion market in 2016 to a $44 billion market by 2020, an increase of about 300% in just four years.