Tag: pot

Massachusetts to Require CGL and PL Coverage for All “Marijuana Establishments”

In regulations finalized just before the March 15, 2018, deadline, the Massachusetts Cannabis Control Commission (CCC) has included a provision requiring the maintenance of liability insurance or an escrow account to cover potential liabilities. This applies to all Marijuana Establishments, which include marijuana cultivators, craft marijuana cooperatives, marijuana product manufacturers, marijuana retailers, independent testing laboratories, marijuana research facilities, marijuana transporters and “any other type of licensed marijuana-related businesses,” except for medical marijuana treatment centers, which are already subject to a comprehensive regulation scheme, including a similar requirement.

Provisions

Under the new regulations, Marijuana Establishments must obtain and maintain general liability coverage with minimum limits of at least $1 million per occurrence and $2 million aggregate, and product liability insurance coverage of $1 million per occurrence and $2 million aggregate, with a maximum deductible of $5,000 per occurrence. 935 CMR 500.105(10)(a).

In the event that a Marijuana Establishment is unable to obtain the required coverage, upon providing documentation of the unavailability of coverage, the requirement may be met by the deposit of $250,000, or some other amount approved by the CCC, into an escrow account. 935 CMR 500.105(10)(b).

Any new applicant will be required to provide a description of its plan to obtain the required insurance coverage or otherwise meet the requirements of this regulation as part of the application process. 935 CMR 101(c)(5).

This insurance requirement is one of several designed to ensure the financial responsibility of marijuana businesses in the Commonwealth, including a requirement that applicants detail the amounts and sources of capital resources available to them, and a requirement that a license applicant provide documentation of a bond or other resources held in an escrow account in an amount sufficient to adequately support the dismantling and winding down of a Marijuana Establishment pursuant to 935 CMR 500.101(1)(a).

Synopsis

The recreational marijuana business regulations were approved on March 9, 2018, after extensive hearings and public input. The regulations must be signed by the Secretary of the Commonwealth and published in the Massachusetts Register, which is expected to take place on March 23, 2018. The regulations become effective upon publication.

Massachusetts voters approved the legalization of recreational marijuana via ballot in November 2016. The CCC plans to begin accepting applications on April 1, 2018, and recreational marijuana sales are expected to begin on July 1, 2018. Existing medical marijuana treatment centers have been given priority for licensure in towns and cities where the number of licenses is limited, see MGL c. 94G, § 5(c), and already will have these coverages in place. However, as applications will be reviewed on a rolling basis, we would expect to see the number of businesses seeking this coverage only increasing.

 

© 2018 Wilson Elser
This post was written by Kara Thorvaldsen of Wilson Elser.

Oklahoma and Nebraska Challenge Colorado’s Amendment 64: Legalized Marijuana

In 2012, Colorado was the first state to legalize recreational marijuana with Amendment 64.  While this has made Pizza Franchisors happy and sent snack sales through the roof, it has also created controversy and unintended consequences.  The entire country has watched Colorado sort through these issues, curious to see how things will land, how much people really want to get high, and most of all, exactly how much money is there to be made?  Along with these practical issues and enforcement questions, several legal issues have come into play as marijuana legalization—and its conflict with federal law—has changed the landscape.  Perhaps most significantly are the legal challenges to Colorado’s statute in front of the Supreme Court.

Colorado’s Amendment 64 changed the State Constitution to allow for recreational use of marijuana. According to the law, Adults 21 or older can grow up to six cannabis plants, with 3 being mature at a time, and legally possess all the cannabis from those plants.  Adults may also travel with up to one ounce of marijuana while traveling, and gift up to one ounce to other adults 21 or over.  Consumption is regulated like alcohol.  The sale and growth of marijuana is regulated by the state, with licenses available for both growers and retail outlets.

The Attorney Generals’ of neighboring states Oklahoma and Nebraska, Scott Pruitt and Jon Bruning, respectively, have sued Colorado.  The complaint cites Colorado for creating a “scheme” that “frustrates the federal interest in eliminating commercial transactions in the interstate controlled-substances market, and is particularly burdensome for neighboring states [Oklahoma and Nebraska] . . . States where law enforcement agencies and the citizens have endured the substantial expansion of Colorado marijuana.”  Colorado’s Attorney General, John Suthers, was against marijuana legalization when it was being debated, but now he is tasked with defending the state’s controversial measure.

Oklahoma and Nebraska take issue with Colorado’s failure to take steps to prevent the drug from leaving the state.  In particular, the complaint takes issue with Colorado not requiring patrons to smoke or eat the marijuana where they purchase it, or tracking marijuana once it is sold, or requiring a background check on purchasers.  The law, in fact, only requires a driver’s license that says you are 21 to purchase the drug.  Colorado has no effective way, according to the complaint, to stop “criminal enterprises, gangs and cartels from acquiring marijuana inventory directly from retail marijuana stores.”

Concerns about a black market exist, and how the law might be creating gray areas in how pot is sold and cultivated.  A CNBC documentary “Marijuana Country: The Cannabis Boom” examines some of these issues.  Cameras follow two pot dealers as they show how loopholes in the law allow them to profit from their excess marijuana, grown legally, in a gray market heavy with craigslist postings and terminology—he is a caregiver, not a dealer, and he gifts the marijuana and receives gifts of cash in return.  It’s easy to see how this gray area doesn’t stop at the state line.

In fact, law enforcement officials from counties neighboring the Colorado border say they are seeing more Colorado marijuana, some of it still in the retail packaging, flow into their counties.  The strained jail budgets in these counties are a result of the increased enforcement costs—more impounded vehicles, more arrests and higher costs all around because of the pot coming down the highway.  Colorado AG John Suthers says 40 states have contacted his office regarding marijuana seized within their borders, and the Washington Post has gone so far as to call Colorado “the nation’s giant cannabis cookie jar.”

It is for these reasons that Oklahoma and Nebraska have filed their complaint.  Invoking the Constitutional provision that gives the Supreme Court original jurisdiction on disputes between the states, basing their complaint on the claim to the right to have federal laws prevail over contradictory state laws under the Supremacy Clause of Article VI of the Constitution.  Nebraska and Oklahoma v. Coloradohas not received permission to be filed by the court.   It should be interesting to see how the case develops.  But with over 130 metric tons of marijuana sold, legally, in Colorado last year, the demand is not going away.

The court documents and the complaint are here.

ARTICLE BY

Eilene Spear
OF
The National Law Review / The National Law Forum LLC