Episode Transcript
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Speaker 1 (00:00):
Nineteen thirty two. That hello again and welcome to Just
Say No. I'm your host Maria Calabrey's coming to you
on KCAA Radio ten fifty am one oh six point
five FM Radio. What we've seen take place in the
(00:23):
cannabis industry over the past several years has been the
most rapid transformation of any sector I've ever witnessed. If
you consider the cannabis plant, with three harvestable components, each
(00:46):
serving unique purposes, there aren't too many other crops that
can claim that versatility. And if you're wondering why this
topic should matter to you, consumers and businesses alike, well,
the impact of regular Tory in action might just surprise you.
So let's get ready to uncover how cannabis advertising and
(01:07):
marketing laws, or the lack thereof, shape what you know,
shape public perception and how brands can and cannot communicate
about cannabis. Hey, whether you're a consumer looking for answers
or a brand seeking clarity, this conversation matters because it
affects all of us. The more we understand, the better
(01:32):
equipped we are to demand transparency and fairness from both
businesses and policymakers. So sit back and relax as we
explore some of the most pressing themes shaping the cannabis
industry with some of the brightest minds in the space.
Speaker 2 (01:55):
By twenty twenty, Bank of America and Merrill Lynch estimate
that will grow to thirty five billion dollars, and many
experts believe it could eventually reach two hundred billion dollars
each and every year.
Speaker 1 (02:13):
I just wanted. I want to see what of this
got me.
Speaker 3 (02:26):
I can see so much, Father, your moroses, your moroses.
I'm a butterfly who is on a begon, taking me
a while to get it.
Speaker 2 (02:47):
Had to live and cry to appreciate your life and
what you give.
Speaker 3 (02:52):
His words, when you're holding me, when you hold me
so close, I'm a brother and under.
Speaker 1 (02:57):
Your brilliant Welcome's guest attorney Walter Chad Blackham from McMurray
and Schuster. Chad is an expert in cannabis compliance and litigation,
advising businesses on navigating the complex web of these inconsistent
federal and state laws governing advertising, marketing, privacy, and consumer protection.
(03:22):
He's played a key role in his firms Cannabis, CBD
and HEMP practice helping businesses across the industry, from startups
to major enterprises, address challenges unique to the cannabis market.
His clients span the entire cannabis vertical, including cultivators, processors, dispensaries, physicians,
(03:47):
and patients. Chad's background includes regulatory compliance work at the
US Department of Homeland Security, giving him a unique perspective
on statutory compliance, privacy, and data of security, key concerns
for both businesses and consumers in today's cannabis landscape. Whether
(04:07):
you're a cannabis entrepreneur seeking to stay compliant or a
consumer trying to make informed choices, chads insights will be invaluable.
So let's dive in.
Speaker 2 (04:20):
Welcome Chad, Maria, Thank you so much. What a wonderful
introduction and what a tough act to follow, but thank
you very much for having me on.
Speaker 1 (04:30):
It's so great to see you again. Chad and I
participated together in a National Cannabis Industry Association webinar, really
really digging down into the legalities that his firm has
put together a guide on unlocking cannabis compliance. So Chat
(04:50):
getting right into it. How exactly does the patchwork of
marketing and advertising laws with the absence of clear or
federal gunans effect the information consumers receive about cannabis products.
Speaker 2 (05:08):
Well, Maria, that word that you use, the patchwork of laws,
that is so apropos and that is so perfect because
what we run into with this situation is something really
really unique. And you know, the only kind of equivalent
I can think of in any other area of the
law is maybe bitcoin or something else that's brand new
like cannabis. But every single state has their own unique
(05:32):
cannabis regime. Now, of course there are crossovers, there's some blend,
there's some feed over, some reciprocity, but what you're looking
at here, as you aptly described, is a complete patchwork
of laws. Now, when these regulators are making these laws,
their primary focus is of course on the licensing, building
out the facilities, some of the ensuing regulatory compliance. But
(05:53):
where does that leave marketing and advertising. Well, it usually
leaves them on the back burner. So one thing that
often happens is you'll have some of the other regulations
in laws that have been built up for gosh nay
on one hundred years at this point, subsumed in you
have all these rules, regulations, some that are by constructive notice,
meaning they post something up on the website and you're
(06:14):
expected to know that. But they're bringing in hundreds of
years of regulatory compliance work into the cannabis sector by
virtue of these u d APP laws and consumer protection
laws that we're going to be talking about shortly. So
there's some commonality. A lot of states have similar U
to APP laws, but they all have their own jurisprudence.
A court case in California does not have the same
(06:35):
effect of law as a court case in Ohio when
you're looking at an Ohio law. And you mentioned as well,
there is the absence of clear federal guidance. And I
love the way that you said that, because people will
often say that the Feds haven't said anything, they've given
no guidance, and that simply isn't true. It's just what
they've given is so confusing, it's almost worse than no guidance.
(06:58):
So we do have lack of clear guidance. We have
some conflicting opinions from the DEA the FTC on items
such as novel or minor cannabinoids like delta eight, other
cannabinoids such as CBN and CBG, so we do have
an overlay with the FTC through the FTC Act. However,
(07:19):
that also has these u'ed app laws that we're going
to be getting into. So there again is no clear
set federal law governing the marketing and advertising of cannabis.
So we have to look elsewhere to these laws that
have been on the books for decades.
Speaker 1 (07:33):
Really, wow, and you DAP is unfair deceptive abusive advertising practices.
Speaker 2 (07:41):
Yes, acts or practices, but you hit the unfair, abusive
and deceptive parts and those are what the claims are.
Speaker 1 (07:48):
So you got it perfect and it's synonymous basically with
consumer protection. Would you say?
Speaker 2 (07:54):
Yes? One of the things people here think of when
they hear of you DAP or unfair deceptive practices, they think, wow,
this must be a really niche specific item that comes
up in very limited circumstances. To the contrary, you DAP.
When I when I say you DEPP, I want you
to think of consumer protection. The two are absolutely synonymous.
(08:18):
As you said, when an attorney general brings a consumer
protection claim, they're doing it through a U dept. Statute.
When the fifty state Attorney generals went after Big Tobacco
for some of their concerns around advertising towards children and marketing.
It was through the you dept. Statutes. So absolutely consumer
protection actions, whether from a private citizen or a government
(08:41):
regulatory body, will be brought through these you DEPP statutes.
Speaker 1 (08:45):
Okay, and then what are these list patchwork of inconsistent laws?
What type of legal challenges do they present for well
meaning brands as they try to navigate the confusing regulations.
Speaker 2 (09:03):
It's really interesting because, especially in the cannabis sector, we
have an industry, we have so many brands out there
who truly are in my opinion, really trying to do
the right thing by consumers. They want to provide medicine
or adult use products in the dosages described accurately, with
a consistent product that people know what they're getting. Thankfully,
(09:27):
there's good news when it comes to the patchwork of
laws insofar as there's a lot of commonality amongst them.
So when we talk about you DAP, what is an
unfair deceptive abuse of actor practice? It's very subjective, right,
It sounds like a catch all termat it is, but
really it's any type of thing that a reasonable consumer
might be misled by. I'm thinking, of course, of things
(09:50):
like misrepresentations is to price the availability of a good,
the quality or grade of a good. You know, if
I tell you I'm going to give you a certain
grade of steel, but then sell you a different grade,
you'll probably be upset. That's you DApp Similarly, every single state,
despite the patchwork, has a anti deceptive law on the books,
(10:12):
meaning deceptive acts and practices are prohibited. The federal government
has the same thing through the FTC Section five Act,
So businesses can take some heart and knowing that there
is commonality among the law in the books. But as
I alluded to earlier, the tricky part where you need
legal advice really comes in with the differences between each state.
The law on the books might be similar, but it
(10:34):
doesn't mean it's been interpreted the same in each state.
It doesn't mean it's being viewed the same. It doesn't
even mean that the regulators are enforcing the same laws.
In cannabis, some states are really big on pesticide enforcement
and some aren't.
Speaker 1 (10:47):
Wow. Wow. And then back to the consumer consequence in state, well,
on both of them, the consumer and the brand, the inconsistencies,
the lack of clarity from these federal regulatory agencies commissioned
(11:08):
to protect consumers ends up leaving gaps in consumer education
and protection.
Speaker 2 (11:16):
Would you say, I absolutely would you know, there's there's
a fine balance between regulation and over regulation, but we
really aren't at that balance on either side of the
coin right now in the cannabis industry. You know, I
teach a class over at Capital Law School and cannabis
law and Policy, and my students are always flabbergasted by
(11:38):
the amount of problems that come up in the packaging
and advertising space. You know, we begin the packaging and
advertising section, their first impulse is, well, the packaging can't lie.
How much more can there possibly be? And then we
get to the seventy pages in the book and they're like,
oh my gosh, but let me bring one issue up
for you in particular, just THHC amount right when we're
(12:00):
simply measuring THHC. Now, first off, THC content is not
the end all be all of the effects that a
particular cannabis product will have on a patient. So that
in of itself is an issue that people think that
is self sufficient. But when we're looking at THHC content,
you know, we have three ways of measuring that alone.
Are we looking at total THC to THC? Are we
(12:22):
looking at only THHC nine tetrahydro cannabinol nine. Are we
looking at a THHC per milligram analysis where it's saying,
as is very common with gummies ten milligrams per gummy,
which is really a THC per weight analysis. So even
within such a small things, how do we measure THHC?
There's multiple variations. Then you get into things like taxation,
(12:45):
whether the other cannabinoids other than THHC and CBD minor
cannabinoids are also elicted on there, and of course you
get into things such as flavinoids terpenes, which a lot
of bud tenders may not necessarily be edge kate on
able to inform the consumers, let alone the consumers than themselves.
So consumers first and foremost often are not aware of
(13:10):
their rights when it comes to these ut app laws.
They very often.
Speaker 1 (13:14):
Provide not to interrupt, but you have just hit where
I was going with this interview. What's in it for me?
What's in it for the consumer? And so you are
you are right on point. So that's that's what I
want to really dig down into.
Speaker 2 (13:31):
Absolutely well, what's in it for consumers is also what's
in it for businesses? In this type of space, and
that's something you really do not see in a lot
of industries. The reason for that, I think is in
a typical consumer business relationship, there's a somewhat adversarial relationship
insofar as the business is trying to kind of really
(13:54):
eke out a little bit more margin with the price
that the consumer will find acceptable to a point where
the consumers not to reject the good. Cannabis is a
little bit different in that respect. Consumers are often willing
to pay over face value for their good so long
as it has proper consumer protections on it. You know,
it's labeled properly, it doesn't have improper pesticides, it's been
tested appropriately and has a proper certificate of authority. So
(14:18):
what's in it for consumers? Why do they want their
businesses to be legal? Well, the most important part is
you know what you're getting. I talk. As you mentioned, Maria,
a lot of some of my clients are also patients
as well as doctors, and one of the questions, or
one of the issues I run into most often is
consistency in the products. Right, They'll have an edible one
(14:41):
day and then they'll have it the next day, and
the effect is not the exact same. This is a
consumer protection issue relating to the testing, gradient, see and
consistency of the product. So what's in it for consumers
is a more reliable, trustworthy and safe product as we
look to you know, medicinal adoption. We'll get into this later,
(15:01):
I'm sure with Schedule three at the end of this year,
in the beginning of next consumer protection is going to
be the name of the game. We know how cannabis
has been viewed. It was viewed back in the early
nineteen hundreds as a potential health item. Then there's a
shift towards criminal enforcement through the War on Drugs up
until very recently. If we want to keep this street going,
(15:24):
if we want businesses and the government and consumers to
continue to view cannabis as medicine or an adult use product,
it has to be consistent, has to be reliable. I mean, gosh,
can you imagine if you go down to the liquor store,
you buy a pack of beer and oops, I'm sorry,
this one has the same ABV as a bottle of
vaka because we mixed it wrong.
Speaker 1 (15:46):
That's what concerns me, the potential that the lack of
clarity and consistency of the legal framework has for unsafe products,
and how there are businesses exploiting the regulatory gaps to
the detriment of the consumer safety and public health. We
(16:06):
need cohesive standards right that that will make the risk
being flooded with unsafe for on tested products, will help
minimize that and reward the well meaning brands I would imagine.
Speaker 2 (16:21):
One hundred percent. And you see this actually with your
in my work with NCIA in the marketing advertising guidelines
and why it's so important to put these across the
industry very often, for instance, when when you look at
some of the rules and regulations for a processor, for instance,
in many stages, processors, for those who may not know,
(16:44):
are often responsible for turning raw canvas plant material into
processed forms such as food, beverages, concentrates, edibles, think things
of that nature. Processors in very many situations are subject
to FDA regulation. They're interacting with what was essentially food
they're cooking in many of their operations. And you know,
(17:06):
even anyone who's watched bar rescue or thought about opening
a restaurant can tell you there's a lot of rules
and regulations around keeping that clean. So what a lot
of states do is they slip right into the regulations
a single line that says you have to follow the
industry standards for this particular industry, abide by this particular
(17:27):
trade group's requirements. And these are you know, it's a
small single line and the rules and regulations. But that's
a really big undertaking for a lot of these businesses.
Some states require them to act with the type of
propriety that a controlled substance lab would, a vestige of
the fact that cannabis is still Schedule one on the
Control Substances Act. So it's it's really important that we
(17:49):
start trying to find a way to unify this to
create a more cohesiveness in the industry. So businesses aren't,
you know, battling their own their own rules and regulations
and can fall.
Speaker 1 (17:58):
Yeah, And the challenge is that these brands are facing
that want to operate responsibly in the legally gray space.
There's there's products that are literally dying on the vine.
I hate when I have to disappoint a customer or
(18:21):
a member of our greenby Life hive that falls in
love with I mean, so many of these CBD products
behind me are no longer available. I have to disappoint
them and try to explain to them that the brands
are just they can't carry as many skews, or they
just despite having a great legal counsel like your firm offers,
(18:47):
they just the exposure the risk is too high. You
have many CBD brands that were very hopeful that the
big box stores would carry them, and you did see
CBD product in the bigger box stores. But then because
of this legally gray state space, the big box stores
started the pull and the manufacturers just these brands are
(19:14):
dying on the vine. And you mentioned the.
Speaker 4 (19:18):
FDA, and they're in action right on. Evaluating CBD as
an ingredient in food or supplements is a big part
of it. And it seems like there's a regulatory game
of pingong. So the FDA throws it back to Congress.
Congress throws it back to the FDA. Then you have
(19:39):
the DA the FTC.
Speaker 2 (19:41):
So it is an absolute mess. So the biggest change
in cannabis policy, and probably the last seventy years or
so since the Controlled Substances Act was implemented, was the
twenty eighteen Farm Bill. And what the twenty eighteen Farm
Bill did was it further legalized after the twenty fourteen
Farm Built further legalized hemp and hemp derived CBD products.
(20:06):
So hemp under the bill is defined as point three
percent or less tetrahydro cannabin all nine THHC nine, so
point three percent or less. The fact that they defined
it only with regards to THHC nine is actually part
of the problem. So we're getting a huge proliferation of
all these CBD products, and many of them are legal, right,
they've got the point three percent or less THHC nine.
(20:29):
But what we've really started to see is this whole
new market that was not anticipated by the twenty eighteen
Farm Bill, not anticipated by cannabis producers, but was anticipated
by the gray market. And we're calling this the hemp
derived cannabinoid or minor canbinoid market. So these are products
that contain point three percent or less THHC nine meet
(20:50):
the federal definition of hemp, are processed into CBD so
or federally legal CBD, but then contain extremely large amounts
of other can banoids ranging from you know, delta eight
to THHCV, THHCA, cbn CBG. You know, there's one hundreds
of cannabinoids. The list goes on forever. So we're running
(21:10):
into this very unusual situation where we have some products
that are following the letter of the law, but almost
certainly not the spirit, and this puts consumers and cannabis
producers in a really tough space. You know, technically, these
individuals are working with hemp, which is not cannabis technically,
so they can take all the tax breaks and all
(21:31):
the deductions in credits that these cannabis businesses simply are
not able to. And you know what do they get
for following the rules and regulations. They have a sixty
percent effective tax rate. They aren't able to work hand
in glove with regulatory advisors the same way as other businesses,
and it's really a shame. So the CBD market is
in a really, really tough spot right now for that reason.
(21:54):
We have this whole hemp derived cannabinoid issue as producers
and consumer and really the consumers I think are the
ones who lose out here. You know, in many in
many states in particular, that do not have medical or
recreational or adult use cannabis, consumers are looking for a
way to consume cannabis legally, and so many of them
(22:15):
will turn to CBD. And what often happens is you'll
have consumers and they'll drive by stores and they'll say,
we have THHC here or Delta eight or by cannabis
here yep. And what the consumers do not know is
that these are hemp derived cannabinoid products. This isn't to
say that all hemp derived cannabinoid products are bad. We
could stand to get a little more information on Some
(22:37):
of this is via synthetic ones, I think, but we
know things like CBN CBG. These are totally fine. But
the problem arises when these hemp derived cannabinoid products are
separated out from the typical cannabis regulatory regimes. The result
is they don't They aren't subject to the same testing,
same pesticide restrictions, same quality control. So you're really relying
(23:00):
on the word of the manufacturing producer rather than any
type of consumer compliance efforts to verify what's going on.
Speaker 1 (23:07):
All right, well, hang on, you're at a perfect perfect
point because we're twenty minutes into the show, and where
I am in California, it is for twenty I mean,
you have just dropped so many You've just dropped twenty
minutes of knowledge bombs on us, and every four to
(23:28):
twenty we have we take a moment to ask our
guests for a quick hit, quick hit four twenty, what
do you got for us?
Speaker 2 (23:37):
I've got a few, but in terms of a knowledge one,
I've got a really good one that I think you
might like. So CBD is legal, but as long as
it contains the point three per center lest THHC nine.
But what a lot of people is as well as
manufacturer forms. What a lot of people may not know though,
is that the CBD foods and beverages that you find
(23:58):
in gas stations and retail stores, those continue to be
federally illegal even if it's CBD, even if it's point
three percent, even if it has no other cannabinoids in
it whatsoever. And the reason for that is under the Food,
Drug and Cosmetic Act with the FDA, a product can
only be included in food or drink if it's generally
(24:21):
recognized as safe or and I'm not making this up
for the segment, or if it's grass. Right, So, unless
the product is grass, exactly unless it's grass, has to
go through a really really lengthy review process before you
put in food or drink. As you can imagine CBD
has been illegal for the past, you know, near one
hundred years, don't have a whole lot of studies showing
(24:42):
it super safe, even though colloquially we know it is.
And as a result, CBD is not grass according to
the Food, Drug and Cosmetic Act and technically cannot be
included in foods or beverages.
Speaker 1 (24:55):
That was a knowledge bomb. It was a potent, important
quick hit, and I'm going to use it because every
time I run into somebody who tells me, yeah, but CBDs,
why should you know? I try to get people to
care and understand. People will say, yeah, but CBD is legal.
I'm like, I don't know, it's not not if you
(25:17):
put it in a gummy or a drink mix. Oh yes,
I saw it at Walmart or the gas station. Like
you said, Well, I'm just going to play your quick hit.
I'm just going to send them a link. So how
do we bridge the gap? How do we bridge the
gap to get to a path of clarity? What needs
to change?
Speaker 2 (25:35):
So the first thing that needs to change, thankfully, it
looks like it's going to be happening quite soon, and
that's the rescheduling of cannabis now. So currently cannabis, specifically, again,
tetrahydrocannabin all nine THHC nine is a Schedule one substance
under the Controlled Substances Act. That is, the source of
(25:59):
cannabis is illegality, the reason there's a complete federal prohibition
and and.
Speaker 1 (26:04):
I did not drupt. Can you just explain to people,
because not everybody knows what that means to be public
enemy number one? What does that mean? What is Schedule one?
Speaker 2 (26:15):
Public Enemy number one? Is right? So the Controlled Substances
Act places drugs on a schedule of one to five,
one being the most dangerous with the least medical benefit,
in five being the least dangerous with the most potent
medical benefit. Cannabis TH nine is currently a Schedule one
drug meeting it has no currently accepted medical benefit and
(26:39):
a high potential for mental and physical addiction. The funny thing,
as you may know, is the FDA approved ACBD based
multiple CBD based anti seizure epilepsy drugs for children of
specifically EPI dialects a little bit ago, which seem to
(27:00):
fly in the face of that as well as the
grass tech designation of CBD. But really it's it's it's
quite ironic. In that respect that they're saying, in one hand,
you know it has all this danger, but at the
same time, there's certain government patents on seeds and other
production methods, so it really is quite an unusual dichotomy.
(27:21):
But the first thing that really needs to happen is
the change of Schedule one, which looks like it's going
to be happening. So there's a petition to move it
to Schedule three, recommended by HHS Health and Human Services,
kicked over to the Department of Justice. And this is
this is a fun litl quick hit for any attorneys
out there, but the rescheduling process for cannabis is entirely unique,
(27:43):
whole unique. It does not bear any other resemblance to
any other type of rule change of regulation change, very unusual,
and there's been some uncertainty with the new administration coming
in whether the Schedule three change is going to continue
to happen. Thankfully, it looks like it will. But Schedule
three is going to kick cannabis into the third level
(28:03):
of the Controlled Substance Act ME has some currently accepted
medical benefit and a low to mild potential for psychological
or physical abuse, So we're not quite there yet. It's
but it's a lot better. And what's really important about
the Schedule three designation is for medical cannabis businesses, and
and you touch on it so beautifully, Maria, that this
(28:25):
is a health and adult recreational use issue, but a
lot of the gateway and they'll of the way we
get our foot in the door is through the medicinal aspect.
And I don't want to speak for you, but I
think we probably share similar views and so far as
that was the primary use of the plant is for
medical benefit. But one of the great things about Schedule
three is these medical businesses are going to be able
(28:47):
to use FDIC insured banks. Right now, cannabis businesses cannot
use federally insured banks. They are the sounds like a joke,
but they're literally stuffing money into safes and then carrying
tens of thousands of dollars in their car to their mattress.
The Schedule three designation is also going to open up
(29:08):
a few more advertising and marketing restrictions for them, and
is also going to enable medical cannabis companies to potentially
take credits and deductions currently section two ade of the
tax Code, which I'm sure many of your viewers have
heard the name, and if we have time, I have
a fantastic story about how two AD came about. But
(29:30):
currently two ADE prevents cannabis businesses or any business dealing
in a Schedule one or two drug from taking credits
or deductions. The effective tax rate for cannabis business is
because of this is like sixty percent. In some cases,
they're paying sixty percent of their revenue and taxes extremely high.
Once we get to Schedule three, this won't be an issue.
(29:51):
So they'll have banking access, they'll be able to raise capital,
they'll be able to utilize the US tax code in
the way literally every other type of business can. You know,
I think one of the questions we need to ask
isn't just how do we harmonize the federal laws to
make things better for them, but how they managed to
survive so long the way things are.
Speaker 1 (30:11):
Yeah, exactly. I mean on the road from normalization to legalization.
I mean, anyone out there who has this entrepreneurial spirit
or is coming at it from a whelm meaning place,
look at what you're saddled with. If if you think
(30:32):
this is a green rush, think again, guys, this right right,
this is we need to turn it into a green revolution,
because how could anyone enter into this business unless nothing
against them? But if you're a giant mso, I mean
you have to you have the lawyer up. There's just
(30:58):
you'll get wiped out and find some violations. And then
with two ade, if you can't write off your business
expenses on top of having the burden of legal expenses
that unlike any in any other industry, and then you
can't even write those cost off. I mean the consequences
(31:22):
and the consequence back to the consumer is we want
well meeting brands to enter the space. And another episode
I'd love to have you come back for is the
impact of social equity. I mean, how does anybody with
a social equity light right? How do they even want?
Our phones are ringing off the hook. Chat Everyone wants
(31:43):
to chat with you. There's so many questions. So let's
hear the two ade text story. You've got dispensary owners
in La burning to hear this story.
Speaker 2 (31:53):
Really briefly, the social equity idea sounds amazing and I
would love to talk with you on that in the future.
Because a little bit of a teaser. Our firm was
actually involved in the most prominent social equity litigation lawsuit
in Ohio for our cannabis systems.
Speaker 1 (32:09):
So well, what was that? What was the lawsuit?
Speaker 2 (32:12):
It was the It was the pharmacn lawsuit two ends
at the end of FARMACAM but involved a bunch of companies.
We were representing Harvest grows in that case. I'm sure
it'll pop up if you check it right. But the
two ad store out. Gosh, I was really hoping we'd
get to it. So that's fantastic.
Speaker 1 (32:31):
So people curious.
Speaker 2 (32:34):
Perfect, perfect. So Section two eighty, as I mentioned, prevents
businesses dealing with Schedule one and two drugs from taking
ordinary or necessary business credits and deductions all credits and deductions. Really,
but the law came about, I believe in the eighties
there was a young man who got pulled over driving
(32:56):
by a cop and the cop searched his car and
he found fairly large amounts of cocaine. He found baggies,
a scale, zip ties, and he said, okay, well you're
clearly trafficking cocaine, and he arrested the man for cocaine trafficking.
At the man's trial, he tried to argue that as
a cocaine trafficker. His profession was cocaine trafficking, and therefore
(33:17):
he should be able to deduct the costs of his scales,
his baggies, his zip top, and the court agreed with
him because nothing in the tax code prohibited the deduction
of an illegal business. So TWOAD was implemented after that
man took the I know it sounds too funny to
be true, but it absolutely is so too. Ade was
(33:38):
implemented by Congress after a cocaine dealer successfully deducted his scales, baggies,
and ties from his taxable basis.
Speaker 1 (33:46):
Okay, well, you're reading my mind because our next segment
is legal updates, and one of the things I love
to do is ask our attorney guest for the craziest
laws and then the most sensible ones. And my crazy
law segment I call I'm not making this up. So
now you're telling me with certainty on my next episode
(34:08):
if I want to throw to a crazy law and
I'm not making this up, I can actually say that
the Two Lady originated from a cocaine dealer claiming and
prevailing on the assertion that he could write off his
(34:29):
zip block bags and zip ties and all of his
business expenses for running his illegal cocaine operation that was
at one time.
Speaker 2 (34:38):
Okay, that is completely correct. Is hilarious and comic colds
it sounds. But as I saying, goes, bad cases make
good law.
Speaker 1 (34:51):
Unbelievable. It's time for nipping in the bud. So what's
one of your one of your most common misconceptions you
run into or something that you would just like to
nip in the bud?
Speaker 2 (35:08):
Well, I got a little bit of a fun one first,
but you know, there there, And of course I'm not
a doctrine. None of this is medical advice. This is
all base of you know, things I've read in my
own opinion edification. But one of the most common myths
about cannabis is that it negatively impacts your memory, and
particularly or short and long term memory. Short term more so,
(35:31):
but that can have really deleterious and negative effects over
the long term. There have been fewer studies on this
and many other things. A recent study, actually the two studies.
The first was a long term, longitudal study out out
of Sweden in the Netherlands area, which found that cannabi
long term cannabis in this I believe this was the
first and potentially the only current long term, longitudinal cannabis
(35:54):
based study looking individuals over around twenty year period. It
found no correlation but between cannabis use and negative memory
shorter long term for long term users using ten plus
years or more at least to join your day, which
is how many of these studies classify heavy users as well,
So that's really a big significant part. The other one
(36:16):
is that there is a recent study, and a lot
of people might get a kick out of this, that
cannabis use actually may help prevent Alzheimer's and that specifically
high CBD forms of cannabis can act as a neuroprotectant
for your synapses and help help the signals in your
brain fire and get sent faster. Cannabis has also been
shown to potentially create new neural pathways in your brain.
(36:40):
What's really interesting about that is when we associate new
neural pathways in the brain with drug use. Cannabis is
a drug we often associate in a negative way. It
might be forming an addiction pathway in the case of opiates,
for instance. What we see with cannabis, interestingly, is some
of these pathways are remarkably similar to your brain's normal pathways.
(37:02):
Just in different sections, not creating the same addictive tendencies,
but potentially providing the same protective benefits.
Speaker 1 (37:12):
Schedule one.
Speaker 2 (37:13):
My uh, exactly exactly.
Speaker 1 (37:19):
I you know, I was familiar with the second study
we had in episode three, we had doctor Minesh gern
a neuroscientists from me you see, yeah, you see San Francisco,
and he's in Robbin Carhart Harris's world renowned lab studying
(37:39):
the effects of psilocybin and cannabis on the brain. And
he had talked to us about that second study you mentioned.
And when you talk about a neuroprotectant, one other thing
to help substantiate your nipping this myth in the butt,
And who better than to esk a lawyer. The US
(38:00):
government had the patent uncannapinoids as a neuroprotecting until very recently.
Is that correct?
Speaker 2 (38:10):
It absolutely is?
Speaker 1 (38:11):
Guess how did it? Well, that's another episode. We'll have
an episode on Harry Anslinger, the nineteen thirty seven Marijuana
Tax Act. Will's Falling app will follow it through this
nineteen seventies, the eighties War on drugs. That's the whole
other episode. But I think it is so critical and
(38:32):
important for people to understand the consequences of this being
on a Schedule one, and then how those consequences parlay
into the advertising and marketing compliance, and how that impacts brands,
well meaning brands, guys, which impact you looking for top
(38:56):
shelves premium products that literally are up in smoke.
Speaker 2 (39:03):
You know the comment there too, the reference to Anslinger
was you highlight a really fantastic part of what the
War on Drugs really did. So cycling back a little bit,
we talked about the grass designation generally recognized as safe.
How do you determine if something is generally recognized is safe? Right, Well,
(39:25):
the federal standard, and this is a federal law under
the Food Drug Cosmetic Act, is in order to determine
something as grass, you need what is referred to as
reliable and competent scientific evidence. Now, how on earth do
you get reliable and competent scientific evidence on a schedule
on drug that nobody is allowed to study. It's kind
(39:47):
of a catch twenty two rock and a hard place thing, right. So,
Anslinger and the Control Substance Act and the War on Drugs,
all this put us in a cart before the horse
situation where we're saying it's not generally recognized is safe,
but we're not going to allow you to study its
effects to make any further determinations on your own.
Speaker 1 (40:05):
Behalf, it's in a box. It's in a box. And
who better than attorneys to make a case for it.
I mean, it's it's it's it's improperly imprisoned. So we
got to bust it out. We've got to bust it
out people. But it's the people who have the power.
So moving into consumer insights and tips, speaking about people
(40:28):
having the power, I mean, what are the best ways
for consumers to find a trustworthy brand in between all
of this navigating this evolving market with all these twists
and turns and nuances.
Speaker 2 (40:43):
Well, the first thing in consumer can do is do
their own research. You know, the larger companies are generally
fairly reputable. If they've been around for a while in
the space, they must be doing something right. But you
can also do is you can actually look at your
local regulatory authority for instances in Ohio, this would be
(41:03):
the Department of Commerce, and they'll list all the enforcement
actions and the letters and the warnings and the concerns
that they send to these companies. Sign up for local
mailing lists for trade industry groups, maybe your local cannabis
group in Ohio that might be Okan, I'm California normal
for instance. They send out plenty of amazing newsletters and updates,
(41:25):
and you know, these consumer groups their primary focus is
also consumer protection, So getting involved, getting knowledgeable about the
products is the first step. Also, also learn what works
best for you. We talked about this a little bit.
The outset. There is such a prevalent view in marketing
(41:46):
and advertising cannabis that THHC content is king, that consumers
are always chasing the biggest THCHC high, that they want
massive ninety percent concentrates or thirty I saw a flower
being advertised as thirty eight percent THHC content when I
was in Vegas this past weekend, and I have to
(42:07):
tell you, first off, I don't believe it. Second off,
who wants that? Right? So when it comes to making.
Speaker 1 (42:15):
Certainly not the majority of consumer.
Speaker 2 (42:18):
Certainly not the majority. And you know, there's there's certainly
a market for these special teenage products. But if you
have an average consumer who's got you know they're they're
coming to a bud tender and they say, I have
trouble sleeping or I have glaucoma, it makes my vision bad.
What do I do? And they're not knowledgeable about the
effects of terpenes and other canbinoids. You know, CBN cannabinall
(42:39):
is great, is great for sleep? Nine not so much? Uh,
CBG a little if, if there's if the bud tender
is you know, oh you have severe pain. I'm going
to give you the strongest product we have. That may
not be best for that particular individual. Maybe they need
some terp Beta Carophyoline is a terpene that is fantastic
(43:01):
for pain management. Maybe they need that, or then they
need a high THC content.
Speaker 1 (43:06):
But what would you find that in? What would you
find that in?
Speaker 2 (43:10):
So so it depends on the product and how it's manufactured.
Terrapines can be inserted and taken out as needed. But
you raise a really interesting point that many states do
not even list what terpenes are on there, right, Yeah,
so that that's a whole separate issue outside of even
the THC content. And then again, most states are only
(43:32):
listing TC, THCA and CBD. You're not You're not getting
any knowledge about any of the other cannabinoids, let alone
all these other phytochemicals inside of the plant. And then
of course you run into things such as the entourage effect,
where many people believe that when all of the canbinoids
are included together they have a more cohesive kind of
(43:53):
group effect than if you single them out as an isolate.
So the first thing consumers really need to do is
find what works best for them, and the way to
do that is to find a knowledgeable bud tender with
a dispensary you like, and if possible, aim for products
that provide the most possible amount of information on THC
(44:13):
content terpenes and also growing in production methods such as
pesticide usage very important.
Speaker 1 (44:20):
And I mean this is assuming you're in a state
where it's illegal so called legal.
Speaker 5 (44:28):
Right absolutely, wow wow, Chad, I mean, and that is
for products with more than point three percent THC, that
would be if you're in a state where it's legal,
you would get that from a dispensary.
Speaker 1 (44:48):
But the point you're making is all this measurements in
benchmarks is based on THC. When you're going to a dispensary,
it's not that you're just going to get something that's
gotten greater CBD than point three percent. It's because it's
not like you said, you're not looking for something with
thirty eight percent THC. It's so much more than the
(45:12):
promise of chasing a high. It's the intention behind it.
And you mentioned some people would like to have it
as an option for sleep as opposed to pharmaceutical drugs
that don't work for them or have too many side effects.
So it's the intention behind it. And it's not the
(45:32):
THC and that's going to be the be all and
end all. It's the vital cannabinoids. It's the ter being profile.
But it's nuanced. It's nuanced. The science is nuanced, the
applications are nuanced, the law is nuanced. And I just
love speaking with experts like yourself and guys. I have
(45:54):
to say, as a business owner and someone trying to
make my way in this space, as a poblished company,
having to be very very concerned about what type of
advertising and marketing materials brands want me to move forward,
you need firms like McMurray and Schuster. I can't say
(46:16):
enough about McMurray and Schuster because just for the other
businesses out there, I'm sure they've all gone through what
I've gone through. I just wanted to get my hats
off to McMurray and Schuster Chad whenever I'm looking for
legal counsel. Yeah, that's just one other suggestion for businesses.
(46:37):
There you go consumer insight and tip. What businesses look
for when you're looking to hire a law firm. What
drew me to your law firm and having you here
as a guest today is you guys have a prolific
your founders if you could speak a little bit about them,
past history in un regulated spaces, and there are so
(47:03):
many not bad mouthing anybody, and you're teaching this is
so exciting at a university law to the next generation
of our legal experts in this evolving marketplace. But what
should businesses look for when looking for a law firm?
(47:24):
My pain point was it was disparate. I would talk
to one law firm and say can I get a
trademark on this? They'd say yes. Another law firm they'd
say no. Another law firm that would say, well, I
need a ten thousand dollars retainer, And it seemed like
they wanted tens of thousands of dollars from me to
write a white paper on it to educate them. So
(47:48):
I can't say enough about you guys, And I think
it's because you're sitting on the shoulders of two incredible
women female found it law firm. Tell us a little
bit about the founding partners and about the history and
for the businesses out there, what do you look for
when you're vetting a law firm, because this is the
wild wild West.
Speaker 2 (48:11):
It really is. So we're me in particular, I'm absolutely
blessed to work where I do at McMurray and Schuster.
Our founding partners are hell McMurray and Michelle Schuster. But
as you know, it's a woman owned law firm that
they are both absolutely incredible, really just inspiring women. They
both came all of our partners have, but they in
(48:32):
particular came from separate big law firms. They both had
histories and consumer protection offices. Is consumer protection chiefs in
the Ohio Department of Commerce, so really storied, decorated public
service record, great service in the private sector for extremely large,
powerful law firms. And they both kind of were sitting
(48:54):
around look at each other one day and they said that,
you know, there's got to be a better way. There
has to be a better work life balance. There's a
point at which you know you can't really produce more
beyond what you're doing. How do we do this, How
do we create a firm that's oriented towards the future
and the next generation of talent, and also specifically, what
areas of law do we look at? So they created
McMurray and Schuster. I cannot say enough positive things about
(49:18):
the firm. And that's not just because they pay me,
but it is I've worked in a lot of places.
It is the best place I've ever worked. And what
really makes it unique is everyone here has come with
experience from highly regulated niche areas, whether it's be consumer protection, yeah, absolutely,
consumer protection, telemarketing. I defend telemarketers, but I never like
(49:40):
to tell anybody that because they assume I'm a bad guy.
But just like our cannabis clients to tell, marketers are
the compliant ones. So we bring experience from these really
highly regulated niche areas with very few or very complex laws.
We do a lot of privacy work as well that
the regulators look at very intensely. They brought me on
(50:01):
in around twenty seventeen twenty eighteen and asked me what
I saw as a great area for the firm. I
told them cannabis, and they were gracious enough to give
me the opportunity to start the practice group and expand it.
So what do businesses need to look for? Well, they
need to look for that, I think. And I'm not
just saying that because.
Speaker 1 (50:20):
I agree I learned the hard way. I learned the
hard way.
Speaker 2 (50:24):
But I agree, well, you know, you learn the hard way,
but you'll learned the right way at the same time,
because too many people go down the track with the
wrong firm and then they're two years into it and
they realize it. But the thing with the cannabis sector
you really need to look for is you need someone
who has been in the system from the beginning, who
(50:45):
knows the law. Intimately. You don't want someone who's an
employment lawyer who knows a little cannabis, a privacy lawyer
who knows a little bit of cannabis. You want a
cannabis lawyer first and foremost, who knows employment, who knows privacy.
We're lucky because we defend a lot of consumer we
defend a lot of class actions, billion dollar lawsuits despite
(51:07):
our small size, which is really kind of unique. So
we've had experience in all these other areas as well,
So it's not just the cannabis related stuff. But when
you're looking for someone with cannabis issues. And we talked
about this at the outset, there's no overarching federal law.
There's there's a patchwork of law. There's no single one
that applies. That doesn't mean there aren't federal laws that apply.
(51:29):
They still are you.
Speaker 1 (51:31):
Know, it's wid still on the hook for them, You're
still on the look for them. You mentioned something earlier
about constructive notice. I mean, whether you know they exist
or not, notice is out there, so you're on the hook.
Speaker 2 (51:43):
I mean, And gosh, Maria, that's such a good points
speaking of knowing if it's out there or not. I'm
not sure if we're any get to it later. This
large lawsuit you and I had chatted out about a
bit before, But there is a two billion dollar lawsuit
ultimately to a paltry nine hundred and fifty five million
on appeal. But there's a two billion dollar lawsuit against
(52:07):
health and CBD supplement Marketer. And the law that the
people suit under relates to telemarketing, the Telephone Consumer Protection NEC.
I guarantee you ninety percent of cannabis companies have not
even heard of that law yet. There's a two billion
dollar lawsuit out there against the company for it, and
it applies to any company making calls or texts through
the clients, which cannabis companies certainly are. So you need
(52:31):
to look for someone who knows the cannabis issues first
and foremost, but you also got to find someone who
knows those blind spots and.
Speaker 1 (52:37):
Those ancillary issues that relates. So, Chad, I can talk
to you forever. I hope you'll come back. This has
been amazing. I'm a fan of McMurray and Schuster. I
will disclose that I'm not a client. I'm a fan.
Speaker 2 (52:51):
We're a fan of you in Greenbey Life as well,
but that's no secret.
Speaker 1 (52:55):
Ah. So before we close today, I just want to
thank thank you Chad for sharing your expertise, your insights
into these legal challenges that do surround cannabis marketing, advertising,
and affect consumer protection. You know your works, the work
(53:16):
at McMurray and Schuster. It's critical as we strive for
more equitable and inform informed right cannabis industry. As we've explored,
the lack of clear, clear regulation has consequenes. It has
high stakes. For consumers, it creates confusion, misinformation, potential health
(53:43):
risks from unsafe products coming off of eight decades of
an education vacuum worse than an education vacuum misinformation.
Speaker 3 (53:52):
You know.
Speaker 1 (53:53):
And yeah, and for consumers it becomes harder to trust
the products they and unless they're excited about them and
really getting the positive effects, they're not going to create
the conversation for their policymakers to know that not only
do we need to reschedule it, we need to deschedule
(54:15):
it at the end of the day. And you know,
these legal gray areas can very unintentionally put consumers and
businesses at risk, especially when you mentioned not one state
has a uniform system. Every state has different laws. And
(54:38):
then you have federal laws and then you have federal
regulatory agencies that are in conflict with one another. Or
the legality is ambiguous. It's vaga, it's ambiguous, Congress says,
from the Hemp Farm Bill. Yeah, and is legal if
it's got point three percent. But then the FDA has
something to say about it, the DBA has something to
(54:59):
say about it, DC has something to say about it.
So you know, right, So for brands, the stakes are
are very high, and we need to support brands that
are struggling to find their way to be pioneers through
this maze, to preserve premium top shelf brands, the risk
(55:21):
of legal penalties to these businesses that are trying to
do it right, the challenges they're faced with communicating responsibly
with unclear boundaries, the overall market instability. It makes it
difficult for even the most ethical companies to operate confidently.
(55:41):
And the instability, I'm sorry, it stifles innovation, It increases cost,
and that impacts all of us, because whether you're for
cannabis or not, it's not just the promise of chasing
a high, which which again there's time and place, but
it people depend on it. There are pediatric cases where
(56:06):
it's the only thing that helps with seizures, and fortunately
it's now an ingredient in an anti seizure drug EPI dialects.
But it's a game changer for many people where pharmaceutical
drugs just don't have a solution or these side effects
are too negative. And you know, it's also a great
(56:27):
alternative to alcohol. That's a whole other episode. But we
need a cohesive fat regulatory framework that benefits all of us,
and it's important because that's what will foster trust, safety,
and growth, both in the marketplace and in our communities,
(56:50):
which is a whole other topic because in California, for
every one legal dispensary, there's four illegal ones and that's
a whole other thing. But until that framework exists, education
is our most powerful tool. So I'm like your biggest
fan because you're teaching and you found a platform a
university that's got it on their curriculum. So you go, Chad,
(57:14):
you know, and as consumers, what can we do? Well?
We got to stay informed, We've got to ask questions,
we've got to do our research, like Chad said, and
we've got to hold both brands and policymakers accountable. For brands,
focus on transparency as much as you can, and compliance
(57:34):
and get the right advice for compliance. You don't know
it all, trust me, there are I don't even want
to know what potential violations are out there that as
business owners we don't know about, but I'm sure Chad
can tell us and has already today a good amount
(57:56):
of them. So we're all part of this evolving landscape,
and together we have the power to shape it and
we want to shape it responsibly. Your feedback is invaluable,
so please reach out with any questions or comments about
today's episode, and reach out with any other topics you'd
like to hear in the future. You can connect with
us on social media or through our website. Thank you
(58:19):
for joining me today on Just Say No. Remember knowledge
is power, and together we are redefining cannabis, one conversation
at a time. Until next time, stay informed, stay curious,
and for God's sake, just say no. That's no with
a K K and O W. There were two consonants
(58:40):
off when they were saying just say no, Bob, so
that's it. Thanks a lot. Just Say No is a
greenbee Life presentation, airing live weekly on Friday afternoons from
four to five pm Pacific on KCA Radio and KCAA TV.
(59:01):
Archived audio episodes are on Greenbeelife, greenbelife dot com, iHeartRadio, Spreaker,
and most third party major platforms. For archived videos, check
them out on GBLTV, on Greenbeelife YouTube, and Rumble. To
follow us our Instagram and Facebook is at just Say
(59:26):
No Radio. To apply to be a guest on the
show or for sponsorship and advertising opportunities go to greenbelife
dot com, forward slash, just say no, and feel free
to reach out to me Maria for any questions. I'm
(59:48):
at Maria at greenbelife dot com or call me at
eight one eight seven five eight six nine two five.
Speaker 2 (59:59):
Nbcnews KCAA LOMELD sponsored by Teamsters Local nineteen thirty two,
Protecting the Future of Working Families Teamsters nineteen thirty two.
Speaker 1 (01:00:08):
Dot org
Nineteen thirty two. That hello again and welcome to Just
Say No. I'm your host Maria Calabrey's coming to you
on KCAA Radio ten fifty am one oh six point
five FM Radio. What we've seen take place in the
(00:23):
cannabis industry over the past several years has been the
most rapid transformation of any sector I've ever witnessed. If
you consider the cannabis plant, with three harvestable components, each
(00:46):
serving unique purposes, there aren't too many other crops that
can claim that versatility. And if you're wondering why this
topic should matter to you, consumers and businesses alike, well,
the impact of regular Tory in action might just surprise you.
So let's get ready to uncover how cannabis advertising and
(01:07):
marketing laws, or the lack thereof, shape what you know,
shape public perception and how brands can and cannot communicate
about cannabis. Hey, whether you're a consumer looking for answers
or a brand seeking clarity, this conversation matters because it
affects all of us. The more we understand, the better
(01:32):
equipped we are to demand transparency and fairness from both
businesses and policymakers. So sit back and relax as we
explore some of the most pressing themes shaping the cannabis
industry with some of the brightest minds in the space.
Speaker 2 (01:55):
By twenty twenty, Bank of America and Merrill Lynch estimate
that will grow to thirty five billion dollars, and many
experts believe it could eventually reach two hundred billion dollars
each and every year.
Speaker 1 (02:13):
I just wanted. I want to see what of this
got me.
Speaker 3 (02:26):
I can see so much, Father, your moroses, your moroses.
I'm a butterfly who is on a begon, taking me
a while to get it.
Speaker 2 (02:47):
Had to live and cry to appreciate your life and
what you give.
Speaker 3 (02:52):
His words, when you're holding me, when you hold me
so close, I'm a brother and under.
Speaker 1 (02:57):
Your brilliant Welcome's guest attorney Walter Chad Blackham from McMurray
and Schuster. Chad is an expert in cannabis compliance and litigation,
advising businesses on navigating the complex web of these inconsistent
federal and state laws governing advertising, marketing, privacy, and consumer protection.
(03:22):
He's played a key role in his firms Cannabis, CBD
and HEMP practice helping businesses across the industry, from startups
to major enterprises, address challenges unique to the cannabis market.
His clients span the entire cannabis vertical, including cultivators, processors, dispensaries, physicians,
(03:47):
and patients. Chad's background includes regulatory compliance work at the
US Department of Homeland Security, giving him a unique perspective
on statutory compliance, privacy, and data of security, key concerns
for both businesses and consumers in today's cannabis landscape. Whether
(04:07):
you're a cannabis entrepreneur seeking to stay compliant or a
consumer trying to make informed choices, chads insights will be invaluable.
So let's dive in.
Speaker 2 (04:20):
Welcome Chad, Maria, Thank you so much. What a wonderful
introduction and what a tough act to follow, but thank
you very much for having me on.
Speaker 1 (04:30):
It's so great to see you again. Chad and I
participated together in a National Cannabis Industry Association webinar, really
really digging down into the legalities that his firm has
put together a guide on unlocking cannabis compliance. So Chat
(04:50):
getting right into it. How exactly does the patchwork of
marketing and advertising laws with the absence of clear or
federal gunans effect the information consumers receive about cannabis products.
Speaker 2 (05:08):
Well, Maria, that word that you use, the patchwork of laws,
that is so apropos and that is so perfect because
what we run into with this situation is something really
really unique. And you know, the only kind of equivalent
I can think of in any other area of the
law is maybe bitcoin or something else that's brand new
like cannabis. But every single state has their own unique
(05:32):
cannabis regime. Now, of course there are crossovers, there's some blend,
there's some feed over, some reciprocity, but what you're looking
at here, as you aptly described, is a complete patchwork
of laws. Now, when these regulators are making these laws,
their primary focus is of course on the licensing, building
out the facilities, some of the ensuing regulatory compliance. But
(05:53):
where does that leave marketing and advertising. Well, it usually
leaves them on the back burner. So one thing that
often happens is you'll have some of the other regulations
in laws that have been built up for gosh nay
on one hundred years at this point, subsumed in you
have all these rules, regulations, some that are by constructive notice,
meaning they post something up on the website and you're
(06:14):
expected to know that. But they're bringing in hundreds of
years of regulatory compliance work into the cannabis sector by
virtue of these u d APP laws and consumer protection
laws that we're going to be talking about shortly. So
there's some commonality. A lot of states have similar U
to APP laws, but they all have their own jurisprudence.
A court case in California does not have the same
(06:35):
effect of law as a court case in Ohio when
you're looking at an Ohio law. And you mentioned as well,
there is the absence of clear federal guidance. And I
love the way that you said that, because people will
often say that the Feds haven't said anything, they've given
no guidance, and that simply isn't true. It's just what
they've given is so confusing, it's almost worse than no guidance.
(06:58):
So we do have lack of clear guidance. We have
some conflicting opinions from the DEA the FTC on items
such as novel or minor cannabinoids like delta eight, other
cannabinoids such as CBN and CBG, so we do have
an overlay with the FTC through the FTC Act. However,
(07:19):
that also has these u'ed app laws that we're going
to be getting into. So there again is no clear
set federal law governing the marketing and advertising of cannabis.
So we have to look elsewhere to these laws that
have been on the books for decades.
Speaker 1 (07:33):
Really, wow, and you DAP is unfair deceptive abusive advertising practices.
Speaker 2 (07:41):
Yes, acts or practices, but you hit the unfair, abusive
and deceptive parts and those are what the claims are.
Speaker 1 (07:48):
So you got it perfect and it's synonymous basically with
consumer protection. Would you say?
Speaker 2 (07:54):
Yes? One of the things people here think of when
they hear of you DAP or unfair deceptive practices, they think, wow,
this must be a really niche specific item that comes
up in very limited circumstances. To the contrary, you DAP.
When I when I say you DEPP, I want you
to think of consumer protection. The two are absolutely synonymous.
(08:18):
As you said, when an attorney general brings a consumer
protection claim, they're doing it through a U dept. Statute.
When the fifty state Attorney generals went after Big Tobacco
for some of their concerns around advertising towards children and marketing.
It was through the you dept. Statutes. So absolutely consumer
protection actions, whether from a private citizen or a government
(08:41):
regulatory body, will be brought through these you DEPP statutes.
Speaker 1 (08:45):
Okay, and then what are these list patchwork of inconsistent laws?
What type of legal challenges do they present for well
meaning brands as they try to navigate the confusing regulations.
Speaker 2 (09:03):
It's really interesting because, especially in the cannabis sector, we
have an industry, we have so many brands out there
who truly are in my opinion, really trying to do
the right thing by consumers. They want to provide medicine
or adult use products in the dosages described accurately, with
a consistent product that people know what they're getting. Thankfully,
(09:27):
there's good news when it comes to the patchwork of
laws insofar as there's a lot of commonality amongst them.
So when we talk about you DAP, what is an
unfair deceptive abuse of actor practice? It's very subjective, right,
It sounds like a catch all termat it is, but
really it's any type of thing that a reasonable consumer
might be misled by. I'm thinking, of course, of things
(09:50):
like misrepresentations is to price the availability of a good,
the quality or grade of a good. You know, if
I tell you I'm going to give you a certain
grade of steel, but then sell you a different grade,
you'll probably be upset. That's you DApp Similarly, every single state,
despite the patchwork, has a anti deceptive law on the books,
(10:12):
meaning deceptive acts and practices are prohibited. The federal government
has the same thing through the FTC Section five Act,
So businesses can take some heart and knowing that there
is commonality among the law in the books. But as
I alluded to earlier, the tricky part where you need
legal advice really comes in with the differences between each state.
The law on the books might be similar, but it
(10:34):
doesn't mean it's been interpreted the same in each state.
It doesn't mean it's being viewed the same. It doesn't
even mean that the regulators are enforcing the same laws.
In cannabis, some states are really big on pesticide enforcement
and some aren't.
Speaker 1 (10:47):
Wow. Wow. And then back to the consumer consequence in state, well,
on both of them, the consumer and the brand, the inconsistencies,
the lack of clarity from these federal regulatory agencies commissioned
(11:08):
to protect consumers ends up leaving gaps in consumer education
and protection.
Speaker 2 (11:16):
Would you say, I absolutely would you know, there's there's
a fine balance between regulation and over regulation, but we
really aren't at that balance on either side of the
coin right now in the cannabis industry. You know, I
teach a class over at Capital Law School and cannabis
law and Policy, and my students are always flabbergasted by
(11:38):
the amount of problems that come up in the packaging
and advertising space. You know, we begin the packaging and
advertising section, their first impulse is, well, the packaging can't lie.
How much more can there possibly be? And then we
get to the seventy pages in the book and they're like,
oh my gosh, but let me bring one issue up
for you in particular, just THHC amount right when we're
(12:00):
simply measuring THHC. Now, first off, THC content is not
the end all be all of the effects that a
particular cannabis product will have on a patient. So that
in of itself is an issue that people think that
is self sufficient. But when we're looking at THHC content,
you know, we have three ways of measuring that alone.
Are we looking at total THC to THC? Are we
(12:22):
looking at only THHC nine tetrahydro cannabinol nine. Are we
looking at a THHC per milligram analysis where it's saying,
as is very common with gummies ten milligrams per gummy,
which is really a THC per weight analysis. So even
within such a small things, how do we measure THHC?
There's multiple variations. Then you get into things like taxation,
(12:45):
whether the other cannabinoids other than THHC and CBD minor
cannabinoids are also elicted on there, and of course you
get into things such as flavinoids terpenes, which a lot
of bud tenders may not necessarily be edge kate on
able to inform the consumers, let alone the consumers than themselves.
So consumers first and foremost often are not aware of
(13:10):
their rights when it comes to these ut app laws.
They very often.
Speaker 1 (13:14):
Provide not to interrupt, but you have just hit where
I was going with this interview. What's in it for me?
What's in it for the consumer? And so you are
you are right on point. So that's that's what I
want to really dig down into.
Speaker 2 (13:31):
Absolutely well, what's in it for consumers is also what's
in it for businesses? In this type of space, and
that's something you really do not see in a lot
of industries. The reason for that, I think is in
a typical consumer business relationship, there's a somewhat adversarial relationship
insofar as the business is trying to kind of really
(13:54):
eke out a little bit more margin with the price
that the consumer will find acceptable to a point where
the consumers not to reject the good. Cannabis is a
little bit different in that respect. Consumers are often willing
to pay over face value for their good so long
as it has proper consumer protections on it. You know,
it's labeled properly, it doesn't have improper pesticides, it's been
tested appropriately and has a proper certificate of authority. So
(14:18):
what's in it for consumers? Why do they want their
businesses to be legal? Well, the most important part is
you know what you're getting. I talk. As you mentioned, Maria,
a lot of some of my clients are also patients
as well as doctors, and one of the questions, or
one of the issues I run into most often is
consistency in the products. Right, They'll have an edible one
(14:41):
day and then they'll have it the next day, and
the effect is not the exact same. This is a
consumer protection issue relating to the testing, gradient, see and
consistency of the product. So what's in it for consumers
is a more reliable, trustworthy and safe product as we
look to you know, medicinal adoption. We'll get into this later,
(15:01):
I'm sure with Schedule three at the end of this year,
in the beginning of next consumer protection is going to
be the name of the game. We know how cannabis
has been viewed. It was viewed back in the early
nineteen hundreds as a potential health item. Then there's a
shift towards criminal enforcement through the War on Drugs up
until very recently. If we want to keep this street going,
(15:24):
if we want businesses and the government and consumers to
continue to view cannabis as medicine or an adult use product,
it has to be consistent, has to be reliable. I mean, gosh,
can you imagine if you go down to the liquor store,
you buy a pack of beer and oops, I'm sorry,
this one has the same ABV as a bottle of
vaka because we mixed it wrong.
Speaker 1 (15:46):
That's what concerns me, the potential that the lack of
clarity and consistency of the legal framework has for unsafe products,
and how there are businesses exploiting the regulatory gaps to
the detriment of the consumer safety and public health. We
(16:06):
need cohesive standards right that that will make the risk
being flooded with unsafe for on tested products, will help
minimize that and reward the well meaning brands I would imagine.
Speaker 2 (16:21):
One hundred percent. And you see this actually with your
in my work with NCIA in the marketing advertising guidelines
and why it's so important to put these across the
industry very often, for instance, when when you look at
some of the rules and regulations for a processor, for instance,
in many stages, processors, for those who may not know,
(16:44):
are often responsible for turning raw canvas plant material into
processed forms such as food, beverages, concentrates, edibles, think things
of that nature. Processors in very many situations are subject
to FDA regulation. They're interacting with what was essentially food
they're cooking in many of their operations. And you know,
(17:06):
even anyone who's watched bar rescue or thought about opening
a restaurant can tell you there's a lot of rules
and regulations around keeping that clean. So what a lot
of states do is they slip right into the regulations
a single line that says you have to follow the
industry standards for this particular industry, abide by this particular
(17:27):
trade group's requirements. And these are you know, it's a
small single line and the rules and regulations. But that's
a really big undertaking for a lot of these businesses.
Some states require them to act with the type of
propriety that a controlled substance lab would, a vestige of
the fact that cannabis is still Schedule one on the
Control Substances Act. So it's it's really important that we
(17:49):
start trying to find a way to unify this to
create a more cohesiveness in the industry. So businesses aren't,
you know, battling their own their own rules and regulations
and can fall.
Speaker 1 (17:58):
Yeah, And the challenge is that these brands are facing
that want to operate responsibly in the legally gray space.
There's there's products that are literally dying on the vine.
I hate when I have to disappoint a customer or
(18:21):
a member of our greenby Life hive that falls in
love with I mean, so many of these CBD products
behind me are no longer available. I have to disappoint
them and try to explain to them that the brands
are just they can't carry as many skews, or they
just despite having a great legal counsel like your firm offers,
(18:47):
they just the exposure the risk is too high. You
have many CBD brands that were very hopeful that the
big box stores would carry them, and you did see
CBD product in the bigger box stores. But then because
of this legally gray state space, the big box stores
started the pull and the manufacturers just these brands are
(19:14):
dying on the vine. And you mentioned the.
Speaker 4 (19:18):
FDA, and they're in action right on. Evaluating CBD as
an ingredient in food or supplements is a big part
of it. And it seems like there's a regulatory game
of pingong. So the FDA throws it back to Congress.
Congress throws it back to the FDA. Then you have
(19:39):
the DA the FTC.
Speaker 2 (19:41):
So it is an absolute mess. So the biggest change
in cannabis policy, and probably the last seventy years or
so since the Controlled Substances Act was implemented, was the
twenty eighteen Farm Bill. And what the twenty eighteen Farm
Bill did was it further legalized after the twenty fourteen
Farm Built further legalized hemp and hemp derived CBD products.
(20:06):
So hemp under the bill is defined as point three
percent or less tetrahydro cannabin all nine THHC nine, so
point three percent or less. The fact that they defined
it only with regards to THHC nine is actually part
of the problem. So we're getting a huge proliferation of
all these CBD products, and many of them are legal, right,
they've got the point three percent or less THHC nine.
(20:29):
But what we've really started to see is this whole
new market that was not anticipated by the twenty eighteen
Farm Bill, not anticipated by cannabis producers, but was anticipated
by the gray market. And we're calling this the hemp
derived cannabinoid or minor canbinoid market. So these are products
that contain point three percent or less THHC nine meet
(20:50):
the federal definition of hemp, are processed into CBD so
or federally legal CBD, but then contain extremely large amounts
of other can banoids ranging from you know, delta eight
to THHCV, THHCA, cbn CBG. You know, there's one hundreds
of cannabinoids. The list goes on forever. So we're running
(21:10):
into this very unusual situation where we have some products
that are following the letter of the law, but almost
certainly not the spirit, and this puts consumers and cannabis
producers in a really tough space. You know, technically, these
individuals are working with hemp, which is not cannabis technically,
so they can take all the tax breaks and all
(21:31):
the deductions in credits that these cannabis businesses simply are
not able to. And you know what do they get
for following the rules and regulations. They have a sixty
percent effective tax rate. They aren't able to work hand
in glove with regulatory advisors the same way as other businesses,
and it's really a shame. So the CBD market is
in a really, really tough spot right now for that reason.
(21:54):
We have this whole hemp derived cannabinoid issue as producers
and consumer and really the consumers I think are the
ones who lose out here. You know, in many in
many states in particular, that do not have medical or
recreational or adult use cannabis, consumers are looking for a
way to consume cannabis legally, and so many of them
(22:15):
will turn to CBD. And what often happens is you'll
have consumers and they'll drive by stores and they'll say,
we have THHC here or Delta eight or by cannabis
here yep. And what the consumers do not know is
that these are hemp derived cannabinoid products. This isn't to
say that all hemp derived cannabinoid products are bad. We
could stand to get a little more information on Some
(22:37):
of this is via synthetic ones, I think, but we
know things like CBN CBG. These are totally fine. But
the problem arises when these hemp derived cannabinoid products are
separated out from the typical cannabis regulatory regimes. The result
is they don't They aren't subject to the same testing,
same pesticide restrictions, same quality control. So you're really relying
(23:00):
on the word of the manufacturing producer rather than any
type of consumer compliance efforts to verify what's going on.
Speaker 1 (23:07):
All right, well, hang on, you're at a perfect perfect
point because we're twenty minutes into the show, and where
I am in California, it is for twenty I mean,
you have just dropped so many You've just dropped twenty
minutes of knowledge bombs on us, and every four to
(23:28):
twenty we have we take a moment to ask our
guests for a quick hit, quick hit four twenty, what
do you got for us?
Speaker 2 (23:37):
I've got a few, but in terms of a knowledge one,
I've got a really good one that I think you
might like. So CBD is legal, but as long as
it contains the point three per center lest THHC nine.
But what a lot of people is as well as
manufacturer forms. What a lot of people may not know though,
is that the CBD foods and beverages that you find
(23:58):
in gas stations and retail stores, those continue to be
federally illegal even if it's CBD, even if it's point
three percent, even if it has no other cannabinoids in
it whatsoever. And the reason for that is under the Food,
Drug and Cosmetic Act with the FDA, a product can
only be included in food or drink if it's generally
(24:21):
recognized as safe or and I'm not making this up
for the segment, or if it's grass. Right, So, unless
the product is grass, exactly unless it's grass, has to
go through a really really lengthy review process before you
put in food or drink. As you can imagine CBD
has been illegal for the past, you know, near one
hundred years, don't have a whole lot of studies showing
(24:42):
it super safe, even though colloquially we know it is.
And as a result, CBD is not grass according to
the Food, Drug and Cosmetic Act and technically cannot be
included in foods or beverages.
Speaker 1 (24:55):
That was a knowledge bomb. It was a potent, important
quick hit, and I'm going to use it because every
time I run into somebody who tells me, yeah, but CBDs,
why should you know? I try to get people to
care and understand. People will say, yeah, but CBD is legal.
I'm like, I don't know, it's not not if you
(25:17):
put it in a gummy or a drink mix. Oh yes,
I saw it at Walmart or the gas station. Like
you said, Well, I'm just going to play your quick hit.
I'm just going to send them a link. So how
do we bridge the gap? How do we bridge the
gap to get to a path of clarity? What needs
to change?
Speaker 2 (25:35):
So the first thing that needs to change, thankfully, it
looks like it's going to be happening quite soon, and
that's the rescheduling of cannabis now. So currently cannabis, specifically, again,
tetrahydrocannabin all nine THHC nine is a Schedule one substance
under the Controlled Substances Act. That is, the source of
(25:59):
cannabis is illegality, the reason there's a complete federal prohibition
and and.
Speaker 1 (26:04):
I did not drupt. Can you just explain to people,
because not everybody knows what that means to be public
enemy number one? What does that mean? What is Schedule one?
Speaker 2 (26:15):
Public Enemy number one? Is right? So the Controlled Substances
Act places drugs on a schedule of one to five,
one being the most dangerous with the least medical benefit,
in five being the least dangerous with the most potent
medical benefit. Cannabis TH nine is currently a Schedule one
drug meeting it has no currently accepted medical benefit and
(26:39):
a high potential for mental and physical addiction. The funny thing,
as you may know, is the FDA approved ACBD based
multiple CBD based anti seizure epilepsy drugs for children of
specifically EPI dialects a little bit ago, which seem to
(27:00):
fly in the face of that as well as the
grass tech designation of CBD. But really it's it's it's
quite ironic. In that respect that they're saying, in one hand,
you know it has all this danger, but at the
same time, there's certain government patents on seeds and other
production methods, so it really is quite an unusual dichotomy.
(27:21):
But the first thing that really needs to happen is
the change of Schedule one, which looks like it's going
to be happening. So there's a petition to move it
to Schedule three, recommended by HHS Health and Human Services,
kicked over to the Department of Justice. And this is
this is a fun litl quick hit for any attorneys
out there, but the rescheduling process for cannabis is entirely unique,
(27:43):
whole unique. It does not bear any other resemblance to
any other type of rule change of regulation change, very unusual,
and there's been some uncertainty with the new administration coming
in whether the Schedule three change is going to continue
to happen. Thankfully, it looks like it will. But Schedule
three is going to kick cannabis into the third level
(28:03):
of the Controlled Substance Act ME has some currently accepted
medical benefit and a low to mild potential for psychological
or physical abuse, So we're not quite there yet. It's
but it's a lot better. And what's really important about
the Schedule three designation is for medical cannabis businesses, and
and you touch on it so beautifully, Maria, that this
(28:25):
is a health and adult recreational use issue, but a
lot of the gateway and they'll of the way we
get our foot in the door is through the medicinal aspect.
And I don't want to speak for you, but I
think we probably share similar views and so far as
that was the primary use of the plant is for
medical benefit. But one of the great things about Schedule
three is these medical businesses are going to be able
(28:47):
to use FDIC insured banks. Right now, cannabis businesses cannot
use federally insured banks. They are the sounds like a joke,
but they're literally stuffing money into safes and then carrying
tens of thousands of dollars in their car to their mattress.
The Schedule three designation is also going to open up
(29:08):
a few more advertising and marketing restrictions for them, and
is also going to enable medical cannabis companies to potentially
take credits and deductions currently section two ade of the
tax Code, which I'm sure many of your viewers have
heard the name, and if we have time, I have
a fantastic story about how two AD came about. But
(29:30):
currently two ADE prevents cannabis businesses or any business dealing
in a Schedule one or two drug from taking credits
or deductions. The effective tax rate for cannabis business is
because of this is like sixty percent. In some cases,
they're paying sixty percent of their revenue and taxes extremely high.
Once we get to Schedule three, this won't be an issue.
(29:51):
So they'll have banking access, they'll be able to raise capital,
they'll be able to utilize the US tax code in
the way literally every other type of business can. You know,
I think one of the questions we need to ask
isn't just how do we harmonize the federal laws to
make things better for them, but how they managed to
survive so long the way things are.
Speaker 1 (30:11):
Yeah, exactly. I mean on the road from normalization to legalization.
I mean, anyone out there who has this entrepreneurial spirit
or is coming at it from a whelm meaning place,
look at what you're saddled with. If if you think
(30:32):
this is a green rush, think again, guys, this right right,
this is we need to turn it into a green revolution,
because how could anyone enter into this business unless nothing
against them? But if you're a giant mso, I mean
you have to you have the lawyer up. There's just
(30:58):
you'll get wiped out and find some violations. And then
with two ade, if you can't write off your business
expenses on top of having the burden of legal expenses
that unlike any in any other industry, and then you
can't even write those cost off. I mean the consequences
(31:22):
and the consequence back to the consumer is we want
well meeting brands to enter the space. And another episode
I'd love to have you come back for is the
impact of social equity. I mean, how does anybody with
a social equity light right? How do they even want?
Our phones are ringing off the hook. Chat Everyone wants
(31:43):
to chat with you. There's so many questions. So let's
hear the two ade text story. You've got dispensary owners
in La burning to hear this story.
Speaker 2 (31:53):
Really briefly, the social equity idea sounds amazing and I
would love to talk with you on that in the future.
Because a little bit of a teaser. Our firm was
actually involved in the most prominent social equity litigation lawsuit
in Ohio for our cannabis systems.
Speaker 1 (32:09):
So well, what was that? What was the lawsuit?
Speaker 2 (32:12):
It was the It was the pharmacn lawsuit two ends
at the end of FARMACAM but involved a bunch of companies.
We were representing Harvest grows in that case. I'm sure
it'll pop up if you check it right. But the
two ad store out. Gosh, I was really hoping we'd
get to it. So that's fantastic.
Speaker 1 (32:31):
So people curious.
Speaker 2 (32:34):
Perfect, perfect. So Section two eighty, as I mentioned, prevents
businesses dealing with Schedule one and two drugs from taking
ordinary or necessary business credits and deductions all credits and deductions. Really,
but the law came about, I believe in the eighties
there was a young man who got pulled over driving
(32:56):
by a cop and the cop searched his car and
he found fairly large amounts of cocaine. He found baggies,
a scale, zip ties, and he said, okay, well you're
clearly trafficking cocaine, and he arrested the man for cocaine trafficking.
At the man's trial, he tried to argue that as
a cocaine trafficker. His profession was cocaine trafficking, and therefore
(33:17):
he should be able to deduct the costs of his scales,
his baggies, his zip top, and the court agreed with
him because nothing in the tax code prohibited the deduction
of an illegal business. So TWOAD was implemented after that
man took the I know it sounds too funny to
be true, but it absolutely is so too. Ade was
(33:38):
implemented by Congress after a cocaine dealer successfully deducted his scales, baggies,
and ties from his taxable basis.
Speaker 1 (33:46):
Okay, well, you're reading my mind because our next segment
is legal updates, and one of the things I love
to do is ask our attorney guest for the craziest
laws and then the most sensible ones. And my crazy
law segment I call I'm not making this up. So
now you're telling me with certainty on my next episode
(34:08):
if I want to throw to a crazy law and
I'm not making this up, I can actually say that
the Two Lady originated from a cocaine dealer claiming and
prevailing on the assertion that he could write off his
(34:29):
zip block bags and zip ties and all of his
business expenses for running his illegal cocaine operation that was
at one time.
Speaker 2 (34:38):
Okay, that is completely correct. Is hilarious and comic colds
it sounds. But as I saying, goes, bad cases make
good law.
Speaker 1 (34:51):
Unbelievable. It's time for nipping in the bud. So what's
one of your one of your most common misconceptions you
run into or something that you would just like to
nip in the bud?
Speaker 2 (35:08):
Well, I got a little bit of a fun one first,
but you know, there there, And of course I'm not
a doctrine. None of this is medical advice. This is
all base of you know, things I've read in my
own opinion edification. But one of the most common myths
about cannabis is that it negatively impacts your memory, and
particularly or short and long term memory. Short term more so,
(35:31):
but that can have really deleterious and negative effects over
the long term. There have been fewer studies on this
and many other things. A recent study, actually the two studies.
The first was a long term, longitudal study out out
of Sweden in the Netherlands area, which found that cannabi
long term cannabis in this I believe this was the
first and potentially the only current long term, longitudinal cannabis
(35:54):
based study looking individuals over around twenty year period. It
found no correlation but between cannabis use and negative memory
shorter long term for long term users using ten plus
years or more at least to join your day, which
is how many of these studies classify heavy users as well,
So that's really a big significant part. The other one
(36:16):
is that there is a recent study, and a lot
of people might get a kick out of this, that
cannabis use actually may help prevent Alzheimer's and that specifically
high CBD forms of cannabis can act as a neuroprotectant
for your synapses and help help the signals in your
brain fire and get sent faster. Cannabis has also been
shown to potentially create new neural pathways in your brain.
(36:40):
What's really interesting about that is when we associate new
neural pathways in the brain with drug use. Cannabis is
a drug we often associate in a negative way. It
might be forming an addiction pathway in the case of opiates,
for instance. What we see with cannabis, interestingly, is some
of these pathways are remarkably similar to your brain's normal pathways.
(37:02):
Just in different sections, not creating the same addictive tendencies,
but potentially providing the same protective benefits.
Speaker 1 (37:12):
Schedule one.
Speaker 2 (37:13):
My uh, exactly exactly.
Speaker 1 (37:19):
I you know, I was familiar with the second study
we had in episode three, we had doctor Minesh gern
a neuroscientists from me you see, yeah, you see San Francisco,
and he's in Robbin Carhart Harris's world renowned lab studying
(37:39):
the effects of psilocybin and cannabis on the brain. And
he had talked to us about that second study you mentioned.
And when you talk about a neuroprotectant, one other thing
to help substantiate your nipping this myth in the butt,
And who better than to esk a lawyer. The US
(38:00):
government had the patent uncannapinoids as a neuroprotecting until very recently.
Is that correct?
Speaker 2 (38:10):
It absolutely is?
Speaker 1 (38:11):
Guess how did it? Well, that's another episode. We'll have
an episode on Harry Anslinger, the nineteen thirty seven Marijuana
Tax Act. Will's Falling app will follow it through this
nineteen seventies, the eighties War on drugs. That's the whole
other episode. But I think it is so critical and
(38:32):
important for people to understand the consequences of this being
on a Schedule one, and then how those consequences parlay
into the advertising and marketing compliance, and how that impacts brands,
well meaning brands, guys, which impact you looking for top
(38:56):
shelves premium products that literally are up in smoke.
Speaker 2 (39:03):
You know the comment there too, the reference to Anslinger
was you highlight a really fantastic part of what the
War on Drugs really did. So cycling back a little bit,
we talked about the grass designation generally recognized as safe.
How do you determine if something is generally recognized is safe? Right, Well,
(39:25):
the federal standard, and this is a federal law under
the Food Drug Cosmetic Act, is in order to determine
something as grass, you need what is referred to as
reliable and competent scientific evidence. Now, how on earth do
you get reliable and competent scientific evidence on a schedule
on drug that nobody is allowed to study. It's kind
(39:47):
of a catch twenty two rock and a hard place thing, right. So,
Anslinger and the Control Substance Act and the War on Drugs,
all this put us in a cart before the horse
situation where we're saying it's not generally recognized is safe,
but we're not going to allow you to study its
effects to make any further determinations on your own.
Speaker 1 (40:05):
Behalf, it's in a box. It's in a box. And
who better than attorneys to make a case for it.
I mean, it's it's it's it's improperly imprisoned. So we
got to bust it out. We've got to bust it
out people. But it's the people who have the power.
So moving into consumer insights and tips, speaking about people
(40:28):
having the power, I mean, what are the best ways
for consumers to find a trustworthy brand in between all
of this navigating this evolving market with all these twists
and turns and nuances.
Speaker 2 (40:43):
Well, the first thing in consumer can do is do
their own research. You know, the larger companies are generally
fairly reputable. If they've been around for a while in
the space, they must be doing something right. But you
can also do is you can actually look at your
local regulatory authority for instances in Ohio, this would be
(41:03):
the Department of Commerce, and they'll list all the enforcement
actions and the letters and the warnings and the concerns
that they send to these companies. Sign up for local
mailing lists for trade industry groups, maybe your local cannabis
group in Ohio that might be Okan, I'm California normal
for instance. They send out plenty of amazing newsletters and updates,
(41:25):
and you know, these consumer groups their primary focus is
also consumer protection, So getting involved, getting knowledgeable about the
products is the first step. Also, also learn what works
best for you. We talked about this a little bit.
The outset. There is such a prevalent view in marketing
(41:46):
and advertising cannabis that THHC content is king, that consumers
are always chasing the biggest THCHC high, that they want
massive ninety percent concentrates or thirty I saw a flower
being advertised as thirty eight percent THHC content when I
was in Vegas this past weekend, and I have to
(42:07):
tell you, first off, I don't believe it. Second off,
who wants that? Right? So when it comes to making.
Speaker 1 (42:15):
Certainly not the majority of consumer.
Speaker 2 (42:18):
Certainly not the majority. And you know, there's there's certainly
a market for these special teenage products. But if you
have an average consumer who's got you know they're they're
coming to a bud tender and they say, I have
trouble sleeping or I have glaucoma, it makes my vision bad.
What do I do? And they're not knowledgeable about the
effects of terpenes and other canbinoids. You know, CBN cannabinall
(42:39):
is great, is great for sleep? Nine not so much? Uh,
CBG a little if, if there's if the bud tender
is you know, oh you have severe pain. I'm going
to give you the strongest product we have. That may
not be best for that particular individual. Maybe they need
some terp Beta Carophyoline is a terpene that is fantastic
(43:01):
for pain management. Maybe they need that, or then they
need a high THC content.
Speaker 1 (43:06):
But what would you find that in? What would you
find that in?
Speaker 2 (43:10):
So so it depends on the product and how it's manufactured.
Terrapines can be inserted and taken out as needed. But
you raise a really interesting point that many states do
not even list what terpenes are on there, right, Yeah,
so that that's a whole separate issue outside of even
the THC content. And then again, most states are only
(43:32):
listing TC, THCA and CBD. You're not You're not getting
any knowledge about any of the other cannabinoids, let alone
all these other phytochemicals inside of the plant. And then
of course you run into things such as the entourage effect,
where many people believe that when all of the canbinoids
are included together they have a more cohesive kind of
(43:53):
group effect than if you single them out as an isolate.
So the first thing consumers really need to do is
find what works best for them, and the way to
do that is to find a knowledgeable bud tender with
a dispensary you like, and if possible, aim for products
that provide the most possible amount of information on THC
(44:13):
content terpenes and also growing in production methods such as
pesticide usage very important.
Speaker 1 (44:20):
And I mean this is assuming you're in a state
where it's illegal so called legal.
Speaker 5 (44:28):
Right absolutely, wow wow, Chad, I mean, and that is
for products with more than point three percent THC, that
would be if you're in a state where it's legal,
you would get that from a dispensary.
Speaker 1 (44:48):
But the point you're making is all this measurements in
benchmarks is based on THC. When you're going to a dispensary,
it's not that you're just going to get something that's
gotten greater CBD than point three percent. It's because it's
not like you said, you're not looking for something with
thirty eight percent THC. It's so much more than the
(45:12):
promise of chasing a high. It's the intention behind it.
And you mentioned some people would like to have it
as an option for sleep as opposed to pharmaceutical drugs
that don't work for them or have too many side effects.
So it's the intention behind it. And it's not the
(45:32):
THC and that's going to be the be all and
end all. It's the vital cannabinoids. It's the ter being profile.
But it's nuanced. It's nuanced. The science is nuanced, the
applications are nuanced, the law is nuanced. And I just
love speaking with experts like yourself and guys. I have
(45:54):
to say, as a business owner and someone trying to
make my way in this space, as a poblished company,
having to be very very concerned about what type of
advertising and marketing materials brands want me to move forward,
you need firms like McMurray and Schuster. I can't say
(46:16):
enough about McMurray and Schuster because just for the other
businesses out there, I'm sure they've all gone through what
I've gone through. I just wanted to get my hats
off to McMurray and Schuster Chad whenever I'm looking for
legal counsel. Yeah, that's just one other suggestion for businesses.
(46:37):
There you go consumer insight and tip. What businesses look
for when you're looking to hire a law firm. What
drew me to your law firm and having you here
as a guest today is you guys have a prolific
your founders if you could speak a little bit about them,
past history in un regulated spaces, and there are so
(47:03):
many not bad mouthing anybody, and you're teaching this is
so exciting at a university law to the next generation
of our legal experts in this evolving marketplace. But what
should businesses look for when looking for a law firm?
(47:24):
My pain point was it was disparate. I would talk
to one law firm and say can I get a
trademark on this? They'd say yes. Another law firm they'd
say no. Another law firm that would say, well, I
need a ten thousand dollars retainer, And it seemed like
they wanted tens of thousands of dollars from me to
write a white paper on it to educate them. So
(47:48):
I can't say enough about you guys, And I think
it's because you're sitting on the shoulders of two incredible
women female found it law firm. Tell us a little
bit about the founding partners and about the history and
for the businesses out there, what do you look for
when you're vetting a law firm, because this is the
wild wild West.
Speaker 2 (48:11):
It really is. So we're me in particular, I'm absolutely
blessed to work where I do at McMurray and Schuster.
Our founding partners are hell McMurray and Michelle Schuster. But
as you know, it's a woman owned law firm that
they are both absolutely incredible, really just inspiring women. They
both came all of our partners have, but they in
(48:32):
particular came from separate big law firms. They both had
histories and consumer protection offices. Is consumer protection chiefs in
the Ohio Department of Commerce, so really storied, decorated public
service record, great service in the private sector for extremely large,
powerful law firms. And they both kind of were sitting
(48:54):
around look at each other one day and they said that,
you know, there's got to be a better way. There
has to be a better work life balance. There's a
point at which you know you can't really produce more
beyond what you're doing. How do we do this, How
do we create a firm that's oriented towards the future
and the next generation of talent, and also specifically, what
areas of law do we look at? So they created
McMurray and Schuster. I cannot say enough positive things about
(49:18):
the firm. And that's not just because they pay me,
but it is I've worked in a lot of places.
It is the best place I've ever worked. And what
really makes it unique is everyone here has come with
experience from highly regulated niche areas, whether it's be consumer protection, yeah, absolutely,
consumer protection, telemarketing. I defend telemarketers, but I never like
(49:40):
to tell anybody that because they assume I'm a bad guy.
But just like our cannabis clients to tell, marketers are
the compliant ones. So we bring experience from these really
highly regulated niche areas with very few or very complex laws.
We do a lot of privacy work as well that
the regulators look at very intensely. They brought me on
(50:01):
in around twenty seventeen twenty eighteen and asked me what
I saw as a great area for the firm. I
told them cannabis, and they were gracious enough to give
me the opportunity to start the practice group and expand it.
So what do businesses need to look for? Well, they
need to look for that, I think. And I'm not
just saying that because.
Speaker 1 (50:20):
I agree I learned the hard way. I learned the
hard way.
Speaker 2 (50:24):
But I agree, well, you know, you learn the hard way,
but you'll learned the right way at the same time,
because too many people go down the track with the
wrong firm and then they're two years into it and
they realize it. But the thing with the cannabis sector
you really need to look for is you need someone
who has been in the system from the beginning, who
(50:45):
knows the law. Intimately. You don't want someone who's an
employment lawyer who knows a little cannabis, a privacy lawyer
who knows a little bit of cannabis. You want a
cannabis lawyer first and foremost, who knows employment, who knows privacy.
We're lucky because we defend a lot of consumer we
defend a lot of class actions, billion dollar lawsuits despite
(51:07):
our small size, which is really kind of unique. So
we've had experience in all these other areas as well,
So it's not just the cannabis related stuff. But when
you're looking for someone with cannabis issues. And we talked
about this at the outset, there's no overarching federal law.
There's there's a patchwork of law. There's no single one
that applies. That doesn't mean there aren't federal laws that apply.
(51:29):
They still are you.
Speaker 1 (51:31):
Know, it's wid still on the hook for them, You're
still on the look for them. You mentioned something earlier
about constructive notice. I mean, whether you know they exist
or not, notice is out there, so you're on the hook.
Speaker 2 (51:43):
I mean, And gosh, Maria, that's such a good points
speaking of knowing if it's out there or not. I'm
not sure if we're any get to it later. This
large lawsuit you and I had chatted out about a
bit before, But there is a two billion dollar lawsuit
ultimately to a paltry nine hundred and fifty five million
on appeal. But there's a two billion dollar lawsuit against
(52:07):
health and CBD supplement Marketer. And the law that the
people suit under relates to telemarketing, the Telephone Consumer Protection NEC.
I guarantee you ninety percent of cannabis companies have not
even heard of that law yet. There's a two billion
dollar lawsuit out there against the company for it, and
it applies to any company making calls or texts through
the clients, which cannabis companies certainly are. So you need
(52:31):
to look for someone who knows the cannabis issues first
and foremost, but you also got to find someone who
knows those blind spots and.
Speaker 1 (52:37):
Those ancillary issues that relates. So, Chad, I can talk
to you forever. I hope you'll come back. This has
been amazing. I'm a fan of McMurray and Schuster. I
will disclose that I'm not a client. I'm a fan.
Speaker 2 (52:51):
We're a fan of you in Greenbey Life as well,
but that's no secret.
Speaker 1 (52:55):
Ah. So before we close today, I just want to
thank thank you Chad for sharing your expertise, your insights
into these legal challenges that do surround cannabis marketing, advertising,
and affect consumer protection. You know your works, the work
(53:16):
at McMurray and Schuster. It's critical as we strive for
more equitable and inform informed right cannabis industry. As we've explored,
the lack of clear, clear regulation has consequenes. It has
high stakes. For consumers, it creates confusion, misinformation, potential health
(53:43):
risks from unsafe products coming off of eight decades of
an education vacuum worse than an education vacuum misinformation.
Speaker 3 (53:52):
You know.
Speaker 1 (53:53):
And yeah, and for consumers it becomes harder to trust
the products they and unless they're excited about them and
really getting the positive effects, they're not going to create
the conversation for their policymakers to know that not only
do we need to reschedule it, we need to deschedule
(54:15):
it at the end of the day. And you know,
these legal gray areas can very unintentionally put consumers and
businesses at risk, especially when you mentioned not one state
has a uniform system. Every state has different laws. And
(54:38):
then you have federal laws and then you have federal
regulatory agencies that are in conflict with one another. Or
the legality is ambiguous. It's vaga, it's ambiguous, Congress says,
from the Hemp Farm Bill. Yeah, and is legal if
it's got point three percent. But then the FDA has
something to say about it, the DBA has something to
(54:59):
say about it, DC has something to say about it.
So you know, right, So for brands, the stakes are
are very high, and we need to support brands that
are struggling to find their way to be pioneers through
this maze, to preserve premium top shelf brands, the risk
(55:21):
of legal penalties to these businesses that are trying to
do it right, the challenges they're faced with communicating responsibly
with unclear boundaries, the overall market instability. It makes it
difficult for even the most ethical companies to operate confidently.
(55:41):
And the instability, I'm sorry, it stifles innovation, It increases cost,
and that impacts all of us, because whether you're for
cannabis or not, it's not just the promise of chasing
a high, which which again there's time and place, but
it people depend on it. There are pediatric cases where
(56:06):
it's the only thing that helps with seizures, and fortunately
it's now an ingredient in an anti seizure drug EPI dialects.
But it's a game changer for many people where pharmaceutical
drugs just don't have a solution or these side effects
are too negative. And you know, it's also a great
(56:27):
alternative to alcohol. That's a whole other episode. But we
need a cohesive fat regulatory framework that benefits all of us,
and it's important because that's what will foster trust, safety,
and growth, both in the marketplace and in our communities,
(56:50):
which is a whole other topic because in California, for
every one legal dispensary, there's four illegal ones and that's
a whole other thing. But until that framework exists, education
is our most powerful tool. So I'm like your biggest
fan because you're teaching and you found a platform a
university that's got it on their curriculum. So you go, Chad,
(57:14):
you know, and as consumers, what can we do? Well?
We got to stay informed, We've got to ask questions,
we've got to do our research, like Chad said, and
we've got to hold both brands and policymakers accountable. For brands,
focus on transparency as much as you can, and compliance
(57:34):
and get the right advice for compliance. You don't know
it all, trust me, there are I don't even want
to know what potential violations are out there that as
business owners we don't know about, but I'm sure Chad
can tell us and has already today a good amount
(57:56):
of them. So we're all part of this evolving landscape,
and together we have the power to shape it and
we want to shape it responsibly. Your feedback is invaluable,
so please reach out with any questions or comments about
today's episode, and reach out with any other topics you'd
like to hear in the future. You can connect with
us on social media or through our website. Thank you
(58:19):
for joining me today on Just Say No. Remember knowledge
is power, and together we are redefining cannabis, one conversation
at a time. Until next time, stay informed, stay curious,
and for God's sake, just say no. That's no with
a K K and O W. There were two consonants
(58:40):
off when they were saying just say no, Bob, so
that's it. Thanks a lot. Just Say No is a
greenbee Life presentation, airing live weekly on Friday afternoons from
four to five pm Pacific on KCA Radio and KCAA TV.
(59:01):
Archived audio episodes are on Greenbeelife, greenbelife dot com, iHeartRadio, Spreaker,
and most third party major platforms. For archived videos, check
them out on GBLTV, on Greenbeelife YouTube, and Rumble. To
follow us our Instagram and Facebook is at just Say
(59:26):
No Radio. To apply to be a guest on the
show or for sponsorship and advertising opportunities go to greenbelife
dot com, forward slash, just say no, and feel free
to reach out to me Maria for any questions. I'm
(59:48):
at Maria at greenbelife dot com or call me at
eight one eight seven five eight six nine two five.
Speaker 2 (59:59):
Nbcnews KCAA LOMELD sponsored by Teamsters Local nineteen thirty two,
Protecting the Future of Working Families Teamsters nineteen thirty two.
Speaker 1 (01:00:08):
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