The New Greenways: The City of Hillsboro Adopts Recreational Marijuana Regulations

Marijuana facilityThis article was first published on GSB’s Northwest Land Law Forum blog.

On May 3, 2016, the City of Hillsboro adopted new land use regulations in preparation for recreational marijuana uses of the product.  The city’s new code allows marijuana production facilities only in the General Industrial (I-G) and Industrial Park (I-P) zones.  However, such production facilities are not allowed in the city’s recently adopted Industrial Sanctuary (I-S) or the light rail industrial zones.  As a practical matter, this limitation in the I-S zone may turn out to be smart planning as the city has envisioned high energy users at these locations, and marijuana production could have had adverse impacts to energy infrastructure and availability in the area.

Development of industrial marijuana facilities in the I-G zone will allow flexibility for the use that can either occupy existing buildings or new construction. The city’s vision is the new uses might help solve the blight caused by out‐of‐date buildings with the result that those structures will be repurposed and refurbished.  Further, vacant land in the southwest industrial area and in older industrial parks elsewhere in the city will allow for construction of new buildings to serve the use.  Both refurbishment and new construction for marijuana facilities will be subject to the process and standards of the Development Review process.

Similarly, the I-P zone allows industrial marijuana facilities.  However, new buildings in the I-P zone are required to have concrete or cement masonry units construction only.  The city’s intent is to ensure that new development is consistent with the city‘s plan for well‐designed, highest quality development, and the construction of “use neutral” buildings which enhance property values on nearby properties and better enable conversion to other higher value uses in the future.  While the city refers to higher value uses in the future, it is hard to imagine when 2016 Oregon market projections call for $481 million in legal marijuana sales.

Although production is not allowed in the city’s Station Community Business Park (SC-BP) and Station Community Industrial (SCI) zones, complimentary uses will be allowed.  For example, wholesale facilities and testing laboratories can occupy either existing buildings or new construction.  New construction will be limited to concrete or cement masonry units construction only, and subject to the process and standards of the Development Review process.

The city also adopted time, place and manner restrictions intended to prevent nuisance impacts to surrounding properties and the general.  Here are a few highlights from these regulations:

  • In the case of production facilities, views from the exterior of the building into the production area are prohibited.
  • Security features are addressed.
  • Odor mitigation for production facilities, including installation of activated carbon filters on all exhaust outlets to the building exterior; location of exhaust outlets a minimum of 10 feet from the property line and 10 feet above finished grade; and maintenance of negative air pressure within the facility; or an alternative odor control system approved by the Building Official.
  • Marijuana waste must be rendered unusable before it is disposed.
  • A recreational marijuana production, processing, testing laboratory or wholesale sales facility shall not be located within 100 feet of any single-family residential, multi-family residential, mixed-use, urban center or institutional zone.
  • For retail sales facilities, operation may only occur between the hours of 10:00 a.m. and 8:00 p.m., Monday through Thursday; and 10:00 a.m. to 10:00 p.m., on Friday, Saturday and Sunday.
  • And be sure to check the code for distances required from schools, public plazas and other specified areas.

For those of you “do-it-yourselfers,” take heed.  The city decided that home occupations for recreational marijuana facilities are prohibited.  And don’t expect a marijuana cart on wheels to drop off your product because mobile retail businesses are prohibited.

Ready to get started with a recreational marijuana facility in Hillsboro?  We can help navigate the land use process while you get down to business.

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances.  Penalties for violating federal drug laws are very serious.  For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million.  In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice has noted that an effective state regulatory system, and a marijuana operation’s compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of federal law is not diminished by the passage of state laws which may decriminalize such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.

Emergency Moratorium in Unincorporated King County

In a surprise move, the Metropolitan King County Council imposed a four-month moratorium on accepting or issuing permits for marijuana growers, processors, and retailers. The moratorium took effect Monday, April 25th, and will be subject to a public hearing within 60 days. No statement clearly outlining the primary concern regarding legal marijuana businesses has been issued by the council. Although Council member Reagan Dunn, who represents rural areas, “likened the lack of restrictions on growers and processors in the county’s rural residential areas to the “wild West.””

As way of reminder, while marijuana is legal in Washington, cities, towns, and counties can still ban marijuana sales and production. Also as way of reminder, unincorporated areas of King County are those areas outside of any city within King County. Such areas, cover 82 percent of King County’s land area.

The Seattle Times article is available here: http://www.seattletimes.com/seattle-news/marijuana/with-no-notice-king-county-slaps-ban-on-pot-businesses/

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances.  Penalties for violating federal drug laws are very serious.  For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million.  In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice has noted that an effective state regulatory system, and a marijuana operation’s compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of federal law is not diminished by the passage of state laws which may decriminalize such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.

Washington State Bar Association’s CLE Seminar – “Marijuana Law: Changes in Regulation and Best Practices”

Hemp

Washington State Bar Association is hosting its CLE program, “Marijuana Law: Changes in Regulation and Best Practices” seminar taking place next Tuesday, April 12, 2016 in Seattle, Washington.

The marijuana industry is a rapidly evolving landscape. The seminar will address changes and updates in the law, what constitutes medical marijuana, commercial best practices relating to contracts, and ethical considerations in running a cannabis law practice.

The seminar will kick off with introductions by program Co-Chairs, Andy I. Aley, Owner at Garvey Schubert Barer and Co-Chair of the Cannabis Industry Practice Group and Jared Van Kirk, Owner at GSB and Co-Chair of its Labor and Employment Practice Group. Emily Harris Gant, also Co-Chair of Garvey Schubert Barer’s Cannabis Industry Practice Group, will lead off the seminar with reviews of Washington’s legislative and regulatory updates.

To view full program and registration details, please click here: http://bit.ly/1UNLUQF

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances.  Penalties for violating federal drug laws are very serious.  For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million.  In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice has noted that an effective state regulatory system, and a marijuana operation’s compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of federal law is not diminished by the passage of state laws which may decriminalize such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.

The Taxation of the Marijuana Business (A Primer)

Law Balance - CannabisThis blog post will be in two parts. The first part will provide the reader with an understanding of the laws and concepts associated with the taxation of the marijuana business. The second part will take these ideas and concepts and attempt to provide some practical operational guidance.

The First Part

The income taxation of a marijuana business, whether it be a producer, processor, wholesaler or retail establishment, is very different from a non-marijuana business. Everyone entering into the business will want to talk with a tax expert experienced in the taxation of a marijuana business in order to maximize the return on their investment.

There are several sections of the Internal Revenue Code (“IRC”) that impact the taxation of the marijuana business. Businesses, in general, in which the sale of merchandise is an income producing factor, calculate their taxable income in accordance with three primary sections of the IRC. Those are code sections IRC § 162(a), IRC § 471 and IRC § 263A.

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Varied and Changing Minimum Wage and Paid Leave Laws Affect Washington State Cannabis Businesses

Marijuana on dollar billsNew cannabis businesses face a myriad of challenges. The state of Washington’s fragmented and expanding approach to minimum wage and paid leave is only becoming more difficult.  Law and legislation in this area already impacts cannabis businesses in Seattle, Tacoma and Spokane, and may soon affect all cannabis businesses statewide.
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Hal Snow Discusses with Puget Sound Business Journal on the Surprises and Growth of the Marijuana Industry

UntitledHal Snow shares his views with Puget Sound Business Journal’s Emily Parkhurst on the surprises, growth of the burgeoning marijuana industry, and issues faced by the industry such as putting together financing structures, non-Washington residents not being allowed to invest in companies, and the struggle in dealing with banking issues. Hal also discusses how GSB’s Cannabis practice group came to fruition with their team of experienced and dedicated attorneys with backgrounds ranging from business law, M&A, land use, real estate and regulatory, and also their experience in helping companies navigate the complexities of highly regulated industries.

Read the article here (subscription required): http://www.bizjournals.com/seattle/print-edition/2016/02/12/su

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances.  Penalties for violating federal drug laws are very serious.  For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million.  In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice has noted that an effective state regulatory system, and a marijuana operation’s compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of federal law is not diminished by the passage of state laws which may decriminalize such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.

Cannabis in Indian Country – A Year Later…

Seatte_totemA little over a year ago, the Department of Justice released the infamous “Wilkinson Memo” containing DOJ policy guidance to U.S. District Attorneys on Marijuana in Indian Country.

Chaos ensued.

Media and industry began shouting “Marijuana is legal in Indian Country!” from the rooftops. Tribal leaders were swarmed by tribal members demanding that marijuana be immediately legalized. State and local jurisdictions were worried about the impact of legalization on their jurisdictions. Some tribes immediately announced their intent to open large marijuana operations; other tribes issued strong statements against legalization, and lawyers all started scratching our heads.

As the debris settles, we look back at a year with several tribes attempting to enter into the industry. The federal government either closed down their operations or the tribes shut down their operations themselves. Two tribes successfully opened two retail shops.

The truth is that there is just too much uncertainty in the law for most tribes to confidently enter into the industry. But there does seem to be economic opportunity available and some tribes will be able to take advantage of that.

Here are my highlights from 2015:

  1. Development of the National Indian Cannabis Coalition. In February 2015, Jeff Doctor (Seneca) announced the establishment of NICC. NICC’s mission is to educate tribal leaders and elected officials on the emerging regulated cannabis industry while advocating for parity on behalf of Indian Country. NICC has been on the forefront of cannabis policy development in Indian Country, speaking at conferences around the country and weighing in on policy development at the Congressional and Administrative level.
  2. Development of a draft tribal marijuana bill. Congress has been paying attention to the concern in Indian Country that dabbling in the cannabis industry could lead to the termination of federal grants or other funding. House representatives drafted a bill that would clarify that tribes would not lose federal funding if they were engaged in economic development in the cannabis industry.
  3. HHS Secretary Burwell promised that tribes engaged in the cannabis industry will not lose their federal funding so long as they do not use HHS funds in those endeavors. (Now we need more such statement from other Agencies).
  4. Suquamish and Squaxin Island open and operate (successfully) two retail marijuana stores on their reservations. While other tribes were being raided, these tribes in Washington were quietly negotiating with the State and preparing to open their retail stores. Now I hear that several other tribes are in negotiations with Washington State to do the same.

What should we look for in 2016?

  1. Ruling in Menominee v. DEA and DOJ determining whether a tribal college is an “institute of higher learning” for the purposes of growing hemp under the Farm Bill.
  2. Congressional legislation protecting federal funding for tribes engaged in the cannabis industry.
  3. Development of a single federal policy regarding legalization of cannabis in Indian Country.
  4. Development of tribal cannabis businesses in states with some form of legalization.

There have been a couple tribes who have tried unsuccessfully to open marijuana operations within states that have no form of legalized marijuana. The logistics of ‘legalization on an island’ are at this point, in my opinion, too difficult to overcome. Instead, the focus should be on developments within states with some form of marijuana legalization. I understand that this means that tribes in restrictive states without other forms of economic development will lag behind others – but cannabis remains a schedule 1 Controlled Substance carrying severe penalties for those convicted of possession, intent to manufacture or distribute. It is just not worth the risk unless you KNOW your intergovernmental agreements are strong and protect tribal people and tribal investments.

We are still in the infancy of this industry, both in Indian Country and the “outside” world. Growing pains are inevitable. What is both encouraging and frightening is that for the first time since gaming, non-Native businesses are coming to Indian Country. A word of caution – be careful who you work with – the sharks are circling and while they can leave and change their name, we are tribal people and members of our tribal nations from the beginning of time to the end of time and these businesses will remain part of our tribal history forever. Make sure that history tells a good story of developing cutting edge industries in a good way.

With Respect and Hope for a Successful Year,
Lael

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances.  Penalties for violating federal drug laws are very serious.  For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million.  In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice has noted that an effective state regulatory system, and a marijuana operation’s compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of federal law is not diminished by the passage of state laws which may decriminalize such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.

Join Us Next Week at the 2016 Cannabis Collaborative Conference in Portland!

Blog-graphic-2Garvey Schubert Barer will be sponsoring and attending the Cannabis Collaborative Conference at the Portland Expo Center on February 3 and 4. The conference will kick off with a keynote address from former NBA All-Star and Portland Trail Blazer Cliff Robinson, a cannabis advocate, and will feature 80 cannabis industry speakers and more than 90 exhibitors.

The numerous sessions are devoted to informing both existing businesses and new ventures about recent industry developments, including interactive workshops and hands-on demonstrations hosted by the Oregon Liquor Control Commission. This year’s conference is shaping up to be a can’t-miss event for members of the cannabis community.

You can find us at the following events on Wednesday, February 3:

  • 2:15-3:00 PM – “Ask the Experts” Roundtable
    Emily Harris Gant, Scott G. Warner and William K. Kabeiseman will participate in this informal round table session and will be available to answer attendees’ questions about corporate, intellectual property and real estate & land use issues, respectively, as they relate to the cannabis industry.
  • 3:15-4:00 PM – The Status of Investing in the Cannabis Industry
    Harold E. Snow, Jr. will review the law and regulations concerning who can invest in the cannabis industry and how, both directly and indirectly, and he will offer suggestions on maximizing investor participation in the emerging cannabis industry.
  • 7:00-10:00 PM – Evening Reception
    GSB is hosting the conference’s Wednesday evening party.

We hope to see you there!

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances.  Penalties for violating federal drug laws are very serious.  For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million.  In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice has noted that an effective state regulatory system, and a marijuana operation’s compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of federal law is not diminished by the passage of state laws which may decriminalize such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.

Shrinking Buffer Zones? Municipalities Now Have Discretion to Decrease the 1,000 Foot Requirement

Seattle skylineLooking for a location for a licensed marijuana premises? Changes to the buffer zone requirements may be headed to your fair city.

Previously, the Washington State Liquor and Cannabis Board (“LCB”) would not issue a license for any premises within one thousand (1,000) feet of various sensitive uses, namely, elementary or secondary schools; playgrounds; recreational centers or facilities; child care centers; public parks; public transit centers; libraries; or game arcades admitting minors. RCW 69.50.331(8) (2013).

This requirement caused headaches for many applicants, as they scrambled to find compliant locations. This was particularly true for retailers in larger cities, where much of the prime real estate was near a public transit center, by a public park, or otherwise within the 1,000 foot buffer zone.

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Tacoma Passes Moratorium on New Retail Stores, Medical Cooperatives

 

Thinking about opening a recreational store or medical cooperative in Tacoma? Better sit tight, at least for the time being.

On Tuesday, January 13, 2016, the Tacoma City Council passed a “temporary moratorium on new marijuana retail uses and a prohibition on the establishment of marijuana cooperatives.” Substitute Ordinance No. 28343.

From a practical perspective, this means that Tacoma will not accept or process applications for city licenses, or for land use, building, or other development permits.

The moratorium does not impact existing State- and city-licensed recreational marijuana retailers, which can continue to operate.

The Tacoma Planning Commission is currently revising the Land Use Regulatory and Nuisance Codes. The Commission is expected to forward recommendations to the City Council in March 2016.

The moratorium is set to expire within six months. Although the City Council could technically renew the moratorium, it apparently expects to lift the moratorium after voting on the amended Land Use and Nuisance Codes in April or May 2016.

Warning Regarding Federal Law: The possession, distribution, and manufacturing of marijuana is illegal under federal law, regardless of state law which may, in some jurisdictions, decriminalize such activity under certain circumstances.  Penalties for violating federal drug laws are very serious.  For example, a conviction on a charge of conspiracy to sell drugs carries a mandatory minimum prison term of five years for a first offense and, depending on the quantity of marijuana involved, the fine for such a conviction could be as high as $10 million.  In addition, the federal government may seize, and seek the civil forfeiture of, the real or personal property used to facilitate the sale of marijuana as well as the money or other proceeds from the sale. Although the U.S. Department of Justice has noted that an effective state regulatory system, and a marijuana operation’s compliance with such a system, should be considered in the exercise of investigative and prosecutorial discretion, its authority to prosecute violations of federal law is not diminished by the passage of state laws which may decriminalize such activity. Indeed, due to the federal government’s jurisdiction over interstate commerce, when businesses provide services to marijuana producers, processors or distributors located in multiple states, they potentially face a higher level of scrutiny from federal authorities than do their customers with local operations.

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