Editor
Stanley S. Jutkowitz
Seyfarth Shaw LLP
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Contributors
Jeremy Schachter
Seyfarth Shaw LLP
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Avrohom Colev Posen
Seyfarth Shaw LLP
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Stanley S. Jutkowitz
Seyfarth Shaw LLP
975 F Street, N.W.
Washington, D.C. 20004
(202) 828-3568 phone
[email protected]
§ 1.1 Introduction
Laws and regulations relating to cannabis and the cannabis industry continue to evolve at a rapid pace. In order to put current developments in context, it is important to understand the current state of the law regarding marijuana and hemp.
The starting point is the Controlled Substances Act, 21 U.S.C. § 801 et. seq. (“CSA”), passed in 1970 to regulate the manufacture, use, and distribution of certain controlled substances for medical, scientific and industrial purposes and to prevent these substances from being used for illegal purposes. The CSA classified various drugs and chemicals into five categories, or schedules. Marijuana, along with heroin, cocaine, LSD, and other substances, was placed on the most restrictive schedule, Schedule 1. The CSA prohibits the manufacture, distribution, sale possession, or use of marijuana. Also, the CSA operates to prohibit the transportation of marijuana across state lines, even between states that have passed laws legalizing marijuana, as well as international borders.
Despite the existence of the CSA, as of today, thirty six states plus the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands have laws legalizing marijuana for medical use, and fifteen of those states, plus D.C., and Guam a have legalized marijuana for recreational use, as well. Legislation to legalize marijuana is currently working its way through other state legislatures. Since the CSA is the law of the land, how states can “legalize” marijuana consistent with the preemption doctrine is complicated. _____.
The laws relating to marijuana and hemp became very complicated at the end of 2018, with the passage of the Agricultural Improvement Act of 2018, the Farm Bill. It is important to understand that both hemp and marijuana come from the same species of plant, Cannabis sativa L., and both were included in the definition of marijuana in the CSA. Both marijuana and hemp contain a number of chemical compounds, the two most known of which are THC (the psychoactive compound) and CBD. The legal difference is that hemp contains less than three percent THC. Part of the confusion revolves around the other chemical compound, CBD, which is extremely popular and ubiquitous in the market place. CBD comes from both hemp and marijuana. Further complicating the situation is that there is no standard for measuring THC content in a cannabis plant, so what might be classified as hemp by one state might be classified as marijuana by a different state.
While hemp is technically legal under federal law, the Food and Drug Administration maintains jurisdiction over hemp (and therefore CBD) to the extent it is marketed as a food or dietary supplement or as a drug. Also, the state statutory and regulatory framework for hemp and CBD derived from hemp remains very confusing and is rapidly evolving.
This section will focus on recent developments in cannabis law.
§ 1.2 Tax Issues for the Cannabis Industry
Richmond Patients Group v. Commissioner of Internal Revenue, T.C. Memo 2020-52
Date: May 4, 2020
Facts: Plaintiff operated a medical marijuana dispensary. It purchased for resale bulk marijuana and inspected, sent out for testing, trimmed, dried, packaged, and labeled the marijuana it …
