Federal statutes create risk for banks that want to operate in the cannabis space. Banks face the threat of civil actions, asset forfeiture, reputational risk, and even criminal penalties if they do business with customers in the cannabis industry. Further, because most banks will not touch cannabis money, the growers, processors, and retailers in the

Last week the Food & Drug Administration (FDA) made public three new warning letters to Cannabidiol (CBD) and hemp oil product companies sent by FDA and the Federal Trade Commission (FTC). FDA has previously targeted cannabis product companies.

The new warning letters are consistent with FDA Commissioner Scott Gottlieb’s recent statements that the FDA will go after manufacturers of CBD products that make health and wellness claims that FDA views as egregious. For example, the CBD companies in question allegedly marketed their products for Alzheimer’s disease, fibromyalgia, inflammation, skin conditions, autoimmune disorders, anxiety, cancer pain, PTSD and depression, to name a few symptoms. These companies are making food, dietary supplements, and cosmetic products, as well as products for pets (CBD for dogs).
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On March 18, 2019, the Washington Court of Appeals upheld a trial court’s decision that three advertising campaigns for 5-Hour Energy® made by Living Essentials, LLP and Innovative Ventures, LLP (collectively, Living Essentials) violated the Washington Consumer Protection Act (CPA) by making deceptive advertising claims.

Living Essentials makes and markets the energy drink 5-Hour Energy®. The three advertising claims at issue involve claims about the efficacy of the drink. Living Essentials claimed or implied that: (1) 5-Hour Energy® was “Superior to Coffee” (Superior to Coffee claim); (2) decaf 5-Hour Energy® was effective “for hours” (Decaf claim); and (3) 73 percent of doctors would recommend 5-Hour Energy® (Ask Your Doctor claim). The trial court found all three advertising claims in violation of the CPA. It also assessed a civil penalty against Living Essentials of $2,183,747 and awarded the State $1,886,866.71 in attorney fees and $209,125.92 in costs. The court of appeals affirmed.

Living Essentials argued on appeal that the trial court (1) erred by adopting the Federal Trade Commission’s (FTC) prior substantiation doctrine; (2) that the prior substantiation doctrine violates article I, section 5 of the Washington State Constitution and the First Amendment to the United States Constitution; (3) that Living Essentials’ claims were mere puffery which did not require substantiation; (4) the trial court applied the wrong standard for necessary substantiation; and (5) the trial court erred in concluding that Living Essentials’ Ask Your Doctor claim was deceptive. Living Essentials also challenged the trial court’s penalty and award of attorney fees.
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In September 2018, the U.S. Supreme Court granted a petition for a writ of certiorari brought before the Court by the Tennessee Retailers in Tennessee Wine and Spirits Retailers Association v. Byrd. The petition requested that the Court review the lower court’s decision upholding a finding that Tennessee’s two-year residency requirement for retail license

In this lunchtime talk at CiderCon 2019 (the annual conference of the US Association of Cider Makers), Marc Sorini discusses the historic development of the current legal structure regulating alcohol beverage businesses. Topics include the origins of “tied house” laws and the evolution of the three-tier system, the often-confusing status of cider under federal law,

Last week, in Connecticut Fine Wine and Spirits LLC v. Seagull, the US Court of Appeals for the Second Circuit affirmed a lower court’s motion to dismiss a lawsuit from Total Wine & More challenging parts of Connecticut’s Liquor Control Act and related regulations. Though the decision represents a victory for state alcohol regulatory regimes, the Second Circuit’s ruling was decided on the basis of established antitrust law and did not raise or rely on state regulatory authority under the 21st Amendment. Nonetheless, state alcoholic beverages regulators will embrace the court’s ruling.

In Connecticut Fine Wine, Total Wine challenged three sets of provisions in Connecticut’s alcohol laws. First, Total Wine challenged “post-and-hold” provisions. Under the post-and-hold provisions, state-licensed wholesalers are required to post a “bottle price” and “case price” each month with the Connecticut Department of Consumer Protection. Those prices are then made available to industry participants. During the four days after prices are posted, wholesalers may “amend” their posted prices to match—but not drop below—lower prices offered by competitors. Wholesalers are then obligated to “hold” their prices for a month.

Second, Total Wine challenged the state’s minimum-retail-price provisions. The minimum-retail-price provisions require retailers to sell alcohol beverages to customers at or above a statutorily defined “cost,” which is determined by adding the posted bottle price and a markup for shipping and delivery. Combined with the post-and-hold provisions, the minimum-retail-price provisions bind retailer prices to wholesaler prices.

Third, Total Wine challenged the state’s price discrimination and volume discount provisions. The price discrimination/volume discount provisions preclude wholesalers from offering a given product to different retailers at different prices and from offering discounts to retailers who are high-volume purchasers.
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116th Congress’ first cannabis-related hearing

Next week, Congress will hold a long-awaited hearing on the future of banking in the cannabis industry.

On Wednesday the 13th, the House Financial Services Committee Consumer Protection and Financial Institutions Subcommittee will convene a hearing entitled, “Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses.”

Among the discussion

Rapid growth in the number of small and independent breweries that rely on taproom sales has received a lot of attention—not all of it positive—across the beer industry. Until this unprecedented growth, taproom sales went largely unnoticed. Competing retailers, beer wholesalers, and even well-established craft brewers were pleased with steadily growing craft beer sales and

On Wednesday, January 9, 2019, Rep. Earl Blumenauer (D-OR) announced the leadership team of the Congressional Cannabis Caucus for the 116th Congress. In addition to Mr. Blumenauer, the Caucus will be co-chaired by Rep. Barbara Lee (D-CA), Rep. Dave Joyce (R-OH) and Rep. Don Young (R-AK).

Mr. Blumenauer helped found the Caucus in 2017 with the goal of providing a bipartisan forum for discussing and collaborating on sensible federal cannabis legislation. The Caucus has a particular focus on harmonizing federal and state laws with regard to medicinal or adult-use of cannabis. The group also works to address issues related to researching cannabis, providing veterans access to medicinal marijuana and business needs, including reforming the tax code. Two of the founding co-chairs have since left Congress: Rep. Dana Rohrabacher (R-CA), who lost his re-election bid in November, and Rep. Jared Polis (D-CO), who was elected governor of Colorado.
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In late September 2018, the U.S. Supreme Court granted a petition for a writ of certiorari (i.e. the Court agreed to hear a case) brought before the Court by the Tennessee Wine and Spirits Retailers Association (Tennessee Retailers) in Tennessee Wine and Spirits Retailers Association v. Byrd. The petition requested that the Court review the