The Impact of Federal Illegality on the Day-To-Day Business Operations of Cannabis Businesses in the USA
In this Chambers Expert Focus video, Hilary Bricken of Husch Blackwell LLP explains how the conflict with US federal law impacts state-licensed cannabis businesses in everyday ways, including access to financial institutions, taxes, trade marks, and institutional investment.
Despite the fact that more than half of the states in the USA have some form of legal adult-use or medical cannabis, the federal government nonetheless treats cannabis as an illegal Schedule I controlled substance.
“Congress could decriminalise, reschedule and legalise cannabis but they cannot even have lunch together at this point – let alone come up with a bipartisan bill that would legalise and benefit everybody that is already in the industry.”
Owing to this conflict between federal and state laws, state-licensed cannabis businesses live in a precarious legal grey area in which their day-to-day business operations are significantly impacted in ways that legal industries never experience. Federal illegality plays a big part in how such companies navigate these state-by-state cannabis legalisation regimes – from the obvious impact on their civil liberties to their ability to secure bank accounts…
“Financial institutions cannot openly or lawfully touch cannabis businesses. All the revenue that flows from these businesses into the banks would be laundered under the Bank Secrecy Act, so the financial institutions would be aiding and abetting and conspiring to violate the Controlled Substances Act.”
… all the way to their investor relations…
“A lot of investors believe they have no liability for just passing funds into cannabis businesses – but their contribution is enabling drug dealing as far as the federal government is concerned, so they have ancillary liability to worry about.”
… and IP.
“The United States Patent Trademark Office will not register trade marks if there is no lawful use in commerce and also because cannabis cannot cross state lines. Cannabis businesses therefore cannot look to the federal government for that very good suite of protections that a business would otherwise normally get.”
Husch Blackwell LLP
