Cannabis Business Blog

This article was first published on GSB's Duff on Hospitality Law blog.

Since Washington voters passed I-502 in 2012, there has been much discussion concerning how hoteliers should respond to guests who seek to use (or are caught using) marijuana on a hotel property, either in a public area or in a guest room. Could a hotel even promote itself as friendly to marijuana tourists?

Use of marijuana in view of the general public remains illegal under state law and Liquor Control Board regulations have long required liquor licensees to conduct their licensed premises in compliance with such state drug laws.  Allowing guests to smoke anything, including marijuana, in public spaces may also violate public smoking laws and smoke-free workplace laws.  So, it was fairly clear that guests could not use marijuana in the public areas of a hotel, and a hotel could not allow guests to use marijuana (smoked or otherwise) in any public place.  But that left open the question of whether a hotel could allow guests to use marijuana in smoking-friendly rooms, either explicitly or simply by taking no affirmative action against use of marijuana in guest rooms.

Amended Liquor Control Board rules that went into effect earlier this year appear to answer this question with respect to properties with hotel liquor licenses.  WAC 314-11-015 addresses the responsibilities of all liquor licensees, including hotel licensees.  The amendments state that licensees and their employees may not:

Engage in or permit any employee or other person to engage in the consumption of any type of marijuana, usable marijuana, or marijuana-infused products in a liquor licensed business, including outdoor service areas or any part of the property owned or controlled by the licensee.

or

Permit any person consuming, or who has consumed within the licensed premises, any type of marijuana, usable marijuana, or marijuana-infused products to remain on any part of the licensed premises.

“Licensed premises” includes all areas under the legal control of the licensee and available to or used by customers, which would include guest rooms.

It is unclear whether the Liquor Control Board intended these amendments to require hotels with premises licenses to exclude marijuana use in guest rooms and require licensed hotels to remove patrons who have used marijuana in guest rooms. However, as written, the amended rule states that a hotel licensee may not permit any person to consume marijuana in any part of the property owned or controlled by the licensee nor remain on any part of the licensed premises after consuming marijuana on the licensed premises.  The letter of these rules require licensed hotels to prohibit use of marijuana in all areas of their property, including guest rooms, and to remove patrons who are found to have consumed marijuana on their property.

Nebraska and Oklahoma sued Colorado today, arguing that Colorado’s legalization of marijuana has undermined decisions by Nebraska and Oklahoma to ban marijuana in their states and that it places stress on their criminal justice systems.  Nebraska and Oklahoma also argue that Colorado does not have authority under the Supremacy Clause of the U.S. Constitution to legalize marijuana because it conflicts with the federal Controlled Substances Act, under which marijuana is illegal.

In 2014, bans and moratoria on state-licensed marijuana businesses by local governments in Washington have emerged as a significant threat to the complete implementation of I-502.  While courts to date have sided with local governments (which are being supported by the Washington Attorney General) and upheld these bans, the issue is still being litigated, and an appeal by a licensed retailer and parties supported by the American Civil Liberties Union of Washington is currently pending before the Washington Supreme Court.

According to the Municipal Research and Services Center, 46 cities and 4 counties have banned marijuana businesses while 61 cities and 8 counties have enacted moratoria.  This means that in over a hundred local jurisdictions – which are home to hundreds of thousands of Washington residents – marijuana businesses, and particularly retail stores, are excluded.

Beginning in June 2014, licensed retailers began to challenge these local laws in a series of lawsuits against the cities of Centralia, Fife, Kennewick, and Wenatchee and against Clark and Pierce Counties.  The licensed retailers challenging these bans argue that it was never the intention of the voters or the Washington State Liquor Control Board to create a system in which state-legal recreational marijuana was locally unavailable to a large number of Washingtonians.  To the contrary, one of I-502’s stated goals was to “take marijuana out of the hands of illegal drug organizations and bring it under a tightly regulated, state-licensed system similar to that for controlling hard alcohol.” I-502 directed the Liquor Control Board to license retail outlets “in each of the counties of the state.” The Liquor Control Board did this through a population-based approach, distributing retail licenses across all Washington counties and in each major city, including in counties and cities that are now opting out through local bans.

Under the Article XI, Section 11 of the Washington Constitution, a local jurisdiction is authorized to make local laws, but they must not conflict with the general laws of the State.   When a city or county adopts an ordinance that prohibits activity which state law permits, or thwarts the legislative purpose of a state law, it exceeds its authority and the ordinance is unconstitutional. State-licensed marijuana retailers argue that local bans conflict with I-502’s requirement that the Liquor Control Board license retail outlets in every county and frustrate the intent of voters to make marijuana legally available across the state and ultimately supplant the black market.

The Washington Attorney General, however, issued a non-binding opinion, in which he concludes that I-502 does not prevent local governments from banning marijuana businesses.  In the Attorney General’s view, unless a “state law creates an entitlement to engage in an activity in circumstances outlawed by the local ordinance,” local governments may ban business activity within their borders.  According to the Attorney General local bans are legal because state-issued marijuana licenses do not create such an entitlement.  The Attorney General has joined many of the suits challenging local bans, arguing in favor of local bans.

To date, lower courts have sided with local governments and the Attorney General in four of these lawsuits.  The first decision came in the City of Fife litigation in which Garvey Shubert Barer and the Tacoma office of Gordon Thomas Honeywell participated as cooperating attorneys with the ACLU.  That decision is now before the Washington Supreme Court on a petition for direct review, and the Court is expected to decide whether to hear the case early next year.  The issue will also be heard again on December 22 in the litigation against Pierce County.

We will keep this blog updated with developments on this critical issue.

In the very same federal spending bill that Congress is using to block DC’s recreational marijuana ballot initiative, Congress is treating medical marijuana very differently.  In fact, once signed by the President, the new spending law will prohibit the Department of Justice — including DOJ's Drug Enforcement Administration — from using federal funds to interfere with states' implementation of their own medical marijuana laws.

Here’s the full text:  Sec. 538. None of the funds made available in this Act to the Department of Justice may be used, with respect to the States of Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Washington, and Wisconsin, to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.

In a memo made public yesterday, the United States Department of Justice revealed that US Attorneys around the country have been instructed to treat any Indian Nation choosing to legalize marijuana consistent with the priorities DOJ previously outlined for all states in the August 2013 Cole Memorandum.  By treating Indian Country the same as states, the DOJ is recognizing the inherent right of tribes to make their own decision whether to participate in the marijuana industry.  The Cole Memorandum indicated that DOJ would focus its resources on the following eight law enforcement priorities:

• Preventing the distribution of marijuana to minors;

• Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;

• Preventing the diversion of marijuana from states where it is legal under state law in some form to other states;

• Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;

• Preventing violence and the use of firearms in the cultivation and distribution of marijuana;

• Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;

• Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and

• Preventing marijuana possession or use on federal property.

For Tribes Considering Whether to Enter the Marijuana Industry

The decision to enter into the marijuana industry should not be taken lightly.  There are a number of policy issues to be evaluated, such as the impact on the tribal court system, Indian Child Welfare programs and employment.  Compliance with other federal grants for housing, foster care funding and 638 contracts also needs to be considered.  Robust regulatory systems must be implemented and enforced.  Tribes should also consider entering into MOU’s with the Department of Justice and the U.S. Attorney Office.

As in any other emerging area of law and industry, these first steps are the most important and should be carefully evaluated before taking action.

This post was originally published on Garvey Schubert Barer's Smoke Signals Indian Law Blog by Lael Echo Hawk.

Just last month, DC voters approved a ballot initiative (by a margin of more than 2-to-1) to legalize possession of small amounts of marijuana for personal use.  The only hitch was that because of DC’s special status, the ballot initiative can’t become law until it passes through a 30-day Congressional review period.  Until now, most thought that the review period would pass by uneventfully, but that all changed when a last-minute amendment was added Tuesday night to the must-pass federal spending bill.  For now, it appears that Congress will indeed block DC’s ballot initiative from becoming law.

Here’s the full text of the amendment:  SEC. 809. (a) None of the Federal funds contained in this Act may be used to enact or carry out any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance under the Controlled Substances Act (21 U.S.C. 801 et seq.) or any tetrahydrocannabinols derivative.  (b) None of the funds contained in this Act may be used to enact any law, rule, or regulation to legalize or otherwise reduce penalties associated with the possession, use, or distribution of any schedule I substance under the Controlled Substances Act (21 U.S.C. 801 et seq.) or any tetrahydrocannabinols derivative for recreational purposes.