By Chris Hermann and Bernie Kipp:
Type of Transaction – Asset Purchase versus Stock Purchase. Very important if the acquiring entity wants an immediate continuing operations privilege. Specifically If a PE firm purchases the assets of the target company (including the operating name, equipment, IP, inventory and the current brewery building) and intends to
The U.S. Bureau of Reclamation provides irrigation water to one out of five farmers in the Western United States. According to Reclamation, the irrigation water it provides is used to produce 60% of our nation’s vegetables and 25% of our fruits and nuts. But Reclamation is now deciding whether to leave one Washington crop high and dry: marijuana.
Washington recently issued licenses that allow licensees to grow marijuana. But the cultivation, possession, use, and sale of marijuana remains illegal under federal law. This tension between state and federal law is forcing Reclamation to analyze whether it can provide irrigation water to contract holders who plan to grow marijuana.
The timing of Reclamation’s decision is important because the irrigation season is rapidly approaching in many parts of Washington and has already arrived in other parts of the state. The Olympian reports that Dan DuBray, a spokesman for Reclamation, recently said that Reclamation will make a decision on this issue by early May, and perhaps as early as this week.
Continue Reading Will Bureau of Reclamation Leave Washington’s Marijuana Crop High and Dry?
The Washington State Liquor Control Board (WSLCB) issued the state’s first licenses to produce and process recreational marijuana today. According to news reports, the licenses were issued to Spokane’s Sean Green who will operate his business under the trade name Kouchlock Productions.
The WSLCB began processing applications for all three license types (producer
UPDATE: Although the RPC proposal mentioned below is still under consideration by the Washington State Supreme Court, the KCBA Board of Trustees has adopted an ethics advisory opinion to assist the bar in the interim as attorneys consider practice issues under the existing RPCs. The full text of the KCBA Ethics Advisory Opinion on I-502 & Rules of Professional Conduct can be found here.
An interesting question that has arisen in the wake of the passage of Initiative 502 (I-502) — Washington’s marijuana legalization measure — is whether attorneys run the risk of disciplinary action under the state’s Rules of Professional Conduct (RPCs) for advising clients on their marijuana business or for personally participating in the recreational use of marijuana.
Under Initiative 502, both activities are technically legal under state law, however, they remain illegal under federal law, creating a catch-22 situation. When trying to solve this dilemma, the RPCs unfortunately offer no guidance, and there are no ethics advisory opinions that address the issue.
Due to this lack of guidance, Washington lawyers have been left to wonder what the potential consequences might be. Indeed, earlier this month, King County Bar Association (KCBA) President Anne Daly asked in an article on the subject, “where does this leave…the more than 14,000 lawyers in King County who could easily find themselves in [this] predicament?”
Continue Reading Ethical Challenges for Lawyers in the Face of State Marijuana Legalization
With several states now moving forward with legalized medical or recreational marijuana regulatory schemes, how to obtain business financing remains a hurdle legal marijuana growers and distributers have yet to solve. As noted in a recent New York Times article, “financial institutions, security providers and landlords that serve marijuana businesses can be prosecuted for
On Thursday, the U.S. Department of Justice finally addressed its enforcement strategy as it relates to the recent Washington and Colorado initiatives legalizing marijuana in those jurisdictions. In a memo issued to U.S. Attorneys (PDF), Deputy Attorney General James M. Cole announced that the United States would not sue the states to overturn the voter-endorsed
This week, the Washington State Liquor Control Board (WSLCB) held the first two of six public forums it intends to host across Washington State regarding the implementation of Initiative 502. The first forum was held at the WSLCB Headquarters in Olympia on Tuesday night. According to news reports, hundreds of people flocked to the event to not only provide comments, but to be part of history. Board members were surprised to see that there was standing room only at the event. WSLCB Chair Sharon Foster opened the forum with one word, “Wow!” The Board admitted that they had underestimated how many people would attend the public forums.
Last night’s I-502 public forum in Seattle had a similar turnout. As an article in this morning’s Seattle Times put it, “They came in suits and cowboy hats, with cropped gray hair and long ponytails, and they filled one room at Seattle City Hall and spilled into another, about 400 strong.” At the beginning of the forum, Board members took time to briefly explain the new law to attendees and describe the steps in the rulemaking process that WSLCB will take over the coming months to implement I-502. They also emphasized the importance of public input.
Following that introduction, there were comments directed specifically at the taxes the new law intends to impose. Some urged that the 25% excise tax that will be applied at each level of the licensing system that will eventually be created – producer to a processor, processor to a retailer, and retailer to the customer – is too high. Others countered that the tax was necessary. WSLCB officials noted that they do not have the authority to change the taxes that were voted for by the public. Instead, a change to the tax structure would have to come from the legislature. During the first two years a change to the initiative would require a two thirds majority.
Continue Reading Initial Public Forums on Washington’s Initiative 502 Draw Large Crowds
In Part I of our “Understanding Washington Initiative 502” (“I-502”) series, we described how I-502’s licensing regime is scheduled to go into effect late next year. There is no question that I-502 legalizes possession of certain amounts of marijuana under Washington law, and the state licensing structure aimed at regulating the production, distribution, and retail sale of marijuana reflects this fact. But as a Schedule I drug subject to the federal Controlled Substances Act (“Act”), possession and sale of marijuana remains illegal under federal law. I-502 does not change this basic fact, regardless of whether the Washington State Liquor Control Board succeeds in establishing the rigorous regulatory regime envisioned by I-502.
I-502 intends to establish a well-regulated market that will allow Washington state to tax a commodity that had been pushed into the underground economy. Achieving that goal depends on capital investments in the regulated marijuana market in Washington State. But will investors be willing to fund a marijuana start-up if federal law diverges significantly from state law – particularly when federal law includes criminal sanctions? That will depend on the federal government’s response to states like Washington and Colorado that have chosen to de-criminalize marijuana.
My colleague Wendy Goffe, a trusts and estates attorney in our Seattle office and a regular contributor to Forbes, wrote a fascinating article about Washington Initiative 502 (I-502), the marijuana reform law. As those of you who haven’t been sleeping under a rock already know, the initiative appeared on the November 2012 General Ballot