Need assistance getting a cannabis business license? Schedule a Free Consultation
MONTPELIER — Lawyers help cannabis businesses sort through laws they’ll need to follow or understand.
First of all, they’re prohibited by federal law.
“All jokes aside … that is actually something that you do always have to counsel your clients,” attorney Catherine Burke, a shareholder at Gravel & Shea, said during the first day of a two-part legal education session hosted by the Vermont Bar Association on April 18.
“Cannabis businesses have to go through a number of hoops since it’s not legal on the federal level.”
Cannabis currently is considered a Schedule 1 drug under the federal Controlled Substances Act. That designation is “viewed as the most serious and there’s just an outright ban on that,” Burke said.
Federal lawmakers are looking at making banking easier for cannabis businesses. Burke anticipates that would provide access to more institutions for cannabis businesses in states where they are legal.
If the U.S. Drug Enforcement Agency reschedules cannabis as President Biden has recommended, Burke suggested the federal government would then regulate cannabis businesses. Regulators in Vermont currently sit on the Cannabis Control Board.
“In Vermont and elsewhere, when it’s legal, you can regulate it so you can have quality control measures,” Burke said.
Attorneys advise businesses on how to comply with state and federal laws. Burke said she tells clients they do need to file federal income taxes reporting income from cannabis businesses and comply with federal laws around labor and safety.
Gabe Gilman, general counsel to the CCB, described seeing “interesting complexities” when it comes to “interagency cooperation.” Since the Vermont Department of Health receives federal funds, staff want to be careful in how they engage with the cannabis industry.
Gilman said the CCB “winds up doing some things that are a little bit outside of its expertise.”
“There are things that sneak up on people,” Burke said, recounting how cannabis businesses had been locked out of federal crop insurance and disaster funds after major flooding last summer.
Burke advises clients on how to form a business and set up an operating agreement.
“I think it’s particularly important for people who are from what we call the legacy industry, you know, people who’ve been growing the product for 30 years, but this is obviously their first chance to do it legitimately,” she said. “They’re not necessarily going to have thought of the various other legal things they should be aware of.”
Burke noted the CCB has to approve of cannabis business owners, who need to go through a comprehensive criminal background check.
Burke also counsels clients about avoiding the risk of violating a lease or mortgage. She called the CCB “a great resource on both banking and insurance.”
Intellectual property issues are “coming up a bit more now,” Burke said.
“It’s fun to use something that has familiarity, that appeals to a lot of people, but you can’t use somebody else’s name,” she said. “You don’t want to be getting into a trademark intellectual property dispute.”
