We are always getting questions from our clients on how to manage their cannabis businesses in the context of legalization. How do we protect our brand name? How do we license our brand to other states? How do we make sure we are complying with packaging and labeling regulations? Are we allowed to advertise? How do we handle our employee issues? The list goes on and on.
As our cannabis lawyers increasingly do legal work in newly legalized states, however, one legal question seems to dominate our discussions: where are growers supposed to get their start-up inventory in a “legal” marijuana marketplace? The answer is typically anything but straightforward and it definitely varies from state to state, though most states are willing to look the other way when it comes to where “legal” growers obtain their initial crops. The below is a brief run-down on how various states treat this seed issue.
Florida: Florida’s recently passed Compassionate Care Act makes no mention of where its five regional dispensing organizations are to obtain their initial high-CBD crops. The Florida Department of Health had this to say about the issue:
The statute does not address source material, and providing pathways for obtaining it is not within the Department’s lawful rule making authority … The Department of Health will not prosecute those who seek or possess clone plants, seeds or cuttings.
Ultimately, the state’s expectation is that growers will obtain their marijuana plants either from other states where marijuana is legal or from within Florida itself — if the qualified plants already exist in the state.
Illinois: Illinois’ medical marijuana pilot program makes no mention of where cultivators should obtain their initial crops and its Department of Agriculture’s FAQs provides as follows:
Q: Do the rules address where initial seeds/clones can come from?
So in other words, you are on your own in having to figure out from where you should source your initial seeds and clones.
Nevada: The Division of Public and Behavioral Health will not turn a blind eye regarding from where cultivation facilities obtain their genetics and plants for growing their initial crop. Instead, the state expects cultivators to get their starting plants only from Nevada patients with a valid patient registration card (see NRS 453A.352 (5)). Since Nevada patients currently can possess no more than twelve plants, it is difficult to see how this will work.
Oregon: The Oregon Health Authority has the following to say on its medical marijuana FAQ page about growers sourcing their initial crops:
Q: Where do I get the seeds or plants to start growing medical marijuana?
A: The OMMP is not a resource for the growing process and does not have information to give to patients.
Similar to Illinois, so in other words, you are on your own in Oregon when it comes to finding your plants and seeds for growing.
Washington: I-502 producer licensees are given a 14 day window in which to obtain their initial inventory. Plants, starts, and clones can be brought in from anywhere so long as they are not in a flowering state. Washington completely failed to mandate where growers are to obtain their initial “legal” crop and it can hardly tell growers to make a mad grab for plants from the black market when such a directive is outside of its “rule-making authority.” So, growers in Washington have been left to their own devices when it comes to getting their initial “legal” plants.
Though the above list does not cover nearly every legal marijuana state, it does show that states with regulated marijuana regimes are still grappling with immense gray areas regarding some pretty important issues, such as from where initial crops must come. This is a legally very important question because obtaining start plants or seeds from overseas or from other states amounts to international and interstate drug trafficking — the exact activities the federal government has said it will target for arrests and prosecution. In the end this issue is just another product of the state versus federal conflict over marijuana legalization. And, unless and until Federal prohibition of marijuana is repealed, state licensed growers will need to cross their fingers in hoping that acquiring their initial “legal” inventory will not put them in hot water with Federal law enforcement.