Now That You Are A Real (Pot) Business. Part 1: Employment Law

As cannabis business lawyers, we constantly remind our clients that being legal businesses means they must comply with all laws — not just those relating exclusively to marijuana. If you operate a legal cannabis business, you are going to be bound by the same laws that govern Wal-Mart or the deli down the street, plus a few more.

This will be the first in what will be an ongoing occasional series in which we highlight some of the day-to-day legal issues impacting marijuana businesses beyond marijuana-specific regulations. In particular though, we will highlight how these laws differ in their application to the cannabis industry.

Today’s post was spurred by a recent Huffington Post article, Medical Marijuana Workers Have The Same Labor Rights As Everyone Else, Feds Say, on how marijuana businesses are too often ignoring employment laws. The article starts out talking of how pot shops are at risk of being closed down for more than just drug enforcement laws:

The next time a pot shop gets a visit from the feds, it won’t necessarily be from drug enforcement agents looking to shut the operation down. It might just come from workplace regulators making sure that labor laws are being followed.

The article focuses on how “the largest medical marijuana operation” in Maine faces a possible federal complaint for “committing various unfair labor practices, including unlawfully disciplining and questioning pro-union employees.” The article notes how a “lot of people treat the medical marijuana industry as something special, but these are normal workers with normal jobs trying to care for their families and their patients and make their businesses successful.”

Not surprisingly, this large Maine cannabis operation, Wellness Connection, has had other legal issues:

Last year, an investigation by the Maine Department of Health and Human Services found that Wellness Connection had used pesticides on marijuana plants in violation of state regulations. It also found that the company “lacked proper security and sold an illegal marijuana derivative,” the Portland Press-Herald reported. Wellness Connection was fined $18,000 by the state’s pesticide control board last summer.

We say “not surprisingly” because we have yet to have a client come to us fully aware of all of the federal, state and local laws it must obey. This is understandable as marijuana businesses are subject to more complicated legal issues than small businesses in just about any other industry.

Let’s use a typical dispensary to illustrate why operating a marijuana business is so legally complex. A dispensary usually must deal with the following legal issues:

1. State law marijuana licensing requirements.

2. State law corporate formation and business licensing requirements.

3. State, county and city zoning requirements for retail and/or agricultural businesses.

4. State, county and city zoning requirements for cannabis businesses.

5. State, county and city landlord-tenant matters.

6. Federal, state and city employment laws (such as minimum wage, hours, union organizing, harassment, discrimination).

7. Federal, state and city laws relating to marijuana.

8. Federal and state product labeling requirements.

9. Federal, state and city laws related to packaging and handling of food items.

10. Federal and state laws relating to branding and intellectual property protections.

11. Federal and state laws relating to vendor contracts, made more complicated due to interstate commerce prohibitions.

12. Federal and state banking and financing issues.

13. Federal and state advertising and marketing regulations.

14. Federal and state privacy regulations.

15. Federal and state environmental laws.

16.  Federal and state laws on document maintenance.

And these just scratch the surface. Over the next few months, we will be addressing the above legal issues in detail, so stay tuned.