In today’s Republican-held Senate, the cannabis industry’s best hope for progress has been the Secure and Fair Enforcement Banking Act of 2019 (or the “SAFE Act”), which would allow state legal cannabis business to work freely with banking institutions. The Act puts in place safe harbors from federal money laundering and regulatory issues for banks dealing with the cannabis industry and would therefore open up banking for the entire industry, allowing it to take another step toward legitimacy in the eyes of the federal government. More importantly, passage of the SAFE Act allows the industry to grow and flourish with the assistance of the banking industry, which is fundamental to continued growth.

The SAFE Act is an incremental step forward, which is vital when dealing with Congress; nothing happens overnight in Washington D.C. This is especially true when talking about an industry with a War on Drugs-sized stigma attached to it. However, the main argument against the SAFE Act is that it’s just that: incremental; a half measure when a full measure is called for. That brings us to the Marijuana Opportunity Reinvestment and Expungement Act (the “MORE Act”).

The MORE Act includes many sweeping provisions, starting with the removal of marijuana from the Controlled Substances act (which would decriminalize cannabis on the federal level, allow states to set their own marijuana policies, and free any U.S. marijuana companies of their tax code 280(e) designation). It would also cause for incentivization for states to expunge low-level cannabis convictions, and create a federal tax on marijuana which would fund the newly created Opportunity Trust Fund, which is meant to assist groups which historically have been disproportionately affected by the War on Drugs. In my time dealing with federal lawmakers, a sweeping reform act such as the MORE Act has been described to me as a “Democratic Pipe Dream” with little hope of passing the Senate with its current membership.

However, the Senate’s membership is set to change subject to the November election results. Many political pundits (PoliticoForbesNY Times) believe that the Republican-held senate could be vulnerable to falling into the Democrats’ hands, changing the political landscape for the next few years. As such, the cannabis industry’s federal fight could abruptly pivot from incremental steps forward like the SAFE Act to the MORE Act’s sweeping cannabis reform. This switch would mirror a recent PEW Research Center’s finding that an overwhelming amount of Americans believe marijuana should be legal for medical or recreational purposes (the full study can be found here).

While I appreciate the value (and current necessity) of an incremental, strategic approach to federal reform of the cannabis industry, the best-case scenario for the industry moving forward would be a Democrat controlled Senate in November. This will allow the cannabis industry to push for full-fledged reform of federal cannabis laws, moving the industry forward at a rate which would be impossible under our current incremental approach. Right now, the cannabis industry in America is poised to be a massive boon (Forbes Cannabis Industry Projections), helping to create jobs and opportunities for millions of Americans. With the right help from the federal lawmakers, that dream can become a reality much sooner than expected.

Steven D. Avalon, Esq.
Associate 
Mr. Cannabis Law

By: Steven Avalon

An increasing number of our cannabis doctors have been reaching out to us about providing ketamine treatments as part of their medical practice. This blog will provide some background on ketamine as well as some of the potential legal issues surrounding ketamine use in the United States.

Ketamine is classified by Drug Enforcement Administration (DEA) as a Schedule III controlled under the Controlled Substances Act (CSA), which means that according to the DEA, the drug in question “has a currently accepted medical use in treatment in the United States; and [a]buse of the drug or other substance may lead to moderate or low physical dependence or high psychological dependence (21 U.S.C. § 812(b)(3)).”

With this Schedule III designation, federal regulations require individuals to register with the DEA prior to manufacturing, distributing, dispensing, or otherwise dealing in ketamine, with further rules regarding who can obtain a DEA registration. Only healthcare professionals such as physicians, Mid-level Practitioners (whose definition varies on a state-by-state basis, but generally can include nurse-practitioners and physician assistants), pharmacies, and hospitals/clinics can apply for DEA registration, and these registrations, once acquired, must be renewed at least every few years, and oftentimes annually.

Ketamine’s Food and Drug Administration (FDA) approved use is as a sole anesthetic for surgical procedures. However, many drugs are used for off-label use, which are non-FDA approved uses, which is generally legal unless the off-label use of a drug violates ethical or safety guidelines. Ketamine is being used off-label as a tool for therapy to treat a variety of mental health issues, including addiction, post-traumatic stress disorder (PTSD), anxiety, and depression. This use is legal as long as the prescribing doctor, dispensing pharmacy, and the manufacturer are registered with the DEA as outlined above.

Despite the stringent registration requirements, ketamine clinics are opening at a fast pace, largely in response to the mental health crisis the U.S. is facing, exacerbated by the coronavirus pandemic. When properly registered and run, these clinics can be vital in the fight against mental health issues, but as outlined above, proper navigation of the regulatory landscape is crucial for clinics and physicians to stay compliant with DEA rules.

Beyond regulatory issues, ketamine clinics have liability issues to be mindful of. Like any powerful anesthetic, clinics should ensure that patients do not operate a motor vehicle or engage in any other potentially dangerous activities while taking ketamine; starting with a warning to patients so they know what effects to expect from ketamine treatments, a liability waiver stating that the patient understands the risks and will not engage in any activities until a safe amount of time has passed, and ensuring that the patient has a ride home from any treatment sessions.

A key to expediting ketamine research and widespread use as a therapy tool is breakthrough therapy status, granted by the FDA. This status allows the drug in question (in this case, ketamine) priority review and by extension, approval, by the FDA for the use in question. In the past, the FDA has granted breakthrough therapy status to other psychedelics, including MDMA for the treatment of PTSD and psilocybin for the treatment of severe depression. These designations allow the research of each to flourish, allowing potentially life-saving treatments to be effectively studied, and upon a successful clinical trial, reach the market. Receiving breakthrough therapy status for ketamine therapy to treat mental health issues, especially in light of the coronavirus pandemic, could be essential to curbing the current mental health crisis our country faces.

Could today’s ketamine clinics be tomorrow’s Psychedelic Supervised Therapy Centers?

Mr. Cannabis Law, a full-service law firm focused exclusively on the marijuana and hemp industry, is excited to announce the addition of Steven D. Avalon, Esq. as an associate attorney at Mr. Cannabis Law. Mr. Avalon is a regulatory and transactional attorney with experience in federal regulation of marijuana and hemp as well as mergers and acquisitions experience with middle market transactions.

Mr. Avalon worked both as in-house counsel to a publicly traded cannabis investment firm and as an associate at a boutique firm specializing in transactional and regulatory law. During his time as in-house counsel, Steven oversaw mergers and acquisitions valued at over $50 million as well as ensured compliance within local, state, and federal law in the cannabis space. He also has experience lobbying Congress in Washington, D.C., making frequent trips to the nation’s capital to advocate on behalf of the cannabis industry. Finally, Steven helped navigate state laws to set up dispensary sites as well as statewide delivery for a Florida Medical Marijuana Treatment Center.

Dustin Robinson, Founding Partner of Mr. Cannabis Law, provided his comments on the addition of Mr. Avalon: “Mr. Avalon’s unique skill-set that combines cannabis-specific M&A experience with a deep understanding of cannabis operational compliance is going to make him a tremendous asset to our clients. The hiring of Mr. Avalon demonstrates Mr. Cannabis Law’s unwavering commitment to providing our clients and the cannabis industry with access to sophisticated legal expertise from professionals that are deeply passionate about the industry.”

 

Florida Hemp Companies Purchasing Out-of-State Product to be Used in Food Must Ensure the Hemp Comes From an “Approved Source” - Mr. Cannabis LawWith the complications surrounding certified seed in the state of Florida and other complications causing delay of hemp production within Florida, our clients with Hemp Food Establishment Permits are being forced to source hemp product from outside of Florida. Some are sourcing fully packed finished product while others are sourcing extract that will be formulated and packaged within Florida. Some are sourcing direct from suppliers outside of Florida while others are sourcing through brokers or distributors. Some are sourcing from nearby states like Tennessee while others are sourcing from west-coast states like Oregon.

 

Regardless of the where, what, and how of the product being sourced, all food consisting of or containing hemp or hemp extract must be sourced from an “approved source.”  Fla. Admin. Code. R. 5k-4.034(4)(a). Fla. Admin. Code R. 5k-4.034(2)(a) defines an “approved source” as a “food establishment manufacturing, processing, packaging, holding, or preparing food or selling food at wholesale or retail that meets local, state, or federal food safety standards from the jurisdiction of origin.” In order to demonstrate that the product is from an “approved source”, a Florida Hemp Food Establishment should require its supplier provide (a) a valid food license/permit; (b) the most recent food safety inspection report; and (c) a Certificate of Analysis verifying that the hemp product has been tested and contains less than 0.3% THC on a dry weight basis.

 

In many instances, applying the “approved source” rule is simple. Assume a Florida hemp retailer purchases a hemp tincture from a licensed Virginia hemp company. Similar to Florida law, Virginia regulates hemp tinctures as food and requires that the hemp companies obtain a food license and a food safety inspection report. Thus, the Florida hemp retailer should be able to easily obtain from the Virginia company the valid food permit, the most recent food safety inspection report, and a Certificate of Analysis verifying that the hemp product has been tested and contains less than 0.3% THC on a dry weight basis.

 

However, in other instances, the “approved source” rule is more complex. Assume that a Florida hemp retailer purchases a hemp tincture from a hemp company located in a state that does not regulate hemp as a food. Such company would likely not be able to produce a food license nor would it be able to provide a food safety inspection. Thus, such hemp tincture would not be from an “approved source” and the Florida hemp retailer should refuse to do business with such out-of-state hemp company.

 

Another instance that may cause confusion is when there are several middle-men between buyers and sellers. As the hemp supply chain has developed, many of these deals involve a broker or distributor that is trying to conceal the identity of the seller so that the buyer doesn’t try to go direct to the seller. For example, assume a Florida hemp retailer purchases a hemp tincture from a licensed Virginia hemp company but it is being purchased through a broker that is trying to conceal the identity of the Virginia hemp company. Under such circumstances, the Florida hemp retailer must demand that the broker provide a valid food license and a food inspection report for the seller. If the broker is not willing to produce such documentation, then the Florida hemp retailer should walk away from the deal.

 

The “approved source” rule is just one example of the complications created by a lack of uniformity in state hemp programs and a lack of guidance from the FDA with respect to hemp extract used in food. The team at Mr. Cannabis Law is here to help you navigate through this complex web of laws and regulations rife with legal inconsistencies and legal contradictions.

 

 

Two Distinct Legal Frameworks for Two Products that are not so Different

By: Dustin Robinson and Sean Hardwick

 

Can the Hemp Industry Transact with the Marijuana Industry? - Mr. Cannabis LawHemp and marijuana are botanically similar. Specifically, hemp is defined as cannabis with a concentration of 0.3% THC or less on a dry weight basis. However, cannabis is classified as marijuana both federally and in the state of Florida once the cannabis contains more than 0.3% THC on a dry weight basis. For operations, hemp and marijuana require a similar supply chain and infrastructure. While most states separate the hemp and marijuana industries into two distinct legal frameworks, the two industries could potentially complement one another through cooperation between hemp and marijuana operators. Yet, most state marijuana laws do not even contemplate the possibility of the two industries transacting with one another. This is a big mistake and states need to update their laws. Allowing hemp and marijuana operators to transact will improve supply issues in the marijuana industry; provide more sales channels for the hemp industry; improve patient access; and reduce costs in both industries.

 

There are numerous ways the hemp industry could one day transact with the marijuana industry. For example,  the hemp industry could sell CBD isolate to marijuana companies to be converted into THC distillate. There are several companies who have filed patents on technology that can do this in a safe and efficient manner. Another way in which the hemp industry could one day transact with the marijuana industry is by providing marijuana companies with various isolated cannabinoids derived by hemp, including, but not limited to, delta-8 THC, CBD, CBN, and CBG. It is much cheaper to produce these minor cannabinoids by using hemp than marijuana. And there is an increasing demand for these minor cannabinoids as additional research studies are published demonstrating their potential benefits.

 

However, the laws in most states prohibit these types of transactions. For example, in Florida a marijuana licensee must grow, process, dispense, and deliver the marijuana it sells; and it cannot contract out for these activities and it cannot purchase product from another grower to be processed. Thus, a Florida marijuana licensee cannot purchase CBD isolate or any minor cannabinoids from a hemp company. If a Florida marijuana licensee was able to purchase the CBD isolate or minor cannabinoids, it would improve patient access; drive down costs; and allow the marijuana licensees to develop more innovative products. It would be a win for the hemp industry, marijuana industry, patients, and customers.

 

Additionally, hemp companies and marijuana companies can create strategic partnerships. The sale of hemp-derived products occurs online and in retail stores. Therefore, a hemp producer needs to generate traction with its customers on the hemp producer’s website, a hemp distributor’s website, or through retail store. Yet, stand-alone hemp product stores are often unsuccessful. Furthermore, the sale of hemp products in other retail stores such as grocery stores, pharmacies, or convenience stores is generally not a primary focus for the retail store. By contrast, marijuana may only be lawfully sold within a state-licensed dispensary facility. Further, marijuana dispensaries are seen as a reliable place to purchase cannabis products because each marijuana product must undergo rigorous testing and can be tracked after it is sold. Specifically, each marijuana product is tested for potency; microbial contaminants; metals contaminants; and residual solvent contaminants (if any solvents were used during manufacturing). In addition, all marijuana products are tracked using the state’s track-and-trace system. Therefore, hemp products sold in a marijuana dispensary will be viewed as more reliable. As a result, hemp producers and marijuana dispensaries will both benefit. Specifically, hemp producers can generate higher revenue from sales to dispensaries and reach more customers from the exposure the hemp product receives from being sold within marijuana dispensaries. Furthermore, marijuana dispensaries can offer customers a wider variety of products. Therefore, commerce between hemp and marijuana operators benefits both hemp and marijuana operators.

 

In short, the interaction between hemp and marijuana can create a variety of benefits for both industries. While Colorado has provided guidance for the hemp industry to transact with the marijuana industry, most states have not established frameworks that allow for hemp operators and marijuana operators to transact with one another. Because marijuana remains a Schedule I controlled substance under the Controlled Substances Act, any transaction between the hemp operator and marijuana operator may be federally illegal. Furthermore, without established regulations or clarification from a state’s marijuana or hemp program, transactions between hemp and marijuana operators may violate state law as well. As more states recognize the interaction between the hemp and marijuana industries, the lines between the two industries will be further blurred which will further buttress the need for federal legalization.

 

 

 

 

 

By Dustin Robinson and Zachary Hyman

This article is featured in the eBook, Pivot Under Pressure: A Comprehensive Guide to Minimize Impact and Revitalize Your Small Business, which is available at https://millenniallaw.com/pivot/

 

The ABC’s of Cannabis and Coronavirus - Mr. Cannabis LawThe Coronavirus has impacted many businesses and industries, including the Cannabis industry.  The Coronavirus closures and government regulations concerning the distribution of Cannabis has created uncertainty as it relates to the future of the industry. To make matters worse, federal funding is not available, and Cannabis companies cannot file for bankruptcy. However, Assignment for the Benefit of Creditors (or “ABC”) state statutes, such as Florida Statute Section 727.104, provide an affordable alternative to bankruptcy that permits business owners to close while limiting your potential liability.

The ABC proceeding is commenced with the execution of an irrevocable assignment in writing.  Upon execution of this assignment, the party receiving the assignment receives control over a “legal estate” comprising of all of the assets of a business, and the assignor (or business) loses power and control over its property. Then, the assignee, or neutral third party who is responsible for marshalling and selling the assets of your business, commences an assignment proceeding. Generally speaking, an ABC is an efficient, relatively economical, and faster means for the administration of insolvent estates in Florida, and remains a viable alternative to Bankruptcy, especially if bankruptcy is not available to a company.

Below is a summary of what an assignment for the benefits entails, and how it can benefit your business.

  1. You get to choose the assignee. Pursuant to Fla. Stat. § 727.104, the people or entities in control of a business can select the assignee, or the person that will be managing the liquidation process, which gives flexibility in the approach to be taken with respect to your company, and the assignee can operate your business during the pendency of the ABC process.
  2. ABCs Limit Liability. An assignee has the right to reject real and personal property leases, and may be required, at a maximum, to only pay back rent and future rent not to exceed the greater of one year’s rent or fifteen percent of the rent remaining, and rent must be charged at the contract rate. Damages arising from the termination of employment agreements are also limited.
  3. Unsecured Creditors Cannot Pursue Collection Efforts. An unsecured creditor, such as a credit card company, or a creditor that does not have a security interest in your businesses’ assets, is prohibited from commencing any claims against your business, and must file a proof of claim in the Assignment of Benefits Case. As a result, all of the claims against your business, with the exception of secured claims, mortgages or other claims where a creditor has a security interest in your business’ property, must be heard and addressed in a single forum.
  4. The Assignee Can Assign and Prosecute Claims. The Assignee can assign and prosecute claims on behalf of your business, and certain legal defenses to such claims, such as claims based on your participation in the wrongdoing, do not apply to an assignee. This means the assignee can sell potential claims on behalf of your business at a higher value to creditors.

The ABC process provides business owners, for whom bankruptcy is not available, because they are in the Cannabis industry or cannot afford the process, a mechanism to close their company and limit potential liability from creditors. If your business is struggling, then the ABC process may be a viable solution to your financial distress. Consult with an attorney or financial advisor to see if the ABC process is appropriate for you and your business.

By: Dustin Robinson and David Butter

Florida Super Licenses Receive Another Dose of Steroids: But Will They Accept the Boost? - Mr. Cannabis LawFlorida medical cannabis licenses have become known as “super” licenses for three reasons.

 

  • First, Florida’s licensing structure is vertically integrated. Licensees are required to oversee the entire supply chain, including cultivating, processing, dispensing, and delivering. Vertical integration provides licensees with significant control from seed to sale. Vertical integration is unique—most states with cannabis programs have a horizontal licensing structure, which means licenses are specific to certain segments of the supply chain. For example, in Illinois, you could apply for a cultivation license or a transportation license.

 

  • Second, there is a limited number of licenses. In 2014, the Florida legislature created the “super” licenses, originally issuing only five. Over the course of the past five to six years, more licenses have been issued. Today, only 22 licenses have been issued, 13 of which are actively operational. Operators who acquired a license in 2014 got a substantial head start over operators who received their license in later years.

 

  • Third, licensees can open an unlimited amount of retail dispensary locations. Most states with cannabis programs place a cap on the size and number of facilities for growing, processing, and dispensing. Until this month, Florida allowed each licensee to open 25 dispensaries and an additional 5 dispensaries for every 100,000 patients who register for Florida’s cannabis program.

 

Recently, these Hulk-Hogan licensees received a new boost. Florida’s cap on dispensary locations (as mentioned in bullet point 3 above) expired on April 1, 2020. Previous to the expiration, licensees could open up to 35 dispensaries because there are over 300,000 registered patients in Florida’s registry. Since its expiration, licensees can now flex their muscle into an unlimited number of dispensaries.

 

But this isn’t their first dose. Along the way, the licensees have picked up juice. The repeal on the ban of smokable cannabis gave licensees a shot in the arm, prompting licensees to expand production, operations and retail footprints. This was effective—more than 22,000 pounds of smokable product were sold in less than six months. Now, with the expiration of the dispensary cap, the “super” licenses have an opportunity to expand business operations.

 

Even though gone, the dispensary cap left scars. It was the spark of much confusion and litigation, resulting in state health officials agreeing to allow two licensees—Trulieve and Surterra Wellness—to open more than 35 dispensaries, exceeding the state cap.

 

So why aren’t the licensees celebrating and heading to the gym with their new boost? After all, “super” license status is what attracted large multi-state operators to purchase Florida licenses for big bucks including, MedMen, Curaleaf, Surterra, Cansortium, iAnthus, Columbia Care, Acreage, Green Thumb Industries, Green Growth Brands, VidaCann, and AltMed.

 

Because most licensees are so strapped for cash, they cannot afford the syringe and needle to complete the injection. Production has been an ongoing problem for licensees as most of them are already having trouble keeping quality product on the shelves. Opening more dispensaries would kill cash flow and put an additional strain on these production issues. The coronavirus pandemic forced several licensees to pivot into a delivery model and put their dispensary model on the back burner.

 

The silver lining is these issues can be resolved if the Florida legislature implements a horizontally integrated structure. A horizontally integrated cannabis program would limit cash demands on operating these licenses; allow licensees the ability to be an expert on specific parts of the supply chain; foster innovation in production methods and product mix; and provide more access to patients.

 

On the surface, removing the cap would seem to put additional muscle on the individual licensees, but a more effective supplement for the market as a whole would be the implementation of a horizontally integrated program. Luckily, the Florida Supreme Court has an opportunity to weigh in on the constitutionality of vertical integration in the Florigrown case and potentially provide a clearer pathway for a fair and balanced marketplace.

Bringing Clarity to a Trippy Legal Framework

By: Dustin Robinson, Founding Partner of Mr. Cannabis Law and Mr. Psychedelic Law

Are Magic Mushrooms and Sclerotia Truffles Legal in Florida? - Mr Cannabis LawOver the past six months, the Mr. Cannabis Law team has received several inquiries from clients interested in selling magic mushrooms and sclerotia truffles in Florida; and the clients are insistent that magic mushrooms and sclerotia truffles are legal in Florida based on the client’s google searches. At first, I thought to myself that these clients must be “tripping.” But, upon further research, I realized that this misconception is based on a reasonable misunderstanding of two basic legal concepts: (1) facial v. as applied constitutionality; and (2) mens rea.

The Florida Case – Fiske v. State

The case that is causing much of the confusion is the 1978 case of Fiske v. State, 366 So. 2d 423, 424 (Fla. 1978). In Fiske, the defendant was arrested after leaving a field. Police officers found a bag of wild mushrooms near him. Id. The mushrooms were taken into the custody and the mushrooms were tested. Id. The tests concluded that the mushrooms contained psilocybin. Id. Under the Florida Statutes, “any material which contains a quantity of the hallucinogenic substance ‘psilocybin’” was labelled a Schedule I controlled substance. Id. Importantly, the statute does not specifically list wild mushrooms as a Schedule I controlled substance. The defendant was found guilty for possession of the psilocybin, which was a felony of the third degree. Id. The defendant appealed his case to the Florida Supreme Court.

The Florida Supreme Court determined that the Florida Statute was unconstitutional “as applied” to the defendant. Id. The court reasoned that the statute did not mention magic mushrooms or any other psilocybin organic substance that can grow naturally in the wild. Id. Furthermore, the court determined that if the statute specified that psilocybin can be found in certain identifiable mushrooms, and named the mushrooms that contained psilocybin, the statute would give notice to a prospective defendant that possession of certain mushrooms could be a crime. Id. Without the Florida Statute specifying that naturally growing mushrooms could contain psilocybin, a defendant does not have the proper notice or knowledge that some naturally growing mushrooms may contain a Schedule I substance. Id. Thus, the court determined that the Florida Statute was unconstitutional “as applied” because the statute did not give the defendant a “fair warning” that possession of the naturally grown mushrooms he possessed was a crime. Id. Therefore, the defendant did not have the required mens rea to be found guilty of possession of psilocybin. Id. Yet, the court made clear that the Florida Statute is “facially” constitutional because the statute can be applied in other circumstances where the defendant had the requisite mens rea. Id. Importantly, the Florida Statute has not been revised since Fiske and the Florida Supreme Court has not reversed its position in Fiske. Thus, Fiske is still good law in Florida.

“Facial” v. “As Applied” Constitutionality

In order to gain a full understanding of the Fiske holding, one must understand the the difference between “facial” v. “as applied” constitutionality. A statute’s constitutionality can be challenged “facially” or “as applied.” A statute is unconstitutional “on its face” when it would be unconstitutional in every situation. In contrast, a statute is unconstitutional “as applied” when the application of the statute is unconstitutional because of the fact-specific circumstances of the case. When a court finds that a statute is “facially” unconstitutional, the court will void the entire statute since it is unconstitutional under any circumstances. In contrast, when a court finds that a statute is unconstitutional “as applied”, the statute will remain in force but the circumstances for which that statute is constitutional will be narrowed. In Fiske, the court found that the statute was unconstitutional “as applied” to the facts and circumstances of the case.

Mens Rea

“Mens Rea” refers to a person’s mental state at the time of carrying out the act of a crime. Because of due process, a person’s mens rea must have some sort of level of intent in order to be guilty of a crime. In other words, a person who has committed a criminal “act” cannot be guilty of a crime unless such person has the requisite mens rea when committing such criminal act. A prosecutor in a criminal case must prove mens rea beyond a reasonable doubt. If a statute does not put an individual of ordinary intelligence on proper notice of the nature of the crime, an individual cannot have the required mens rea to commit such crime. While ignorance of the law is no excuse, that principal “may be abrogated when a law is so technical or obscure that it threatens to ensnare individuals engaged in apparently innocent conduct.” United States v. Caseer, 399 F.3d 828, 837 (6th Cir.2005). In Fiske, the court found that the defendant did not have the requisite mens rea since the defendant was not aware that magic mushrooms contained magic mushrooms and the defendant was not on notice that magic mushrooms contain psilocybin since magic mushrooms were not specifically listed in the statute.

Key Takeaways from Fiske v. State

  1. Fiske stands for the general proposition that criminal intent is required to commit a crime.

 

While many believe that the holding in Fiske means that possession of magic mushrooms in Florida is legal, such is not the case. Instead, Fiske stands for the general proposition that criminal intent is required to commit a crime. Florida Statute Section 893.03(1)(c)(33) lists psilocybin as a Schedule I controlled substance in Florida and has not been updated following Fiske to specify which natural substances include psilocybin. This means that a defendant may not be on notice as to which natural substances contain psilocybin and thus the defendant would not have the requisite mens rea. This issue is raised in Florida Jurisprudence, Second Edition March 2020 Update, which states, “the classification of ‘psilocybin’ may violate due process as applied to a defendant whose conviction arises out of possession of a bag of wild mushrooms that are determined to contain the drug, as the statute does not advise a person of ordinary and common intelligence that the prohibited substance is contained in a particular variety of mushroom.[1] Therefore, the issue of Florida Statute Section 893.03(1)(c)(33) not providing criminal defendants proper notice as initially raised by Fiske in 1978 remains an unresolved issue today.

 

  1. Fiske does not stand for the proposition that a natural substance that is not specifically listed as a controlled substance (i.e. magic mushrooms) is legal when it includes another natural substance that is specifically listed as a controlled substance (i.e. psilocybin).

 

The Fiske case did NOT hold that a natural substance that is not explicitly listed as a controlled substance (i.e. magic mushrooms) is legal when it contains a controlled substance (i.e. psilocybin). Instead, the court based its decision on the lack of evidence demonstrating that the defendant had knowledge that magic mushrooms contain psilocybin.  See also United States v. Hassan, 578 F.3d 108 (2d Cir. 2008) (holding that khat is an illegal substance even though it is not explicitly listed as a controlled substance since khat contains cathinone which is a controlled substance; but also noting that the prosecutor would need to have proven beyond a reasonable doubt that the defendant knew that khat contained cathinone);  United States v. Mire, 725 F.3d 665, 679 (7th Cir. 2013), (holding same); State v. Reckards, 2015 ME 31, 113 A.3d 589, 594, (holding same).

 

  1. Fiske makes it very difficult for prosecutors in Florida to prosecute defendants for possession of psilocybin unless the prosecutor has evidence to prove beyond a reasonable doubt that the defendant had knowledge that the magic mushrooms contained psilocybin.

 

The precedent established by Fiske makes it very hard for prosecutors in Florida to prosecute a defendant for possession of psilocybin. If magic mushrooms were explicitly listed as a controlled substance in Florida’s statutes, then a defendant would be on notice and would not be able to claim ignorance of the law. But, since magic mushrooms are not listed as a controlled substance in Florida’s statutes, the defendant is not on notice and thus the prosecution must prove beyond a reasonable doubt that the defendant knew the magic mushrooms contained psilocybin.  Without any modification to the Florida Statutes, a prosecutor will find it difficult to prove a defendant actually knew the mushrooms in the defendant’s possession contained psilocybin.

 

  1. Fiske does not support the commercialization of magic mushrooms containing psilocybin or sclerotia truffles containing psilocybin.

 

The Fiske case does not offer much support to businesses that want to sell products that contain psilocybin. If a business were to grow, process, or sell a naturally-grown substance that contained psilocybin (ie magic mushrooms or sclerotia truffles), all business activities would likely be criminal. Following Fiske, the business and its agents would have the requisite mens rea or criminal intent to commit a crime. Specifically, if a business advertises or otherwise markets its psilocybin-based product, the business is operating with the requisite criminal intent of possessing and handling a controlled substance – psilocybin. To create commercial opportunities for psilocybin products, the Florida Statute would need to clarify which products that contain psilocybin are explicitly prohibited. Otherwise, businesses selling magic mushrooms or sclerotia truffles are operating at their own peril.

[1] 16B Fla. Jur 2d Criminal Law—Substantive Principles/Offenses § 1319

Since the Stay-At-Home Order, the Mr. Cannabis Law team has jumped into action with assisting clients to adjust their business operations; and assisting clients and others apply for stimulus loans. We’ve also been busy continuing to speak on various topics to make sure we educate the public on important current events. Below is a recap of just a few of our recent speaking events:
  • Founding Partner of Mr. Cannabis Law – Dustin Robinson – interviewed with Illinois Cannabis attorney Thomas Howard to update the Illinois market on the current status of cannabis in Florida. We discussed the history of cannabis in Florida; the court cases currently pending in Florida; the current state of the law in Florida; and the future of cannabis in the State of Florida. We also discussed some of the challenges in the Illinois adult-use application process. The Mr. Cannabis Law team completed 5 Illinois Adult-Use Dispensing Applications, 1 Illinois Craft Grow application, and 1 Illinois Transportation application. Dustin and Thomas discussed some of the challenges they faced during this application process.
  •  Founding Partner of Mr. Cannabis Law – Dustin Robinson – attended a webinar with Minorities 4 Medical Marijuana. Dustin was able to talk with Roz McCarthy, Erik Range, and all the other members of Minorities 4 Medical Marijuana on important issues in cannabis. Specifically, Dustin was able to provide insight as to what he learned about the Illinois Cannabis Social Equity Program through Dustin’s significant work completing various cannabis applications in Illinois. On every application Dustin drafted in Illinois he included a partnership with Minorities 4 Medical Marijuana to ensure that his client was committed to diversity, inclusion, and social equity.   Dustin also ensured that every Applicant was at least 51% owned and controlled by a social equity applicant. Dustin, Roz, and Erik explored the different frameworks for social equity programs across the country. They were also able to discuss the stimulus package and how it impacts cannabis businesses.
  •  Founding Partner of Mr. Cannabis Law – Dustin Robinson – attended episode 12 of Elevate Your Grind . In this episode, Dustin discussed the stimulus package, including the Economic Injury Disaster Loan Program, the Paycheck Protection Program, and various other programs that are available at a federal, state, or local level. Dustin also discussed the reasons he started Mr. Cannabis Law and how he provides a unique service whereby clients receive big-law quality legal service with a boutique firm level of attention. Dustin also discussed his newest venture of Mr. Psychedelic Law, which is a not-for-profit focused on using medical and spiritual research to drive legal reform of psilocybin mushrooms and other psychedelics.
  •  Founding Partner of Mr. Cannabis Law – Dustin Robinson – attended an Instagram Live Feed with Leafstyle. Dustin discussed various parts of the stimulus package and explained how people can apply for loans. Dustin expressed the importance of working with your accountant or lawyer to make sure you are getting the full benefit of the money made available. Dustin also discussed the Unemployment Benefits that are available and how to apply for such benefits. Dustin also discussed why marijuana companies are not eligible for federal funds; however, Dustin also shared some different ideas on how marijuana companies may be able to access stimulus money in the future.
Dustin has various upcoming events, including a CLE for attorneys on Cannabis Law on 4/15; and a webinar on the Stimulus, FDA, and Assignment of Creditors that will be available on 4/20.