Illinois gained attention across the US earlier in 2019 by becoming the first state to legalize recreational marijuana by legislative action rather than voter initiative. The passage and ratification of HB 1438 was preceded by intense negotiations, with interest groups conceding and compromising days up to the votes in the State House and Senate and subsequent eager signing by Governor J.B. Pritzker on June 25, 2019.
The bill, signed into law with hardly any time to spare before session was let out for the summer, came in at nearly 600 pages and had more details than any other cannabis legalization measure before it. Because of the negotiations made during the crafting of this bill by State Senator Heather Steans (D-Chicago) and State Representative Kelly Cassidy (D-Chicago) we were given a bill that left no detail overlooked, and one that made every effort to make clear what the regulatory environment would be like.
The new adult use market has been set up to resemble the Medical Marijuana Pilot Program. The state will have strict oversight of all parties and all products involved in the new program, from budtender to CEO, seed to sale. This highly regulated market is set up to ensure that safety is prioritized, product traceability can be ensured to mitigate diversion and maintain a standard for quality assurance best practices, and tax revenues can be easily accounted for.
As I listened to conversations between veteran retailers and producers from states that have gone down the legalization path before us in Illinois, I would hear one common thing that most folks seemed to have been surprised by, and that was being able to follow the law. While these good folks were trying their very best to meet standards, most retailers and producers in these states found themselves unprepared for fulfilling their compliance obligations put forth by the state, and some found themselves, as growers and business people either unable to decipher the jargon themselves, or unable to find someone who could.
So, I decided to catch up with Samantha Kramer and Jake Ziering of The Cannabis Law Society. I was given the opportunity to ask a number of questions to them that I felt could benefit groups looking to enter the Illinois adult use cannabis market in 2020. At the very end of this article is information on how to take advantage of pro bono assistance with license applications for anyone who qualifies as a social equity applicant.
The Cannabis Law Society answered questions I didn’t know I had, here is the Q&A.
-Tell me a little bit about yourselves. What led you toward cannabis/law work?
Sam Kramer: I think Jake and I have somewhat similar stories. I entered the cannabis space as an advocate over a decade ago – worked with ACLU to successfully petition students’ right to a cannabis policy organization at my undergraduate university. As the legal market started to come together, I began to investigate my options in starting a cannabis company. I quickly realized a law degree would be valuable to this effort and would maximize the good I could do in helping cannabis causes and companies succeed across the entire industry.
Jake Ziering: Yea, pretty much the same! Ever since I first learned about the War on Drugs and its devastating effects on communities, I knew that I wanted to be part of the change toward a more just system. When I lived in California, I worked closely with lawyers and entrepreneurs in the industry including Robert Raich, and started to see a future for myself in the legal profession. Once I met Sam in law school, it all just came together – we hit the ground running after one conversation, and haven’t looked back since.
-What is the mission of the cannabis law society? Why is this mission so important?
Sam Kramer: The Cannabis Law Society initially launched out of a drive to fill the gaps in cannabis law curriculum. This is a massive new area of law, yet most law schools have—if anything—a single class on cannabis legislation, regulation, and other industry needs. Students are going into debt for law school tuition and still showing up at this profitable new market requiring a year or more of training.
Jake Ziering: It’s like, what are we paying for? So what makes us different from groups like MPP or NORML—who Sam and I have both been long-time members of and advocates for – is our dedication to creating the pipeline from law students and legal experts into cannabis companies who need high quality, responsible representation.
Sam Kramer: Resume building, networking resources, and the creation of a legal cannabis community has helped land our law students jobs while making our society an asset to law firms and cannabis companies.
– Who are you getting calls and questions from most? Individuals regarding individual rights or prospective companies/applicants?
Sam Kramer: We get a lot of both, right?
Jake Ziering: Yea, definitely.
Sam Kramer: There are questions on everything from employment discrimination and employer rights to how to launch a cannabis business.
Jake Ziering: Right, we get a ton of individual rights questions locally. And then we get people looking at this as a business opportunity. Even big law firms are starting to see the importance of not being last into cannabis. We’re finally reaching a point where the industry hits critical mass – where hemp and cannabis are finally being seen as part of normal American life.
Sam Kramer: Like it was before prohibition. And then there is the long list of inquiries from attorneys wondering how to break into the industry; what these companies are like to work with, how to succeed in interviews, what they’re looking for from their legal departments.
Jake Ziering: You could say we get a lot of calls.
Sam Kramer: And emails. As we’re about to kick off our third chapter, it might be time for us to get some assistants, Jake.
– Are you doing any work in the expungement area? Can you give some guidance for folks looking for help in that area? Are there any funds or non-profit assistance for that you are aware of to help folks out in getting their records cleared?
Sam Kramer: Our Chicago-Kent chapter took the lead on this one. Last year, we knew we wanted to make sure Code for America brought its automated expungement process to Illinois. This group of coder-slash-social-justice-warriors automated an incredible number of expungements in California that saves individuals time and money. After learning they were in talks with the Illinois Attorney General’s office, we asked them how we could help. Our chapter invited Cabrini Green Legal Aid to teach us Illinois’ unique expungement/record-sealing process. We also invited Chicago NORML, who we know is tapped into this cause and was involved in the expungement language later included in the Cannabis Regulation and Tax Act. This allowed us to provide Code for America with a holistic summary of Illinois’ needs for the coding team as they negotiated with Attorney General Kim Foxx. They’ve since made a formal agreement with the state to automate features of the Illinois process.
I typically recommend Chicago NORML and Cabrini Green Legal Aid to Chicagoans looking for expungement assistance.
-Where are you finding people or applicants need the most help from the Cannabis Law Society?
Jake Ziering: Well, it’s such a new industry that there hasn’t been time for the typical relationships to develop between in-house counsels and the law school community. I get a lot of emails from young lawyers and law students looking to find their way into cannabis law. And then I also get emails from people on the inside looking for qualified students for internships and jobs. So that’s how I see what we do – we can be a bridge between the legal community and the industry that helps land qualified candidates in the jobs that are emerging every day. We’re fortunate Kent is so progressive – the school has been really supportive of this mission, and I don’t think we could have come this far without that kind of support.
Sam Kramer: We’re also seeing valuable new opportunities to assist social equity applicants. Outside of The Cannabis Law Society, I have the opportunity to work on GTI’s LEAP team – a program that provides application assistance to Illinois social equity applicants trying to take advantage of the Cannabis Regulation and Tax Act’s new language. This has given me a lot of insight into how our society can help social equity applicants achieve licenses and successfully operationalize. Jake and I both feel strongly about an equitable cannabis space. It’s part of why we felt we were the ones to start this law society—as people with an eye on inclusiveness. That said, we have some new social equity programming in the works! We’ll be announcing once the details are confirmed. Stay tuned!
-Are there any issues that you feel need more clarification from the state?
Sam Kramer: Well, sticking to the topic of social equity, these applicants are still waiting on loan and grant information from the state agency. This information is critical to developing a strong business plan, and the competitive adult use dispensary applications were released last week. Our Illinois legislators worked insanely hard to extend a hand to communities disproportionately harmed by cannabis prohibition. I’d hate to see these attempts minimized for first wave applicants. It’s expensive to start a cannabis business—knowing where you’ll get your capital is key! And getting in during wave one can be a substantial advantage for the business long-term.
Jake Ziering: Illinois has generally done a great job. I’m proud that our law is arguably the most progressive in the country. But Sam’s right that the process is still kind of opaque and challenging for precisely the disadvantaged applicants it is meant to help. The State needs to make sure it is following through and actually providing the resources that all applicants need to be successful.
-What comments or suggestions, if any, regarding the SAFE Banking act?
Jake Ziering: It’s a huge step forward. Everyone agrees about that – for too long the cannabis industry has been forced to deal primarily in cash. This increased transaction costs, denied opportunities for loans and government assistance, and increased the risk of theft and violence. The SAFE Banking Act goes a long way toward remedying some of the structural problems that have plagued cannabis companies for as long as they’ve existed. It’s also an important federal validation of the industry that brings us one step closer to synchronizing state and federal law.
That said, it’s a bit problematic that large financial institutions are the first to receive any federal protection for participation in the cannabis industry. There is some fear among activists that by giving the banks their share of the pie, there will be no more incentive for banks to push for full legalization. There’s also a fear that the entry of these huge financial players will undermine the stated goal of so much state legislation, to make diversity and social equity the cornerstone of the legal cannabis industry.
Sam Kramer: Jake touched on all the important points here. Particularly that this is the first time in modern history the federal government acknowledges a legal cannabis market. I personally can’t help but bristle a bit at the thought – after decades of advocating from hospital beds of those with debilitating illnesses, from prison cells of nonviolent criminals in over-policed communities – banks were the priority that shifted the needle.
I’m also a bit concerned about all the social equity language I hear surrounding the SAFE conversation. Banks have long closed the door on communities with systemic damage done by the failed War on Drugs. I’m not sure what will incentivize them to extend financial opportunities now.
-What are the current biggest challenges for existing operators? What were they in the past? Can you comment on what they may be for the future?
Sam Kramer: As we’re hearing a lot of talk about vapes right now – I’ve had my mind on products liability lately. The first respiratory illness suit was recently filed. Industry executives have a profit incentive to either take shortcuts or take things too far. Jake and I recently attended a panel where one CEO cheered that we can finally bring in leaders of traditional industries. My concern here is the motivation to follow the same profit pathway that, if you look at pharmaceuticals for example, led opioids originally intended to help those in pain to street-level fentanyl addicts. I’m excited to see new faces leading the marketplace. What led to profits in the past may not be best for the longevity of an optimal cannabis industry. Existing and future operators have a responsibility to uphold the integrity of their products, including the way in which they market cannabis products for long-term success.
This will also keep cost of compliance down if governments don’t feel the need to regulate so strictly.
Jake Ziering: Another big obstacle in the short-term is that, while cannabis legalization has an overwhelming majority support among citizens, the minority who are against it are very vocal about their opposition and frequently frame that opposition in moralistic terms. To put it in stark terms, we have small groups of dedicated citizens showing up at town hall meetings and derailing the proceedings, seeking to overturn the democratic will of the people by claiming that cannabis is immoral and has no place in society.
So, one of the big challenges for the industry right now is public relations. We know that the majority of people are on our side, but how do we deal with the minority who are convinced we are barbarians out to corrupt their children and other long-disproven arguments? All, by the way, while being respectful and not creating an even bigger PR mess. It’s a difficult situation.
-Do you think that the hemp industry will face any legal challenges in the future?
Jake Ziering: I don’t know if “challenges” is the right word, exactly – but there are definitely a lot of unsettled legal questions. Right now, for instance, we’re on the verge of the first set of pesticides being approved for hemp use. This was impossible before the Farm Bill because hemp was still illegal under the CSA. But now that’s it’s been de-scheduled, there’s all of this work to be done at the agency level as far as implementing the same regulations that would be applied to a normal product. So, the USDA, the FDA, the FTC, all suddenly become involved in a way that they weren’t before. They’re more opportunities than challenges, because it’s a chance for people on the inside of the industry to have their voices heard in the earliest stages of the regulatory process.
-Is the state regulating well, in your opinion? In which ways do you think the gov’t can ease up a little bit? In which ways do you think that they need to focus and put a little bit more pressure?
Sam Kramer: A comment we hear in many of the rooms we enter is that legislators over-regulated in the statute. It would be more efficient and effective as the industry unfolds to keep more in the regs. Regs are flexible and responsive whereas a statute requires voting and other long-term actions to change as new tensions arise—especially because many requirements may be overly cautious (and unnecessarily burdensome) or experimental. These requirements could turn out to have effects counter to what legislators intended and communities were aiming for.
Jake Ziering: I agree with all that! The one thing I would add is that the sheer size of the legislation is itself a barrier to entry. People who aren’t lawyers (and even some who are!) see the 600 pages and just give up. It would be easier for a diversity of applicants to participate if there weren’t such a ridiculously high bar to digesting the bill’s contents.
-How do you feel about the future of cannabis law? Do you feel that legalization will take the form of highly regulated markets, such as Illinois seems to be positioning itself as the leader of, or more of a free/open market much the same way Oregon or Maine?
Sam Kramer: We’ll have to see how federal legalization plays out. When you look at highly regulated markets, like securities or alcohol, the increased regulation usually stems from injury to individuals. But, like we’re seeing in Illinois, preventive over-regulation may be the only way to get these measures passed. We’ll have to wait and see what this interesting new Congress is concerned with.
Jake Ziering: As far as what model federal legalization will follow, that’s very hard to say. I don’t feel qualified to guess. But my preference is a relatively open model, like what we have for breweries. There are already so many tendencies in the market toward centralization, and one of the coolest things about the cannabis industry has always been its loose, decentralized feel.
-Do you feel that navigating the compliance space has generally become easier or more challenging as the market matures?
Sam Kramer: I’d say it’s getting more burdensome to keep up with. To get all these new pieces of legislation passed, it was important to show a lot of care for individuals and communities. This resulted in an ever-growing list of rules. As the industry normalizes, I imagine we’ll find many of the finely detailed rules are more for comfort than actual protection.
Jake Ziering: This is where the regs-versus-statute conversation is important.
Sam Kramer: Definitely. With fewer hard rules, businesses could use a reasonable interpretation in how they operate. Now more traps are being set to get marked up and/or fined. We could protect businesses from traps better if we could more quickly convince the state that certain overly detailed compliance requirements do more harm than good.
-How will compliance within the adult use program differ from the legacy medical program?
Jake Ziering: To be honest, it should be much easier. All the big players already have teams in place with years of experience navigating various states’ regulatory environments. Adding on a new operation will always be easier than building from scratch.
But beyond inertial reasons, there’s also the fact that adult-use dispensaries don’t have the burden of dealing with private medical data. Medical data is like toxic waste – it’s a byproduct of doing business that none of these companies really want, and that it can be very difficult to store and handle properly. Already in Canada there have been several big lawsuits over breaches of medical data at dispensaries. That’s a huge liability. And adult use dispensaries, because they don’t need anything from their customers but a government ID, they are free of that liability.
Sam Kramer: Medical data is key. We have systems in place from alcohol and tobacco on how to effectively regulate by age. Effective technology of ID scanners, etc., already exist. They’ve also been well-tested in the vice industries.
-What can you recommend new applicants do to ensure solid footing in the future? How should they approach hiring legal/compliance council? Retaining a firm? Contract/Consultant as needed? Full time compliance staff?
Jake Ziering: At the very least, you’re going to need a person on your staff who is fluent enough in legal writing to be able to successfully fill out applications. That person could be a lawyer, but doesn’t have to be. If you tried to outsource that work to a law firm, you’d end up paying astronomical amounts of money on top of the already-high entry costs of an application. So that’s step one.
Assuming you can do applications yourself, I think it’s worthwhile to use outside counsel for some of the more nuanced and specific questions that face a cannabis company. Like insurance – you’re going to want to be absolutely sure that you purchase the right policies, and that whatever policies you purchase actually provide coverage for the activity of your business. That kind of specialized work is a place where outside counsel can have a lot of value.
Sam Kramer: I would definitely recommend having a point-person for your company’s compliance. Ideally, they would be dedicated full-time to your specific operation so they are not spread thin doing compliance check-ups across a number of companies.
-How will approaches to compliance differ from each type of application?
Sam Kramer: Each application has the same goal – to protect the communities that welcome each new cannabis business. There are of course differences in actual compliance required (a dispensary will have different rules than a transporter). But, overall, the state is concerned about permitting responsibly run businesses.
About The Cannabis Law Society: Samantha Kramer and Jake Ziering founded The Cannabis Law Society in 2018. The society has evolved into a nonprofit organization designed to advance the nationwide community of cannabis attorneys, law students, and entrepreneurs. Learn more at TheCannabisLawSociety.org .
I hope that anyone reading this finds the information helpful, and will keep The Cannabis Law Society in mind while navigating applications and later on as licenses are granted and operators come online. These folks not only really know their stuff, but are some true advocates for a positive cannabis future in Illinois.
