psychedelics regulation laws

On November 3, 2020, voters in Oregon approved Measure 109, paving the way for a regime of psilocybin for therapeutic uses in a few years.

Oregon and Psilocybin: Does the Approved Ballot Measure Language Stand a Chance
Oregon Psychedelics: Petition to Legalize Psilocybin for Therapy Moves Forward
Oregon Psychedelics: Psilocybin on the Ballot this November!
Oregon 2020 Election: Vote Yes! on Measure 109
Oregon Psilocybin: Does Measure 109 Go Far Enough? Does it Go Too Far?

Large cities across the country have also adopted decriminalization measures for psilocybin and other entheogenic (psychedelic) plants, including Ann Arbor, Denver, Oakland, Santa Cruz, and most recently, Washington, D.C. (but we note that decriminalization is not legalization). It’s only matter of time before states follow Oregon’s approach and start regulating psilocybin.

Assuming the federal government does not change federal law first (and this is certainly a possibility given the Food and Drug Administration’s approval of drug trials for psilocybin), it’s very likely that many of the legal issues that will face the regulated psilocybin will be similar, if not identical, to issues facing the state-regulated cannabis industry.

In a previous post, we discussed similarities and differences between the movements to legalize psilocybin and cannabis. In this post, we’ll look at the top eight issues that will likely carry over from cannabis to psychedelic drugs more generally.

1. Federal Legality

Even if states follow Oregon’s move and legalize psilocybin therapy, that won’t change federal law. Currently, psilocybin is a Schedule I narcotic under the federal Controlled Substances Act (CSA). This means that it and other entheogenic plants or psychedelic substances are treated the same way as heroin. It remains to be seen whether the federal government would take the same path of non-enforcement of the CSA against psilocybin operators in states that regulate psilocybin uses or sales. In other words, it’s unclear whether there will ever be anything like a Cole Memo for psilocybin. But inevitably, there will be tension between state and federal law.

2. Contract Issues

Whether or not the federal government takes a position of non-enforcement, psilocybin contracts will face serious issues given the state of federal law. Federal (and possibly even state) courts may refuse to enforce contracts that involve a federally illegal substance, even if authorized by state law. This issue still comes up for cannabis operators and can be a huge concern. For some of our articles on federal legality, see:

Cannabis Litigation: Another Blow to the Illegality Defense (Kennedy v. Helix TCS, Inc.)
Federal Courts are Going Backward on Cannabis

3. Tax Problems

The bane of many cannabis operators’ existence is Internal Revenue Code § 280E, and things will be no different for psychedelics companies so long as psychedelics remain on Schedule I of the CSA. This section states:

No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.

In other words, companies that traffic in certain controlled substances have immense limitations on what they can deduct when paying federal taxes. State law doesn’t change this. For more of our analysis on § 280E, see:

Marijuana Businesses and IRC 280E – More Clarity?
Marijuana Taxes: The IRS On Section 280E
Why we love the Harborside § IRC 280E Appeal

4. Access to Banking

On par with 280E in terms of annoyance for cannabis companies is lack of access to banking. Despite the fact that in 2014, the Financial Crimes Enforcement Network (FinCEN) issued a memo providing guidance for banks that wanted to bank cannabis monies, many banks didn’t jump on board. Even today, it can be difficult for cannabis companies in regulated states to gain access to banking. It can even be a challenge for hemp companies to access banks, even though hemp is now legal and even though FinCen and the National Credit Union Association have provided hemp banking guidance. These problems will no doubt persist for psychedelics businesses.

5. No Federal Trademarks

Trademarks will not be issued for goods or services that are not legal (you can read our analysis of trademark legality issues here). If states regulate psilocybin, they may allow licensees to obtain state-level trademarks, but those same companies will not be able to obtain trademark registrations from the United States Patent and Trademark Office unless and until federal law changes. This means that, like cannabis companies, psilocybin companies will only be able to have very limited trademark protection.

6. No Bankruptcy Protection

Bankruptcy protection is not available for cannabis companies due to federal illegality (see our analysis here). Those problems will persist for psychedelics companies as well.

7. RICO Suits

Historically, our cannabis lawyers have seen a ton of civil RICO litigation in federal courts across the United States. RICO (the Racketeer Influenced and Corrupt Organizations Act) is a federal statute that provides for a civil cause of action for acts performed as part of an ongoing criminal organization (in addition to criminal penalties). These suits were often filed by neighbors of cannabis cultivators trying to allege a conspiracy in an effort to shut down the cultivator and their suppliers. They have become less and less common over the years but we fully anticipate seeing a plethora of RICO suits for psychedelics companies in regulated states.

For more on cannabis RICO litigation, check out the following:

Much Ado about RICO
Much Ado About RICO and Cannabis, Part 2
Much Ado About RICO and Cannabis, Part 3
Much Ado About RICO and Cannabis, Part 4
Much Ado About Rico and Cannabis, Part 5: Multi-State Update
The Neighborhood “Gangbusters”: Avoiding RICO Cannabis Lawsuits
Cannabis RICO Lawsuits are Failing: Oregon and Colorado Updates
Federal Court Dismisses RICO Claims: Remedies Would Violate Federal Law

8. Leasing Issues

Federal legality also affects leasing. As we explained previously for cannabis leases:

once the landlord’s bank uncovers that it is leasing its property to a cannabis tenant (because its paid in cash one too many times or because the bank checks up on the collateral), mortgage violations abound. Why? Because this (usually) boilerplate document dictates that no waste or illegal activity take place on the collateral real property, and a cannabis tenant directly violates federal law and therefore the mortgage agreement between the landlord and its bank. This situation should be quarterbacked from the outset of the cannabis tenant and landlord relationship since it’s highly unlikely that the landlord will be able to successfully push back on the bank and will face losing the property to the bank as a result.

In other words, leasing to psilocybin tenants will be a risk for landlords, even in the event of state regulations. This usually translates to much higher rent and much more aggressive lease terms (e.g., tons of guarantees from affiliates and owners of the tenant, hyper-aggressive termination rights, and maybe even security interests).These businesses will also have problems with bank financing for real property.

9. Insurance

Companies who traffic in Schedule I controlled substances will have issues getting insurance. Everything from using title insurance to facilitate real estate transactions to obtaining ordinary insurance policies will be more of a challenge for the psychedelic industry. Today, insurance is fairly available for cannabis businesses, but this was not always the case. Expect to see many issues in the early stages of legalization and regulation.

10. Immigration

Any non-U.S. citizen who participates in the future psychedelics industry, even if it is state legal, will risk being denied entry into the United States, banned from the United States, or denied citizenship. While the Biden Administration will take less of an aggressive role on immigration policy than President Trump, risks based on violating federal law probably won’t go away. Business owners will need to seriously consider the impact of immigration laws on their proposed business model. For some posts on cannabis immigration issues, see:

Cannabis and Immigration: Marijuana Activity a Conditional Bar to Obtaining U.S. Citizenship
Bumps Ahead: The U.S. Border After Canada Cannabis Legalization

Conclusion

Once states get around to regulating psilocybin and other entheogens, it’s clear that businesses will face many hurdles. Fortunately enough, the regulatory lessons learned in the cannabis industry seem like they will all apply, at least to the extent that the federal government takes the same position it has taken for the cannabis industry, which remains to be seen. Stay tuned to the Canna Law Blog for more updates.

The post Top 10 Lessons from Cannabis for the Future Regulated Psychedelic Industry appeared first on Harris Bricken.

Original Source: harrisbricken.com

A reader writes:

I am asking for advice about how to handle my impending divorce at work. I work at a large nonprofit in a specialist capacity that is a recognized priority for the company, but organizationally belongs to one of five departments. I’ve worked here for 10 years. I was headhunted by the executive director, and have worked myself up to the specialist position I have now.

My husband of 28 years has been employed at the nonprofit for 20 years, and during the last five he has been the head of the department I am in — my boss.

The organization has many married couples on all levels. (The former executive director was married to the head of the largest and most important department.) My husband has previously given me worse conditions than others to avoid being accused of favoring me, to the point that the director had to step in.

It has not been easy, but I have done my utmost to behave professionally and keep my private life as separate from my work as humanly possible.

Now my husband/head of department has asked for a divorce suddenly and unexpectedly, as he is having an affair with a colleague. The divorce is a great shock, made worse by the fact that our daughter is critically ill and faces a long, hard recovery.

My soon-to-be ex-husband has the power to cut my funding, lay me off, give negative feedback to the director about me, badmouth me, and make my life even harder than it is.

I normally have a good rapport with the director, but should I tell him about the divorce and illness or not? I wish to remain professional and private, but without telling him about the divorce I have no way of protecting myself from the persecution that I fear from my ex-husband. On the other hand, the director might lay me off himself to avoid problems with my ex-husband. My priority is to keep my job, since finding a new one is next to impossible and I need the insurance for my daughter.

Oh no. I’m so sorry you’re going through this.

And whoa, this organization is a mess. Married people should never be allowed to manage each other, and it’s apparently common there. As you’ve seen, it’s a recipe for all kinds of problems — favoritism, the perception of favoritism, lack of objectivity, and plenty more. It generally means that the employee’s performance isn’t assessed appropriately and they’re not given adequate feedback, and it can even open up your company to charges of harassment down the road (“I wanted to end things with him, but he implied it would affect my standing at work”). Most employers rightly don’t permit this.

But that doesn’t help you now, of course. He does manage you, and your organization has apparently been fine with that (even after having to intervene over his treatment of you!).

You do need to tell the executive director about the divorce. It’s very unlikely not to affect things at work, and he’ll need to be aware of that context. You also need to tell him because you need to ask to report to a different manager. I don’t know how feasible that will be logistically, but it’s utterly untenable to work for someone who’s in the process of divorcing you (and having an affair with a colleague, no less).

I get that you’re concerned about being pushed out, but even if you don’t disclose the situation, your husband probably will! It’s unlikely that he plans to pretend you’re still together, especially once the divorce is final, and especially if he wants to go public with the new relationship at some point.

Please consider consulting a lawyer for help here, aside from the legal help with the divorce itself. Firing you at the end of your relationship with your boss would put the company on shaky legal ground, and ideally you or your lawyer should stand ready to explain to the company the legal considerations in play. (Also, please talk to your divorce lawyer about getting an agreement to keep your daughter on your husband’s insurance, which should help you feel less tied to this job.)

Last, I strongly urge you to reconsider your commitment to staying in this job, especially if they won’t move you (but even if they will). You might not be able to leave immediately, but please actively work toward it. This is not a workable situation for any of you.

You may also like:can we tell dating employees that one of them has to leave the organization?my husband’s boss/our friend is sleeping with their married department headmy coworker had an affair with a colleague’s husband, and now is treating her badly at work

my husband is my boss — and we’re getting divorced was originally published by Alison Green on Ask a Manager.

Original Source: askamanager.org

States are emptying their unemployment funds, and even the federal fund designed as a backstop is likely to run out of money

States are emptying their unemployment funds, and even the federal fund designed as a backstop is likely to run out of money

The current real unemployment rate is 20.8%, the highest since the Great Depression.

Many states’ unemployment funds aren’t robust enough to meet growing demand.

Typically states can apply for help from the Federal Unemployment Account, but even that could run out, experts warn.

“No system is designed for [this] level of unemployment,” former North Carolina budget director Lee Roberts told Business Insider.
Roberts said it was “highly likely” states would begin limiting the duration and dollar amount of payouts to prevent the coffers from running dry.

Over the last five weeks, more than 26 million Americans have filed for unemployment. That’s in addition to the 7.1 million already out of work, according to the Bureau of Labor Statistics.

The result is a real unemployment rate of 20.6%, the highest since the Great Depression.See the rest of the story at Business Insider

 

Original Source: States are emptying their unemployment funds, and even the federal fund designed as a backstop is likely to run out of money

Curated On: https://www.insurifind.com/