Cannabidiol (CBD) is all the rage right now. Touted as a medical cannabinoid analgesic, muscle-relaxer, anti-inflammatory, anxiolytic, and miracle tonic that’ll make you feel better but won’t get you high, people who’ve never used cannabis before are eagerly embracing CBD.
Economists say sales of CBD in the United States could be $16 billion by 2025. Cannabis with more than 0.3% THC remains federally illegal but various states and the federal government recently carved out an exception that makes CBD legal. The CBD loophole has created a gold rush CBD industry, with hundreds of CBD companies and products vying for consumer attention and a place in legal cannabis dispensaries, health stores, and online stores. CBD is marketed as a medicine for humans and other animals, with several companies offering CBD pet medication.
The federal Food and Drug Administration (F.D.A.) is involved in “approving” CBD and many other medicinal products. Unfortunately, the agency has a long history of bias against cannabis and other holistic medicines–it favors pharmaceuticals. Former FDA Commissioner Scott Gottlieb recently claimed CBD isn’t a medical compound and says it should be strictly regulated.
“I don’t think that CBD is doing anything medically approximating what people are purporting is its magic quality,” said, Gottlieb, who resigned his FDA post in early 2019. “It’s a real safety issue. There are risks of accumulated effects. It’s not a completely benign compound. The idea that you can put it in dog food and it’s going to calm your dog as you go away to work during the day, or help them get through a lightning storm, I think that’s pretty hokey. There’s certainly no science to support that.”
During recent FDA hearings regarding cannabis, we heard further evidence of an ominous anti-CBD backlash. For example, Michelle Peace, a forensic science professor at Virginia Commonwealth University said this: “We have seen a rash of reports nationwide from people being poisoned from taking CBD products.”
Treating the Marijuana Industry Like the Opioid Industry
Attorneys who’ve successful sued the opioid industry recently held an anti-marijuana attorney teleseminar called “Litigating Against the Marijuana Industry.” And they’re recruiting “marijuana industry victims” as plaintiffs in an effort to create lawsuits against the entire cannabis industry and against individual manufacturers and sellers of CBD and other cannabis-derived products.
David Evans, a lawyer for Cannabis Industry Victims Educating Litigators, told people at an FDA hearing he has hundreds of cases pending against the opioid industry. “If our dreams come true, we’ll have the same thing going against the marijuana industry in a year or two,” Evans said.
According to Evans and allied attorneys who describe themselves as “marijuana experts,” the cannabis industry is ripe for lawsuits because cannabis is allegedly harmful and people who profit from it are guilty of negligence, product defect liability, organized crime, violations of federal law and other wrongs that can be litigated for damages in civil court. These anti-marijuana attorneys are quite bold in their accusations…
“Basically, like a spoiled child, the marijuana industry has gotten away with murder over the last couple of decades,” Evans told the recent well-attended teleseminar of attorneys eager to sue the cannabis industry. “Very few people have been telling them no. Very few people have been trying to regulate them. In California, marijuana contamination is very widespread. The marijuana industry has made outrageous false claims. Their products are dangerous. And they are eventually going to be sued just like right now a lot of lawsuits against opiate companies and in the past the tobacco companies were brought about because of the reckless conduct of those industries.”
Evans says the cannabis industry takes a risk selling any cannabis product because none are approved by FDA. This means cannabis product manufacturers and sellers can’t use FDA formal product approval as a shield against product harm lawsuits like pharmaceutical companies can. Evans sees a pot of gold for lawyers suing the pot industry.
“Who are the victims of the marijuana industry? Well, let’s take all the victims of the alcohol industry, all the victims of the tobacco industry, and combine it. And you’ve got the victims of the marijuana industry, except we can expand on it. We have children with birth defects, accident victims, crime victims, employers, environmental damage, mental illness. There was recently a study that came out showing that the marijuana states have far higher rates of mental illness. The American Psychiatric Association says marijuana use causes mental illness. Property owners, trademark infringement. You know, you may have seen advertisements for a type of marijuana called Girl Scout Cookies. Well, they infringed on the trademark of the Girl Scouts,” Evans said.
Evans and other anti-marijuana attorneys espouse classic reefer madness propaganda in their rush to demonize cannabis and the cannabis industry. They claim that…
- Cannabis is more harmful than alcohol.
- Cannabis is addictive.
- Cannabis creates mental illness.
- Cannabis harms pregnant women, fetuses, and children.
- Cannabis growers harm the environment.
- The cannabis industry is federally illegal and is much easier to sue because of that.
- Cannabis is contaminated with poisons, molds and other negatives that harm people.
- Cannabis products aren’t properly/comprehensively labeled, especially when it comes to warning consumers about potential harms.
- Marijuana causes stillbirths and premature births.
- Cannabis causes cancer.
- Cannabis products are poorly made, lacking adequate quality control protocols.
- Cannabis industry personnel could be sued under the federal Racketeering Influence and Corrupt Organizations (RICO) Act.
- Budtenders and others who serve cannabis or advise people what kinds of cannabis to buy can be sued for third-party liability the same as bartenders can be.
- Cannabis causes road accidents and other injurious conditions.
- Cannabis marketing is targeted to lure children and teenagers.
- Cannabis sellers are drug dealer, and can be sued and/or prosecuted under “drug dealer liability” laws.
- Marijuana grow ops harm people and the environment.
- Some state regulators who support and implement marijuana legalization are “bought off” by the marijuana industry.
Although most of these allegations are a misleading blend of truth and fiction, and some of them are outright lies, some anti-marijuana attorneys apparently believe the cannabis industry is ripe for big-money lawsuits similar to those launched against the alcohol, tobacco, and pharmaceutical industries.
Jonathan Miller, a lawyer who represents a coalition of dozens of American “hemp” companies, told an FDA panel CBD is safe, but acknowledged that as with any industry, some companies and individuals may act unethically. He asked the FDA to be the agency that polices the cannabis industry.
“Our enemy is not the FDA,” Miller said. “Our enemies are CBD companies that make false claims or sell products that are bad.”
Alcohol & Pharmaceutical Industry Efforts Against Cannabis
The cannabis industry has many other enemies seeking to reverse the rising tide of legalization. These include CALM: Citizens Against Legalizing Marijuana; SAM: Smart Approaches to Marijuana; Partnership for Drug-Free Kids; Police Unions; Save Our Society from Drugs; Drug Free America Foundation; The White House Office of National Drug Control Policy; DEA: Drug Enforcement Administration; Parents Opposed to Pot; American Society of Addiction Medicine, and the Community Anti-Drug Coalition of America.
These organizations want federal prohibition to take precedence over state marijuana legalization, and for state legalization to be overturned by courts and federal law enforcement. A recent opinion article in the prestigious New York Times claimed that cannabis harms brain function and development until the user is 25 years or older. The article’s authors recommended making cannabis illegal for anyone under 25 years of age.
Most of these pot-hating organizations are non-profits with a traditional reefer madness cultural bias. But industries that compete with the marijuana industry also have a financial and political interest in keeping marijuana illegal, or in co-opting its newfound popularity.
Big Pharma realizes consumers are increasingly turning to cannabis instead of pharmaceuticals and that cannabinoids are powerful medical compounds. So the pharmaceutical lobby’s tactic is to claim that whole cannabis and whole cannabis extracts aren’t good medicine, but synthetic cannabinoids made by Big Pharma is good medicine.
Big Pharma has big money that buys big political influence. For example, the FDA recently approved a liquid synthetic THC drug called Syndros, which is marketed by Insys Therapeutics. Insys is infamous for producing a reportedly defective, dangerous opioid spray, and for its covert involvement in successfully blocking voter approval of a recreational cannabis legalization law on Arizona’s 2016 ballot. Insys gave $500,000 to Arizonians for Sensible Drug Policy, the main group lobbying against the proposed law. Insys furthers its financial interests by blocking cannabis legalization competition…so it can better sell its pharmaceutical version of THC.
As you’d expect, the alcohol industry is very much against marijuana, and very worried about it. According to an industry group (International Wine and Spirits Research), beverage alcohol sales are expected to drop as cannabis acceptance and consumption grows, particularly among beer and spirits drinkers. The report notes that ten American states have now approved adult recreational usage of cannabis products and 34 states have approved cannabis for medicinal purposes. All but two of the remaining states allow for CBD products.
“Our research shows that up to 40% of adults 21 and over consume cannabis in states where it’s legal. Cannabis presents substantial opportunities across consumer industries, including new occasions that alcohol cannot and will not play,” said Jessica Lukas, vice president of an analytics firm that contributed to the cannabis versus alcohol research. “Consumers will continue to look to cannabis products over alcohol for occasions when they are feeling creative, need to get motivated, or seeking health, medical or wellness benefits.”
Below, I’m including a slightly edited version of the entire transcript from the recent teleseminar conference held by the Litigating Against the Marijuana Industry Group. It’s a long and interesting transcript–you always want to know what your opponents are thinking and doing. You’ll see just how much potential liability you have of being sued if you’re in the cannabis industry, and how eager these profit-motivated attorneys are to sink their teeth into our industry. My advice is to always consult a competent attorney before you sell any cannabis products, especially if you’re making medical claims for the products. Now here’s the transcript:
“Litigating Against the Marijuana Industry” Teleseminar Transcript
About the Presenters:
David G. Evans, Esq. is admitted to practice law in New Jersey. He has many years of experience as a plaintiff’s personal injury and employment law litigator. He is the author of several law books that deal in whole or in part with substance abuse issues. His books currently in print are: Employee Medical leave, Benefits, and Disabilities laws and Drug Testing Law, Technology, and Practice Both books are published by Thomson-Reuters and are available on Westlaw. His website is: http://www.addictionslaw.com
Brian Barnes is a partner at Cooper & Kirk and has litigated cases at all levels of the federal courts on a range of matters, including financial regulation, takings, and constitutional law. He also successfully represented the plaintiffs in the first suits to be brought on behalf of property owners against state-licensed marijuana businesses under the Racketeer Influenced and Corrupt Organizations Act (“RICO”).
Rochelle [moderator]: Good afternoon. And welcome to today’s presentation, “Litigating against the Marijuana Industry.” The information presented by the expert is not to be used as legal advice and does not indicate a working relationship with the expert. All materials obtained from this presentation are merely for educational purposes and should not be used in a court of law sans the expert’s consent, i.e., a business relationship where she or he is hired for your particular case.
In today’s webinar, Mr. Evans and Mr. Barnes will discuss marijuana industry victims, damage reports, federal law, product liability, medical malpractice, environmental lawsuits, RICO, server liability, Drug Dealer Liability Act. To give you a little background about our presenters, David Evans, Esq., is admitted to practice law in New Jersey. He has many years of experience as a plaintiff’s personal injury and employment law litigator. He is the author of several law books that deal in whole or in part with substance abuse issues. His books currently in print are, “Employee Medical Leave, Benefits, and Disabilities Laws,” and “Drug Testing Law, Technology and Practice.” Both books are published by Thomson Reuters. They are available on Westlaw.
Brian Barnes is a partner at Cooper & Kirk and has litigated cases at all levels of the federal courts on a range of matters, including financial regulation, takings, and constitutional law. He also successfully represents the plaintiffs in the first suits to be brought on behalf of the property owners again state-licensed marijuana businesses under the Racketeer Influenced and Corrupt Organizations Act.
Dave: Good afternoon. I’m Dave Evans. And I am the general counsel for the Cannabis Industry Victims Education Litigators. We are a new project that is aimed at helping litigators to know how to litigate against the marijuana industry. We will be issuing a press release pretty soon. And we have a library of materials that will be available to plaintiffs’ attorneys. The marijuana industry is defined as those who engage in the manufacture or production, cultivation, processing, refinement, transportation, delivery, distribution, dispensing, testing, use, sale, marketing, and exchange of marijuana or marijuana-derived materials or related equipment.
These are the wide range of people that may be subject to litigation. They’re very vulnerable in a lot of areas. The biggest one right now is product liability. Basically, like a spoiled child, the marijuana industry has gotten away with murder over the last couple of decades. Very few people have been telling them, “No.” Very few people have been trying to regulate them. In California, marijuana contamination is very wide-spread. The marijuana industry has made outrageous false claims. Their products are dangerous. And they are eventually going to be sued just like right now, a lot of lawsuits against the opiate companies and in the past the tobacco companies were brought about because of the reckless conduct of those industries.
Medical malpractice. There are a number of states that allow marijuana as medicine. It’s not been approved by the FDA. There’s lack of science showing it’s safe and effective. Basically, it’s a lot of marijuana industry hype. And a lot of people are being damaged by it. In the environment, we see wide use of pesticides, water pollution. Particularly in California, they estimate there’s about 50,000 illegal grow sites in California using, in the majority of them, illegal pesticides, carbofuran, for example. So there are going to be environmental lawsuits and RICO lawsuits about that.
Server liability. Well, you know, the marijuana industry wants to be put on the same level as the alcohol industry. Well, that’s fine. Then they have to be as responsible as the alcohol industry. When you serve somebody who is visibly intoxicated… And by the way, when you use pot, you get intoxicated, not like alcohol where you can have a glass of wine and not become intoxicated. The purpose of using pot is to become intoxicated.
So if you serve somebody who is intoxicated either as a private party at your house or in a marijuana dispensary, you could be liable just like you can be liable for serving alcohol. There’s also the Drug Dealer Liability Act. And that is the law in several states that makes drug dealers liable for the damage caused by the drugs that they’re selling. And then there’s RICO. And Brian is going to be talking about that. That involves damage to property.
Now, who are the victims of the marijuana industry? Well, let’s take all the victims of the alcohol industry, all the victims of the tobacco industry, and combine it. And you’ve got the victims of the marijuana industry, except we can expand on it. We have children with birth defects, accident victims, crime victims, employers, environmental damage, mental illness. There was recently a study that came out showing that the marijuana states have far higher rates of mental illness. The American Psychiatric Association says that marijuana use causes mental illness. Property owners, trademark infringement. You know, you may have seen advertisements for a type of marijuana called Girl Scout Cookies. Well, they infringed on the trademark of the Girl Scouts.
And also people who work in the marijuana industry are victims because they’re being exposed to pesticides and first responders. I was a first responder for many years. And in New Jersey, if you maintain a dangerous location and you call a first responder to your home and the first responder is damaged, you can be sued. And first responders are sometimes called to marijuana grow operations because sometimes they set on fire because the butane explodes. And they may be able to sue the people running that grow site.
Now, the marijuana industry tells you that marijuana is safe. It’s not a problem. That is a complete and utter misrepresentation. Virtually everybody that has the capacity as an objective scientific national world-wide organization has weighed in on marijuana and says, “It’s bad stuff.” The World Health Organization, they have a classification for cannabis addiction. They claim it’s addictive. The marijuana industry says it’s not. They’ve also said it’s not very good as a medicine. And the American Psychiatric Association says it’s linked with mental illness. The National Institute on Drug Abuse says it’s linked with addiction, mental health problems, suicide, pregnancy problems. The National Academy of Sciences, mental health and physical problems, public safety, and leads to opiate addiction.
The FDA has issued warning letters to cannabis companies because of their outrageous claims. The FDA says, “Marijuana is not a medicine.” The DEA went into an extensive explanation of this in their Petition for Rescheduling back in 2016. Health and Human Services Substance and Mental Health Services Administration also says it’s bad stuff. The American College of Obstetricians and Gynecologists. Pregnant women and men who are trying to get women pregnant should not use marijuana. It causes birth defects and low birth weight. Dr. Reese did a study in Colorado. He estimates that since Colorado legalized marijuana for medical purposes and recreational, there has been in excess of 20,000 babies both with birth defects as a result of that. All that’s going to result in litigation. Pediatricians agree that it damages the child. And the U.S. Surgeon General also has weighed in on a report saying it causes mental, physical damage and public safety damages.
Now, I want to deal with marijuana and addiction. The marijuana industry says, “It’s not addictive.” Well, the National Institute on Drug Abuse says that 30% of those who use marijuana may develop a degree of marijuana use disorder and especially if it’s in young people. The study suggests that 9% of people who use marijuana will become dependent on it rising to about 17% in those who use it as teens. The Diagnostics and Statistical Manual of the American Psychiatric Association recognizes cannabis abuse and cannabis dependence as a disorder, as an addiction. They are the folks that decide what are diagnostic criteria for the psychiatric profession? There’s also the International Classification of Diseases. They have a whole list of categories for cannabis-related disorders.
The big problem we have today is the high levels of THC, which is the addictive psychoactive element of marijuana. Back when I smoked pot in college back in the ’60s, marijuana was maybe 2 or 3%. I got plenty high on that. Marijuana now can be up to 99% THC. They have actually crystallized… It looks like crystal meth, THC. This is a lot more likely to cause addiction. By the way, those studies that show that marijuana is damaging were all done largely on low-potency marijuana. The high-potency marijuanas can be even worse.
And we can see how the average THC and CBD levels. Now, CBD is the non-intoxicating cannabinoid in marijuana. We’ll talk about that later, but you can see how they’ve been rising since 1960. It’s going up very, very high. It’s a very different drug. It’s actually a new drug, compared to what it was before. And the marijuana industry has no problem advertising this high THC, despite what the damaging consequences are going to be to people. These are ads advertising 94%, 95% THC. The THC is now in marijuana concentrates. What they do basically is extract oils from the marijuana plant, put in these concentrates. These can be used for dabbing. Dabbing is where you put a small amount of concentrate, which is very potent, in a vaporizer and inhale it that way. And this is also what’s used in food. So this is not the marijuana that people were familiar with in the 1960’s.
And marijuana is in foods now and foods that are very attractive to kids. We’ve got Gummi Bears here. There’s soft drinks, all kinds of candy, lollipops, you know, marijuana-infused gum drops, all very attractive to kids. Does the marijuana industry advertise to children? Well, I don’t know. I mean, here’s two ads from Santa. They have Santa Claus on them. Whether you think that applies to kids or just immature adults, I don’t know, but this advertisement is my favorite. This is a scantily-clad young woman. And maybe she’s a girl, I don’t know, advertising marijuana back-to-school specials. Now, I ask you to consider if this was a whiskey advertisement or a tobacco advertisement, don’t you think people would be pretty outraged to have a young girl advertising whiskey? And the name of this company is Mile High. They use cartoons. This is Alfred E. Neuman from “Mad Magazine.” Again, this is attractive either to children or immature adults. Either way, not a good thing.
Now, let’s talk a little bit about federal law. Marijuana is illegal under the Federal Food and Drug and Cosmetic Act, which, again, makes the marijuana producers behind the eight ball to begin with because they’re doing something that’s illegal. Under federal law, everybody in the marijuana industry is, per se, a criminal. And in many cases, they act that way. The studies that have been done in marijuana in California… California has had legalized marijuana, medical marijuana, for 20 years. Study after study after study has shown that the overwhelming majority of marijuana that’s being sold to people as medicine is contaminated with pesticides and high levels of pesticides. It goes anywhere from 80 to 92%. One study recently did testing at 20 dispensaries. Every single one of them had contaminants.
California’s not been saying no to these people. California has not tried to regulate these people. It’s done tremendous damage. And there are thousands and thousands of pregnant women that have been using this high-potency marijuana. So it’s illegal under federal law. So if you go into federal court as a plaintiff’s attorney, you’re a step ahead. The FDA says that it’s not good medicine. They’ve issued warning letters. It is not a states’ rights issue. It’s a complete misrepresentation of the law. The U.S. Supreme Court has ruled on this in the case of Gonzales versus Raich. They said, “It is not a state rights issues under the 10th Amendment,” which is the amendment that reserves power to the states.
An opinion in another case on this issue was written by Justice Gorsuch who was just appointed to the U.S. Supreme Court. So it is not a states’ rights issue. The reason for this is that marijuana is a product that’s in interstate commerce. And the federal government has a right to regulate something in interstate commerce. Marijuana is also a Schedule I drug under federal law. It cannot be prescribed for any medical purpose because it’s inherently dangerous and not a good medicine. This was revisited again by the Drug Enforcement Administration in 2016 during President Obama’s administration. They held that it should be a Schedule I drug because it’s inherently dangerous and not a medicine. This has been upheld in federal court. There has been a law that has been passed recently allowing CBD, which has been declared not to be marijuana now, because it comes from hemp and it doesn’t contain THC.
There are two FDA-approved artificial THC medicines that have been around for years. So if somebody wants to use a cannabinoid, it’s there. It always was there. You don’t need to be smoking or eating pot. And now, there’s a new CBD medicine called Epidiolex, which is aimed at children that have seizures. So there’s no excuse for not using a prescription medication. Now you’ve got two THC meds and you’ve got a CBD medicine. And the reason why this is a good idea is because these medicines have had to through a very rigorous medicine approval process. So you know that they’re pure. They’re not going to be contaminated. We know how they interact with the body. We know how they interact with other medicines. I take the position that if you’re using marijuana as a medicine, if you’re a doctor or recommending it to people, you’re committing malpractice because it violates the Federal Food and Drug Law.
You have a right to discuss marijuana with somebody. You have a First Amendment right to discuss it, but you have no right as a physician to take any action to help somebody acquire marijuana. So if a doctor writes a recommendation, refers somebody to a place where they can get the marijuana, and they are helping that person to obtain marijuana, they are aiding and abetting under federal law and can be prosecuted or if you have a civil lawsuit against the doctor, you can bring that up. “Doctor, did you do anything to help this person, aid and abet, to get marijuana?” if they answer yes, then they’ve got a big problem.
Now, product liability. Any product that is defective or inherently dangerous or is contaminated exposes the manufacturer or the grower, in this case, to liability. When you put something on the market, there is an implied warranty that it is safe and it is effective for what you’re marketing it for. You can be sued for defective or inherently dangerous product or for negligence because you failed to test the product. Obviously, that’s what’s been going on in California. Nobody’s been testing the pot that they’re selling to people. And by the way, even in states that are “regulated” like Colorado and Massachusetts and some of these other places, there are many examples of contaminated products being sold. Even though they “regulated” by the state, the states are doing a terrible job of regulating marijuana. They are influenced by the marijuana industry. They’ve been bought off. The state of Colorado is outrageous in what they’re doing. They have a warning, warning pregnant women that it is very mild. It really doesn’t say anything. And they’re just allowing this to happen or giving poor instructions, not, you know… And there’s also the issue of failing to warn. You’ve got a product that it absolutely causes damage to fetuses. And people aren’t being warned about that. It can damage your mental health. Operating machinery. You should not operate machinery when you’re using marijuana. Are there warnings for that? It may cross-react to other medicines. There are now documented examples of prescription medicines that you should not be using in conjunction with marijuana because it will cause you damage.
And then warning about addiction and warning about cancer. And yes, marijuana is, of course, a cause of cancer. The state of California has declared marijuana smoke to be a carcinogen under their Proposition 65, a known carcinogen. You also need to warn people about marijuana use and mental illness, depression, suicide. Now, there is what’s called the Learned Intermediary Doctrine. And the duty to warn in many states only applies from the manufacturer to the doctor. If the manufacturer properly warns the doctor and then the doctor fails to warn the patient, the manufacturer can’t be sued. The doctor though can be sued.
Birth defects I think is the most outrageous example of product liability. Marijuana causes still births, premature births. It decreases the quality of breast milk. It causes negative neurodevelopment. It causes hyperactivity in kids, learning defects, frontal lobe damage, future addiction, decreased motor development, and so forth. And so any lawyer who has a client that has experienced birth defects, the first question out of your mouth should be, “Did you or your husband use marijuana before or during the pregnancy,” because there’s now very, very clear evidence that it causes damage to children.
There’s also the issue of the labeling in product. Was your product properly labeled? And the only real adequate labeling is if it’s done by the FDA. They’ve got 17 things that have to be in a product label. I won’t go through all of them right now, but you have to give the dosage, dosage forms, contraindications, and warnings, adverse reactions, drug interactions, overdose, clinical pharmacology, clinical studies, and so forth. All of this is not being done for marijuana. And it’s very, very negligent on the part of state governments to do this.
Breach of warranty. Again, if you sell a product, it’s got to be what you say it is. There are outrageous false claims, misrepresentations, about marijuana. There’s a lot of fraud. The claims for CBD are ridiculous. The FDA has looked at this. They’ve issued warning letters. People have claimed that CBD can either cure or treat cancer, pancreatic cancer, traumatic brain injury, depression, Alzheimer’s, diabetes, leukemia, Parkinson’s disease, stroke, autism, concussions, and so forth, colitis, liver inflammation. There’s a whole list that the FDA has looked at and said, “This is bologna. You’re making false claims for CBD. And stop doing it.”
Also, over-promotion, telling people that the product is safe and recommending it for certain illnesses. They just did a study in Colorado of marijuana dispensaries. The overwhelming majority of them were recommending marijuana to pregnant women. They had a woman call them who said that she was pregnant. And I think 70% of them recommended marijuana for her. Absolutely outrageous. And by the way, these are the budtenders. These are not doctors. These are the little people that are manning the booth, manning the counter, making medical recommendations to pregnant women over the telephone. Seventy percent of the dispensaries in Colorado, which is supposedly a regulated state. So this is why we need federal regulation of this. The marijuana industry engagers can also be sued for civil conspiracy, wrongful death, crashes, violence, suicide, all of which are caused by marijuana.
Now, medical malpractice. Is it malpractice to recommend treatments not approved by the FDA? Not necessarily, but you’ve got to have very clear convincing proof that this thing is a medicine. And the DA outlined those criteria in their Rescheduling Petition response. Marijuana does not meet that criteria. So if it’s not approved by the FDA, if it doesn’t meet the DA criteria for what a medicine is, it’s malpractice to give it to anybody. Botanical marijuana, which is what’s being sold, as opposed to synthetic THC, possess many problems for medical care providers. For example, the marijuana lots that are grown are not homogeneous. So how do you know what you’re getting? THC varies.
There’s contamination. There’s no dosage consistency. It depends on growing techniques. There’s no consistent test process. By the way, the state of Colorado on their marijuana website admits this, that there is no generally recognized testing process for marijuana. That’s on their website. Good Lord. I can’t imagine what a plaintiff’s attorney would make of that. So with the botanical marijuana, you never really know what you’re getting. It’s like Forrest Gump and it’s a box of chocolates. You never really know what you’re getting, but yet, the state of Colorado sells it and allows it to be sold as a medicine.
There’s also third-party endangerment. If a doctor gives something to somebody and it gets them stoned and doesn’t warn them about operating machinery and that person goes out and kills somebody in their car, the doctor can be sued. And then I’ve talked also about pregnant women. And then the other issue with this is informed consent because we really don’t have good quality information about marijuana as a medicine. We can’t give proper informed consent.
So there’s also the aggravation of a pre-existing condition. For example, if you have mental illness and you use marijuana recommended by a doctor and you commit suicide, the doctor can be sued. There’s also future harm, that if it turns out that you’re being given marijuana that may cause you harm in the future, you can sue the doctor. You can sue hospitals or healthcare facilities that provide marijuana. There are a number of examples of medical malpractice in treatment with marijuana. I talked about the pregnancy issues and about 70% of the dispensaries in Colorado.
And then there’s the loss of a chance doctrine, which is the thing that bothers me the most. I’m a cancer survivor. I’ve had two types of cancer. And when I got my first type of cancer, I searched the medical literature for treatments that would be effective for me. Now, had I believed the marijuana industry and used marijuana, I would have lost the chance to get well. I probably would have died. And this is happening all over the country. People are using marijuana because they’ve been sold a bill of goods by the marijuana industry. For example, our poor veterans that have post-traumatic stress disorder are being told that marijuana’s helpful to them.
Science says no, that it actually can damage people who have post-traumatic stress disorder. In fact, the Department of Health in I think it was New York recommended against it. The Veterans Administration does not recommend it, but these poor veterans are being manipulated by the marijuana industry because they know that veterans have political clout. And so people are, you know, wanting to help veterans, but the veterans, by using marijuana, who are not getting proper help are losing an opportunity for a chance to get well. And we have very little information about marijuana as a medicine. And people really are not getting informed consent.
Now, there’s other causes of action here. Oops, pardon me. Breach of contract. There was a case in Colorado where the court held that since marijuana is illegal under federal law, that any contract within the marijuana industry was illegal and was preempted by federal law, that you could sue somebody for breach of contract because if you buy a marijuana product that damages you or it’s not what they claim, it breaches your contract. You gave them money. You exchanged money for that item. There’s also strict liability. In many cases, marijuana is an inherently dangerous product. And therefore, a person that gives it to you can be held under strict liability and which means that a higher standard of liability than just the negligent standard.
There may be statutory or regulatory liability also where there’s a law that says that you’re liable, if you give this to anybody. That certainly would be the case with Proposition 65 in California where a private citizen can start a lawsuit against somebody that contaminates the environment with a carcinogen. And there, it’s an example of statutory liability. Unjust enrichment. Again, similar to contract theory that you’re making money unjustly. Nuisance would apply in the environmental issue. And then res ipsa loquitur means that the thing speaks for itself, very similar to strict liability, that the thing is so inherently damaging and so obvious that it damages you that you don’t need to do a lot of proof.
And then punitive damages. If the management of a marijuana company knew the marijuana was dangerous and they did not do something about it and sold the product anyway, they’re liable for punitive damages, which in some cases, can be double or triple damages. This is something that I believe was brought against the tobacco companies.
Now, environmental. People often don’t think of marijuana in the environment, but in California, they estimate there’s 50,000 illegal grow sites. Sixty percent of the marijuana that’s grown in California, legal or illegal, is shipped out of state. So if you’re buying pot in Kansas or New Jersey or New York, chances are you’re buying pot from California. And chances are, and high chances are, that it’s grossly contaminated, either with pesticides such as carbofuran, which has been banned in the United States because it’s so dangerous, or it has heavy metals. By the way, the cannabis plant is used to clean up toxic wet sites because the plant absorbs toxins and heavy metals from the ground. I’m not kidding you, okay? So when you grow pot, you’re sucking heavy metals out of the ground which are then put into the lungs and stomachs of the consumers.
Also, fungus. There was a case of fungus on medical marijuana in California that killed a guy. That was at least the news report. Water use. Marijuana uses a lot of water. And these marijuana grow operation is usually upstream. And they take water out of the stream, which then downstream is less water for the fish and other aquatic animals and causes problems. They also use a lot of electricity, which uses up resources. Water contamination. There’s a lot of wildlife deaths. You recall the spotted owl in California that the environmentalists were so concerned about the spotted owls being killed by the lumber industry there, that they impinged on the lumber industry? Well, guess who’s dying now? The spotted owl. And they’re dying because of the marijuana contamination. There’s also mammals that are being killed, dogs.
Law enforcement that goes into these grow sites are also being damaged by some of these pesticides that are so powerful. In California, you have the private right of action called Proposition 65. If you want to get documentation on this, there’s a great website, which I have on the slide, silentpoison.com that documents all of these issues. And it documents it very, very well. The people that put that together have done a great service.
Now, there’s also server liability. And the marijuana issue wants to be treated like the alcohol industry. Okay. Well, here’s their chance, okay? You can be liable for serving marijuana either as a store or as a social host. In New Jersey, for example, we have a social host law. If you give alcohol to somebody who is visibly intoxicated, you’re liable, if they can in an accident. This is particularly the situation with these edibles because the edibles are made from concentrated marijuana. They’re very high in THC. It also takes longer for you to feel the effect of marijuana. So you might be given a brownie. And the instructions might say, “Only eat a quarter of this brownie,” because it’s so concentrated. So you eat the brownie. You wait. Nothing happens. You wait half an hour or 45 minutes. Nothing happens.
You eat more of the brownie. You wind up getting extreme intoxication. You may wind up in the ER because you think you’re going crazy or having a heart attack. And the company may be liable for all of that and if they don’t give proper warnings. And social hosts. This is another ripe area for litigation. I remember reading “The Oprah Magazine.” And they had an article called “Is Marijuana the New Merlot?” In other words, it’s hip and sophisticated to be serving marijuana just like it’s hip and sophisticated to be serving merlot wine. So you give marijuana, a very potent marijuana, to your social host guests or children get access to it in your home, either as edibles or as smoked marijuana, you’re liable.
Now, there’s also the Drug Dealer Liability Act. Several states have passed this law. And basically, this is a strict liability law against anybody that sells marijuana illegally. Now, it’s debatable about whether those states that have legalized marijuana get to use this law, but most of the states that have passed this law have not legalized recreational marijuana. So it will have some use. All right. The burden of proof for the Drug Dealer Liability Act is very low. You only have to show that the defendant, the marijuana seller, distributed illegal drugs, marijuana, in the community, that it was the same type of marijuana that was used by the user, and it was done at the same time. And you don’t even have to prove that the user used your specific illegal drug, only that you were selling it at the time in the person’s community. And you can be found liable. And there have been lawsuits with drugs other than marijuana that have generated millions of dollars in awards.
A typical Drug Dealer Liability Act, plaintiffs are guardians of drug babies or parents, those injured by drunk drivers. And in Colorado, the incidence of drunk driving fatalities due to marijuana have doubled. And that’s what’s going on all over the country is all the rates are increasing. Anybody that pays for the treatment of one of the users could sue. State and county agencies that pay for the damage could sue. Insurers and crime victims all could sue. And when you get an award, you can go after the dealer’s assets, income, and future inheritance or other income are subject to payments to the plaintiff. In my opinion, those of you that are not in recreational marijuana states should be advocating to get this law passed in your state. Certainly, plaintiff’s attorneys should be advocating to get these laws passed. The dram shop and social host laws are where an individual social host or an employer, you know, at a holiday party, if they were serving marijuana, can be liable for their injuries.
Now, other possible litigation areas are endangering marijuana industry workers by failing to provide workplaces free of contamination, pesticides, heavy metals, and fungus. This has been an issue, for example, in Massachusetts. Again, the state is supposedly regulated. There is going to be lawsuits by governments to recover damages. There are now over 600 special lawsuits in litigation right now by state and local governments on opiates. If you look at those lawsuit complaints, you take the word opiate out and you put marijuana in, you’ve got a perfect match. Everything that they’re accusing the opiate companies of doing, the marijuana companies have been doing. It’s uncanny that we have not caught on.
You know, everybody is aware of what the opiate companies did. They’re just not seeing it with marijuana. They will, once these lawsuits get going, but they are following the playbook of the opiate and tobacco industries. And they’ve been successful because they’ve got so much money. There is also going to be class action lawsuits, for example, with pregnancy. Those are coming. Also, another one is a writ of mandamus. This is where you can sue your state government for not implementing a law properly. It’s to compel the government to do its duty. It’s possible to do this against the federal government also. And those are some other things that you could think about. Okay, now I’m going to stop talking and turn the session over to Brian Barnes, who will be talking about RICO, a very effective tool. And then I’ll get back on again to talk about some final issues. Brian?
Brian: Well, thanks very much, Dave. Just a word about myself. So I was a law clerk to Justice Alito back in the 2012 term. And not long after finishing that clerkship, I developed this theory that marijuana businesses, even though they are licensed under state law and, you know, permitted to operate under state law, nevertheless could be sued for federal racketeering under RICO. And in the short time that I have to speak with you all, the big takeaway that I hope you’ll take from this is that if you are running a business that is involved in the marijuana industry, then you are engaged in what the federal racketeering statute defines as racketeering activity.
And I’m not going to run through all of the elements that you have to prove to demonstrate a violation of RICO. It’s a long list of things. And if you just look at the list, on its face it can seem intimidating, but the upshot of all of the different elements of a successful RICO claim is that running a business that’s devoted to racketeering activity is a violation of RICO. And the term racketeering activity is a term of art. It’s defined in the federal statute and it includes violating the federal drug laws. And so those two points mean that essentially, any marijuana business across the country, whether it’s in compliance with state law or not, is susceptible to prosecution under RICO.
Now, of course, everybody knows that people who are running marijuana businesses are violating federal law. That’s nothing new, but the critical thing about RICO that makes it different from just a mere violation of the federal drug laws by itself is that RICO includes a civil cause of action. In RICO, Congress expressly provided for plaintiffs who were “injured in their business or property” to allow those kinds of plaintiffs to bring civil RICO lawsuits. And the idea behind civil RICO is basically to turn the victims of those who engage in racketeering activity into what the Supreme Court has termed private prosecutors. And one of the ways that Congress incentivized people to bring these kinds of lawsuits is by providing for extraordinary remedies.
And so if you bring a civil RICO lawsuit and win, you’re entitled not just to your damages, but you’re entitled to three times your damages plus your attorneys’ fees. And that really changes the economics of bringing a case like this because the important point is that if I, as a plaintiff’s attorney, can prove even $1,000 of damages in a RICO lawsuit, then I’m entitled to recover all of my attorneys’ fees, even if those fees are completely disproportionate to the damages that the plaintiff has suffered. And so that really changes the economics of bringing these cases. And I think in the coming years, you’re going to see more and civil RICO lawsuits brought against the marijuana industry.
Another important thing to note about civil RICO is that it extends liability, not just to the people at the core of the marijuana business, the people who are physically growing the marijuana and selling it, but to anyone who conspires with them, anyone who knowingly takes action in furtherance of the efforts of the marijuana business to cultivate and sell marijuana in violation of federal law. And that’s tremendously significant because it means that these civil RICO lawsuits are potentially winners not just against the marijuana businesses themselves, but against banks, insurance companies, accountants, other service industry type entities that might have deep pockets when a marijuana business itself wouldn’t.
And another important thing to note about this type of civil RICO co-conspirator liability is that the Supreme Court in a case called Salinas against the United States recognized that the Pinkerton Doctrine extends to civil RICO. And what that means is that if you are a bank and you knowingly conspire to further the efforts of a business that violates the federal drug laws, you’re on the hook, not just for your piece of whatever damages are caused, but you’re jointly and severally liable for any and all damages caused by that conspiracy. And so, again, you’re talking this feature of civil RICO makes it possible to fine the deep pockets and potentially recover your attorneys’ fees and whatever damages you can prove to the business or property that’s suffered an injury as a result of the marijuana businesses racketeering activity.
So now, I’m going to talk briefly about the three cases that I’ve been involved in involving civil RICO’s lawsuits against state legal marijuana businesses. So the first case I’ll mention is New Vision Hotels against Medical Marijuana of the Rockies. The plaintiff in this case was a Holiday Inn franchisee that basically an important part of their business model was bringing in high school ski teams during kind of the shoulder season. This is a Holiday Inn franchisee that owns a building up in the Breckenridge area in Colorado. And in 2015, it became public that a marijuana retail store was about to open across the parking lot from the hotel.
And unbeknownst to the hotel, without the hotel reaching out to any of their customers and alerting them to this, somehow a bunch of their customers found out that this was going to happen. And they started to get messages from these high school ski teams saying, “Look, we really like your hotel. We’ve been there, you know, multiple years. We wish we could come back, but given the opening of the marijuana facility next to your hotel, we just can’t return.” So the hotel was faced with the potential for very substantial business losses as a result of the opening of this marijuana facility. We got involved. We filed a RICO lawsuit in federal court. Within a few months, the investors in the marijuana business backed out.
The business ultimately did not open, but before the case was dismissed, we settled with the accountant and the insurance company that had underwritten a surety bond for this marijuana business. And we recovered $70,000 in settlement money for the client. In the wake of the lawsuit, when this became public that the surety bond company that had underwritten this surety bond basically guaranteeing that the marijuana business would be good for its tax liability at the end of the year, when that became public, insurance companies stopped underwriting marijuana surety bonds. And at the time, it was a requirement of Colorado law that you get a surety bond to basically assure the state that you would pay your taxes before you could get a marijuana business license. And the Colorado Legislature actually had to repeal that provision of state law because it was no longer possible for marijuana businesses to get surety bonds. And I think that underscores the real threat that these RICO lawsuits posed to not just the marijuana businesses themselves, but also businesses and people who are at the periphery.
The next case I’ll mention, Safe Streets Alliance against Hickenlooper. This is a case where we represent the owners of a piece of property that’s immediately adjacent to a marijuana cultivation facility. The cultivation facility, as is commonly the case with marijuana cultivation facilities, it emits a very pungent marijuana odor. The odor sort of comes and goes, but it’s there more often than it’s not. And it interferes with the plaintiff’s enjoyment of their property. We filed a lawsuit in 2015. You can see there a photograph of the facility. And there are all of these air conditioning units along the side of the facility that are basically pointed at my client’s property and just belching out this foul marijuana odor onto their property.
So we filed the suit in 2015. As was the case with the New Vision Hotels case, initially the Federal District Court dismissed our lawsuit basically saying that we hadn’t proven a cognizable injury to business or property within the meaning of RICO. And that is, as a footnote, that’s something I should mention is that it’s important in these RICO cases that you prove an injury to business or property, so a physical injury, a personal injury isn’t going to be cognizable. You’ve got to prove injury to business or property. As I said, the trial court initially dismissed our case. We appealed up to the 10th Circuit. And the 10th Circuit reversed, basically saying that we could win our lawsuit, if we proved that the odor emitted by this facility interferes with the plaintiff’s use and enjoyment of their land, that the odor diminishes the market value of the property, or that just the stigma associated with owning property next to a marijuana facility diminishes the value of the plaintiff’s property.
Another important feature, a very important feature, of the 10th Circuit’s opinion is that it walks through systematically the elements of a civil RICO claim and explains element by element how virtually every marijuana business in the country is susceptible to a civil RICO lawsuit. The only thing that’s challenging in these lawsuits is proving injury. Everything else basically is very, very straight-forward because the federal statute is just so clear. Dealing in marijuana is racketeering activity. You run a business that deals in marijuana, you’re violating RICO. The Safe Streets case is now back on remand before the district court. And basically, all that’s left in the case is for us to prove that we actually have suffered the injury to property that we allege. We’ve got a pending motion for summary judgment on that issue. I am optimistic that the trial court is going to rule in our favor on that and we won’t need to have a trial, but if a trial is ultimately necessary, it’s scheduled to happen at the end of October of this year.
And then finally, the last case I’ll mention is Crimson Galeria Limited against Healthy Farms, Inc. That’s a case that we filed not long after prevailing in the 10th Circuit in the Safe Streets case. This is a case up in Massachusetts. One notable thing about this case, that the plaintiffs in this one are basically suing on a stigma theory. They own some high-end real estate in sort of downtown Cambridge, Massachusetts not far from Harvard. And basically, there’s a retail marijuana shop that recently opened next to the plaintiff’s property. And what they’re alleging is diminished property value as a result of the stigma from being next to a facility like that. And there are potentially very substantial damages in this case.
So before filing a lawsuit, we had a real estate appraiser assess the effect of having this facility open next to the plaintiff’s property. And he found that there would be $26 million in diminished market value. And so for purposes of RICO where we’re entitled to treble damages, you’re looking at tripling that number and then adding attorneys’ fees. That would be what we would recover. So that’s another case just to watch. And then the final thing I’ll mention is that in the wake of our victory in the Safe Streets case in the 10th Circuit, there have been a number of other RICO lawsuits filed primarily in the state of Oregon by other attorneys. And so I think what you’re going to see in the coming years is a trend towards more of these lawsuits being filed against the marijuana industry. So with that, I’ll turn it back to Dave.
Dave: Brian, that’s great. And so I think this RICO has a lot of potential value for people because there’s a real incentive for lawyers to take these cases. Okay. How would the marijuana industry defend itself? What are some things that they are going to claim? Well, first of all, they’re going to claim the assumption of risk. And that means that, “Hey, we warned you about the product. We told you it might damage your fetus. You used it anyway. We’re not liable.” The might also claim wrongful conduct on the part of the plaintiff. This has been used with the opiate cases where the opiate companies or doctors said, “You know, you were a heroin junkie. You used my prescription improperly. You know, you didn’t do what you were supposed to do. You went doctor shopping,” things like that.
There’s also a legal theory called pari delicto, which basically looks at who is more liable. Who was the worst actor between the defendant and the plaintiff? The case of Tug Valley Pharmacy versus All Plaintiffs Below is a West Virginia Supreme Court case that goes into great detail in arguing why wrongful conduct may not be used against the plaintiff, especially in the issue of addiction. So I recommend that case to you. They may claim that addiction to marijuana is wrongful conduct. That was something that came up in the Tug Valley case. They’re going to claim comparative negligence, that the user used the marijuana negligently and that was the cause of the damages, an intervening cause or abuse of the product. They used marijuana in the wrong way. You used too much of the marijuana. You exceeded the marijuana recommendation. There may be some other type of contributory negligence. These are all possible defenses.
They might also raise the issue of you have a hypersensitivity to marijuana. That’s what caused you problems. You’re not a normal person. And therefore, we’re not liable. There may be a superseding act of negligence by the medical care provider or others. They could argue that marijuana is unsafe, but because it was so valuable and had proper safety warnings, we’re not liable. Now, this applies to certain medications that are dangerous to use, but the risk is not outweighed by the potential benefit. There may be statutory limitations such as the statute of limitations. You have to bring a lawsuit within a certain time.
Many a number of marijuana victims who particularly have had children that have died as a result of marijuana sometimes wait too long to bring a lawsuit. And they approach me. And it’s three, four years later. And it’s too late. Federal preemption in some cases would apply particularly with a medicine where FDA rules may preempt the case. And the manufacturer of the marijuana may make some argument based on that. They may also make an argument based on state law that the use of marijuana in their state was the state of the art, the state of the medical arts, at the time.
Now, in investigating this, any lawyer that’s done a lot of litigation knows you should spend a lot of time on the front end of this case before you file a lawsuit really, really vetting your client, finding out what was going on. So if you’ve got a marijuana case, spend a lot of time with how they use marijuana, how they were exposed. If it’s an environmental case, how is that happening? What happened regarding any side effects or damage? Did they report it to their doctor at the time? Was it investigated? Did they keep any records of it? Did they engage in any wrongful conduct? You also should interview their medical care provider, if they will consent to it, to see if the medical care provider was given proper warnings about marijuana. Whether you go to state or federal court is an issue that depends on the facts of the case. For federal court, I would argue that this is a violation of federal law. And there are a lot of federal laws on your side, the federal court might be the place to go.
But federal court is not favorable in discovery towards plaintiffs. So you might want to keep it in state court. Now, obtaining discovery, these are getting facts and documents. You certainly want to look at the plaintiff’s medical records, the manufacturer’s records. If they’re in a regulated state, there may be records that they have had to keep. Any state government records, for example, in Colorado, there are many, many situations where they’ve recalled marijuana products. You want to get those and see if the defendant was one of those. You want to look at their promotion and marketing information. What did management know and didn’t know? They might be subject to punitive damages.You want to look at their quality control, how they processed the marijuana, any government witnesses, and any laboratory reports that were done on the marijuana products.
Now we have time for some questions.
Rochelle: Our first question is, “I’m confused about the new Governor of New Jersey. What is the state of marijuana law in New Jersey?”
Dave: Well, marijuana was legalized for medical purposes under Governor Corzine, who was two governors ago. And it took quite a while to expand it to five dispensaries. The new Governor is in favor of legalizing, commercializing, marijuana. So far, he’s not had much luck. He’s a Democrat. The Democrats are opposing it because they’ve been very well educated, particularly the black caucus. The African-American legislatures are very much opposed to this because they know that this is going to be visibly in their neighborhoods. So it’s just medical marijuana. The Governor’s trying to legalize marijuana though by expanding medical marijuana. He picked a Commissioner of Health who is a physician, but is not being very responsible about this.
Rochelle: Next question. Do you see any RICO liability for companies that manufacture CBD from hemp?
Brian: Yeah, but potentially, I guess that gets to a question about whether manufacturing CBD violates the federal drug laws. And I think that’s a little bit in limbo at the moment or at least that’s a specific topic I haven’t followed all that closely, but the bottom line is if you’re violating the federal drug laws and you’re running a business devoted to violating the federal drug laws, any injury to property that you cause as a result of operating your business is potentially the basis for a RICO lawsuit.
Dave: Yeah. Now, if I can just chime in on that, the federal government has defined CBD that was derived from hemp, in other words, no THC, as not being marijuana. They have now changed their mind… I mean, as being marijuana. They’ve now changed their mind. And they’re saying that CBD is derived from hemp where there’s no THC does not violate the Controlled Substances Act, but it may violate other federal laws. For example, if it’s sold as a medicine, it violates the Federal Food and Drug Act, unless it’s gone through the FDA drug approval process.
If you will hold something out as a medicine, you’re subject to regulation by the Food and Drug Administration. So I think there’s some risk there. The FDA looked at a bunch of CBD manufacturers. The majority of them, the statements they made about their products were not accurate. And they either had THC in them or they didn’t have the CBD that they claimed. So I think any manufacturer of any marijuana-related product that doesn’t do it according to the FDA standards is at risk.
Rochelle: Next question. This question is about Minnesota. Recently, there is at least one person who has been criminally charged, murder, manslaughter, for supplying the opiates that caused the death of a user. Are you aware of any similar instances where there has been a criminal charge lodged against a marijuana supplier?
Brian: I don’t know because generally, criminal charges are not reported on the national legal research system, unless it gets to court and the court issues an opinion. So it’s very possible that they have occurred. I’m not aware of it. So it’s very possible there might be many of them that have been filed, but it’s not subject to, you know, finding out on Westlaw of Lexis.
Rochelle: Next question. Are there any significant differences you can see between the alcohol and marijuana industries in terms of litigation?
Brian: I can weigh in on one very significant difference just very quickly is that dealing in alcohol doesn’t violate the federal drug laws and dealing in marijuana does. And dealing in marijuana, because you’re violating federal drug laws, you’re susceptible to a civil RICO lawsuit.
Dave: That’s correct. And the other different between alcohol and marijuana in terms of liability is that you can drink alcohol and not become intoxicated. If you smoke pot or use pot, you’re going to become intoxicated. So marijuana is really in a different category from alcohol. It is a hallucinogen. Alcohol is a depressant. So marijuana has a greater effect on your brain. Certainly, if you mix alcohol and tobacco together, you’re a very unsafe driver. And so you really can’t equivocate the two because marijuana is a different type of drug. And marijuana also can cause mental illness, sometimes the first time or very brief use, which is not the case with alcohol.
Usually, you don’t get Korsakoff syndrome or mental illness with alcohol, unless you’ve used it for a long period of time. And alcohol may or may not have as much damage to the fetus as marijuana does. So I think there’s a lot of differences between the two, but I think that where the marijuana industry has made a mistake is trying to say, “Marijuana’s the same as alcohol,” because they think it’s going to give a favorable impression in the public mind, but it also exposes them to all the liabilities that the alcohol companies are liable to, plus more.
Rochelle: And our last question due to time is, “If an attorney gives advice to a marijuana business, can they be held liable?”
Dave: Well, that’s a matter of the state attorney ethics law. And in my opinion, if the state attorney ethics law says that attorneys are not allowed to advise people to violate the law, then the attorney could be liable for that because they’re advising the client to engage in illegal activity. They could also be brought up on ethics charges. You know, I’m an attorney. I’ve done criminal defense for many years. I’m not allowed to tell clients how to commit crimes. If I get caught doing that, I’ll get disbarred. And that’s basically what these attorneys are doing. They’re advising people on how to violate federal law. And I think they could be brought up on ethics charges or sued for malpractice.
Brian: And very quickly, with respect to civil RICO, irrespective of what state ethics rules say, potentially somebody who advises a marijuana business, not in litigation, but on basically how to set up the business and how to operate it, could be sued under civil RICO under kind of the same theory that we used to go after the accountant in the New Vision Hotels case. We made a conscious decision not to sue the lawyer associated with that business in New Vision Hotels just because of the kind of complexities that are sometimes presented when somebody sues a lawyer, but that is a potential type of exposure that marijuana lawyers face.
Dave: Right. One thing about the marijuana industry, for many years it was kind of these small companies and mom and pop stores. And they couldn’t bank. They couldn’t get insurance and so forth. California is now setting up I think an insurance company for the marijuana businesses there. And they’re passing some kind of a law I think about banking. You know, attorneys, when we’re looking to sue somebody, look for deep pockets. And if we are suing a little old mom and pop marijuana operation, they may not have a deep pocket, but they might, if they’re getting insurance in California, but their lawyer or their accountant probably has malpractice insurance. And I know I’ve got a lot of malpractice insurance. And, you know, that’s where a deep pocket could be. You could get their lawyers, their accountants, their financial advisers, people like that, that typically carry liability insurance.
As you can see from the transcript, these attorneys are clever, and highly motivated to sue the cannabis industry. If you’re selling any kind of cannabis product, take heed!