Marijuana and Agriculture’s New Legal Frontier


Growers Find Following the Law Tricky Even Where Legalization Efforts Succeeded



As the legalization of marijuana slowly spreads, one state at a time, so do the laws that govern its production, creating a new area of practice for attorneys who understand the complexities.

“It’s such a highly regulated industry,” says Lindsey J. Weidenbach, an attorney with the law firm of Jeffers, Danielson, Sonn & Aylward inWenatchee, WA“I think it’s overwhelming for clients sometimes and that’s why they turn to attorneys because there is a lot of paperwork.”

Growers must confront legal questions right from the beginning, even as they are deciding whether to grow their plants indoors or outdoors.

“In Washington state, if you are growing marijuana outdoors instead of in a greenhouse, you have to put an 8-foot privacy fence around it,” says Weidenbach, who includes agriculture law among her areas of focus.

“There are security issues, but I also think the state of Washington probably doesn’t want young people to see it.”

Marijuana’s status as an emerging legal frontier is one reason Weidenbach became interested in this branch of law and commerce. “How often do a new industry and a new area of law pop up?”she asks.


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Washington is just one of a handful of states, along with the District of Columbia, where recreational marijuana is legal. The others are Colorado, Oregon and most recently Alaska, which is still working on its rules and regulations. The movement continues with mixed results. In Ohio, voters just shot down a legalization effort.


Because each state makes its own laws, there is no uniformity. For example, in Colorado someone can both grow marijuana and own a retail store that sells it. In Washington, you can’t do both so you have to choose, Weidenbach says.

Banking is another issue that perplexes marijuana growers. Because marijuana remains illegal at the federal level, banks have been reluctant to allow growers to open accounts.  
“Often, it ends up becoming an all-cash business because of the lack of banking options,” Weidenbach says. “In Washington, there are just two credit unions that allow marijuana growers to open bank accounts.”

Marijuana growers also face other issues that aren’t a concern for the rest of the agriculture world, such as: 

  • Lack of Tax Breaks
    As far as the Internal Revenue Service is concerned, marijuana is still a controlled substance and not a legitimate business expense for federal income taxes. So, for example, startup costs that might provide a deduction for another business don’t apply. That might make sense with federal taxes, but even in Washington where it is legal, marijuana growers don’t get the tax breaks that family farms and other agriculture operations do, Weidenbach says. “The state of Washington does not treat marijuana as an agriculture product,” she says. “It’s excluded from the tax benefits that others get, which is interesting, because it absolutely is an agriculture product.”
     
  • Growing It at Home
    Colorado, Oregon and the District of Columbia all allow individuals to grow a limited amount of marijuana for personal use. That’s not the case in Washington state, where only those who possess a state-issued license can grow marijuana for recreational use. (Medical marijuana patients are allowed to grow up to 15 plants.) The window to apply for a license has closed and no more are being issued, Weidenbach says, which means anyone who wants to become a grower would need to buy an existing license from someone already in the business.
     
  • Worries About the Feds
    “There’s always the underlying fear that the feds could come in and shut you down, regardless of what your state laws say,” Weidenbach says. Such fears were allayed somewhat, she says, by a Department of Justice memorandum in 2013 that essentially said federal law enforcement would take a hands-off approach as long as state laws are followed and public policy issues, such as keeping marijuana out of the hands of minors and not crossing state lines, are upheld. But it’s a nonbinding letter. What’s more, there’s always the possibility that after the 2016 presidential election a new administration could take a different view, Weidenbach says.

She says it’s likely the day will come when legalization reaches the federal level, but that might not happen until a majority of states have joined the movement.

“Once the trickle effect is too strong for the IRS and Congress to ignore, we will see some change,” Weidenbach says. “But it’s going to take a while.”


Lindsey J. Weidenbach is an associate attorney with the Wenatchee law firm of Jeffers, Danielson, Sonn & Aylward, P.S.

AdminCannabis, Business, Agriculture