We sat down with Senior Attorney Matthew Primm to talk all things cannabis law
Matthew Primm is a senior attorney with the firm Viridis. He possesses a skill set and background that is of particular use to cannabis entrepreneurs. Matthew is not only able to assist in the general entity formation issues that arise for our clients, but he is also able to assist in navigating those treacherous 280E waters that our cannabis clients face under federal law. Matthew has assisted clients in acquiring licenses, entity structuring, joint ventures, various contract drafting, site acquisitions, as well as general counsel services. Matthew also handles various general litigation matters in areas related to real estate, general liability, and products liability.
Marijuana Retail Report: Your main firm, Bremer Whyte Brown & O’Meara, is not focused on cannabis. What made the firm want to focus on legal cannabis businesses as a subsidiary?
Matthew Primm: The parent firm for Viridis is a full-service law firm, Bremer Whyte Brown & O’Meara. Frankly, the cannabis department predates me, so I wouldn’t want to speculate on what the impetus for creating the department was or the what you could call the separate branding if you will. I assume that the timing and the opportunity was what probably intrigued them to go into cannabis practice initially. I think using Viridis as the vehicle or the subsidiary for the cannabis practice probably was initially set up with the intent to assure the cannabis client of the firm’s dedication to the cannabis practice, as that is the true focus for Viridis. We aren’t just a bigger firm trying to back into this space. Letting cannabis clients know that we, as a firm, are dedicated to the industry is important because the area of law is so unique, given the timing and legal dynamic, that firms that aren’t truly dedicated to the developing legal landscape could be doing their clients an ultimate disservice. We try to dedicate the practice to help our clients as much as we can given the current legal uncertainties, and to that end, I think having the ability to tap into Bremer Whyte Brown & O’Meara’s other legal experts provides our clients with tremendous additional legal resources that augments our client representation.
Marijuana Retail Report: Compliance, as you know, is one of the most difficult areas to navigate. What is the one thing most start-up cannabusinesses overlook?
Matthew Primm: Well, California is unique compared to other states. To be honest, every state is an island upon itself to an extent just because of the federal dynamic. At the same time, cannabis has been medically legal in California since ’96 and that’s not something other states can really say. It’s just been a different journey to get to where we are. Partly because of the wispy infrastructure that was already in place, that Prop 215 gray area that has really just been out in the periphery is something that has complicated the state efforts in moving forward towards legalization. You can see that in Los Angeles for instance where last year they tried to get around MCRSA, otherwise known as the Medical Cannabis Regulation and Safety Act, permitting by allowing for legal non-conforming uses with the pre-ICOs to function like permitted operations. So I’d say for California just finding cogent local permitting initiated under the MCRSA that has been implemented has been pretty difficult. And in many cities and counties, the ordinances have changed quickly, which can be maddening when you are trying to rely on a semblance of consistency when advising clients. To add even more inconsistency to intrigue, the Medical Cannabis Regulation and Safety Act has already been in large part repealed as of last June with the Medicinal and Adult-Use Cannabis Regulation and Safety Act, and we are still awaiting those regulations. So we’re definitely in somewhat of a gray area with respect to the State, which presents itself at times as somewhat of a moving target, you know, because things can change on a day to day basis, and indeed do. So I think the big challenge is making sure that the location where you are trying to operate is a place you can be long term. Ultimately I think people have to be comfortable amidst uncertainty for the time being.
Marijuana Retail Report: What is the best way for a retail cannabis business to make sure that they’re staying on top the ever-shifting landscape of regulations?
Matthew Primm: Well, you really just have to deal with the rules that are in play as you have them available. So as I mentioned, the state laws, they’re set in large part, but the regulations aren’t. Regardless, whichever local ordinance a business is operating under as far as allowable uses are going to have to fit congruently within the state construct. So the local laws are not that disparate, frankly, because they really can’t be. The state won’t license uses that go beyond the scope of state law, regardless if local cities and counties support such uses. That said, California is unique with respect to adhering to local and state law just because of the transitionary timing. In large part determining local compliance right now involves a lot of back and forth with local government and state government. Just communicating, letting them know that you’re trying to work with them, and as much information as they can give you to do just that would be appreciated. But then in other states too, like Nevada, it’s a similar dynamic in that you want to make sure that you’re operating in accordance with their laws. States like Nevada that already have their laws and regulations largely in place make it much easier to comply because the rules are established and more clear. California at this point is a slow-moving target so it’s a little more challenging.
Marijuana Retail Report: Say you’re a legally compliant marijuana retail business, and you’re following all local and state compliance and you still get raided by the police. What should you do?
Matthew Primm: If you are acting in accordance with state law and you get raided then the first thing I would suggest to clients is that they should respectfully inform law enforcement of the legal standing of their business. Any permits and licensing they have on site should be furnished to law enforcement to show their right to operate and their respective legal conformance. I would also advise clients to inquire as to the reason for the intrusion. While it may not be possible to dispel any erroneous suspicions law enforcement may have at that time, it obviously makes sense to know the totality of the situation. If the situation appears to be headed towards arrests and property confiscation then I would suggest that you advise law enforcement that you won’t be making any further statements until you have consulted with an attorney.
Marijuana Retail Report: What is the best course of action for a new cannabis entrepreneur to decide which law firm to go with?
Matthew Primm: That’s a good question. I think people just need to just do their homework. You know, there’s a lot of people that are in the green rush fray. Sometimes it can be overwhelming, and some people can be disingenuous about what services they can provide, or what their experience level is. There’s a lot that’s happening very quickly here. So I would say you’d probably just wanna do your due diligence. A frame of reference with respect to people that have worked with other attorneys is a good way to get at least an initial comfortability, at least to the extent that you believe that person that’s making the recommendation. Otherwise, simply paying attention to names you hear about on a somewhat consistent basis can be a good place to start. Ultimately, the attorney-client relationship is one that can be successful or unsuccessful simply by the dynamic of how the attorney and client communicate and work with each other. That dynamic can be difficult to ascertain absent personal interaction.
Marijuana Retail Report: Are there concerns with the current federal administration’s ideology towards medical marijuana?
Matthew Primm: I mean not just medical, I think recreational or adult use as well, yeah. I mean Jeff Sessions has not been the most avid proponent of the industry, shall we say. And so obviously when you have an Attorney General, the US Attorney General that has come out so strongly against cannabis, knowing what he can do with the federal legal dynamic is, you know, it’s definitely off-putting, if not downright scary. The federal government’s ability to enforce federal law hangs like off in the periphery of the industry like the Sword of Damocles. You have some protection via Rohrabacher-Blumenauer, but that’s only for medical. I am frankly a little surprised that he hasn’t been more proactive in enforcing federal laws. I surmise there is some reason for that. But certainly, you’d like to see something more like the Obama administration days. Where there is an understanding and kind of a, we’ll let you guys do your thing and we’re not gonna interfere as long as you don’t violate these certain priorities. But I guess the most off-putting part about Sessions is that he’s just come out with outlandish statements that don’t seem congruent with the facts. Cannabis is akin to heroin in his opinion. And that’s just, it’s just incredible that is an opinion that he holds with the information that is available, notwithstanding the lack of federal support for research. And he believes it fervently, at least from what it seems. So you don’t know what someone with that kind of disposition is capable of, I guess, and that’s one of the more unsettling things about the current administration.
Marijuana Retail Report: Do you see states ultimately as guardians that will stand up for their legally compliant businesses?
Matthew Primm: Yes. You know, I think you’ve seen, and it’s not a completely congruent parallel, but you’re seeing states come out under, well on the topic of deportation of people that aren’t here necessarily legally as well as sanctuary cities and sanctuary states. I think you’re seeing a semblance of this, you know, a state individualism and desire to stand up against what they believe to be unfair federal practices. And I think with the amount of money that the states look to actually bring in in the long term through cannabis, it also strengthens their resolve because they won’t be necessarily as dependent on the federal government as well, so I do think so. Because a lot of these politicians that are in the places that they are in these respective states, they understand that the will of the people is what has brought these laws into place. And I think there is, on a number of levels, reasons for them to want to protect the laws as they exist. At least on an intrastate level.
Marijuana Retail Report: The Gorilla Glue Co. and GG Strains LLC settled their trademark infringement case last month against the Gorilla Glue adhesive manufacturer. What is a good way for cannabis brands to protect themselves and their trademarks when considering their branding?
Matthew Primm: To avoid a similar sticky situation, right?
Marijuana Retail Report: *laughs* Yes that’s a good way to put it.
Matthew Primm: It’s an interesting dynamic with the federal government on a number of levels. I mean the fact that there are even patents for cannabinoids shows you the PTO will deal with cannabis, it’s just interesting if not inconsistent policy. But trademark protection is huge. And I think Gorilla Glue, the glue company actually just illustrated that in its fervent protection of its trademark. Ultimately, the question becomes, how do you move forward to try to protect yourself on an IP level, as a cannabis company? We actually have a trademark attorney on the Viridis team and essentially cannabis companies can enjoy trademark attention, they just may need to take a different angle towards getting as much trademark attention as the PTO will grant them. Really though, this lawsuit actually substantiates the viability of the industry because it shows that big companies that have vested interests in their intellectual property are on notice as to what the industry is up to and respect its position and momentum enough to take actions to protect their intellectual property. In doing so they are legitimizing the cannabis industry in a way. That said, I would never advise clients to attempt to infringe any intellectual property rights in the name of industry legitimacy! But it is an observation. So what I would recommend you do, is you try to find the way to trademark to the extent that you can. It’s more complicated when you’re dealing with a cannabis company for trademark protection, but look at the High Times Cannabis Cup, you know recently they’ve had some success there as well. For any companies with designs on long-term sustainability, establishing, cultivating, and protecting your respective intellectual property is crucial to your long-term business plan, so I encourage companies to seek out such IP protections.
Marijuana Retail Report: If you could give one piece of advice for marijuana retailers, what would it be?
Matthew Primm: Sure. Well, I would say just know your market. Not every market is the same. And there’s an evolution that’s happening with brand developments that is pretty amazing to watch, at least first hand because you don’t really see- we don’t get the chance to see a nascent industry with such high potentiality, no pun intended, really develop before your eyes. And being on top of what the new trends are I think will be helpful. At the same time, the average cannabis smoker, or user rather, is in their 50’s. So I think knowing your market is probably crucial there. Retail operations are also very dependent on location, unless you are solely operating as a delivery service. There’s really no way you can get around that, although depending on your locality you may be limited to certain types of zoning types so you just need to try and get the best location for retail and foot traffic under the circumstances. I think expecting a more inefficient tax treatment at retail and planning for it is probably pretty crucial too. Because a lot of people don’t understand just how impactful 280-E can be, you know, in limiting your otherwise allowable deductions and credits. And while you can’t completely mitigate it, there are some methods to minimize the repercussions of it, but in the large part, you’re paying more in tax because you’re trafficking a Schedule 1 substance and there are limited Costs of Goods Sold. So just, I guess pouching extra cash for a rainy day, knowing that you’re probably gonna have a higher tax bill would be one of my main recommendations, just because you don’t wanna get in arrears with the federal government. Additionally, it is absolutely crucial to be completely compliant with both state and local law – not only to protect your business investment but also to enjoy what limited protections the industry currently does from federal interference.
Marijuana Retail Report: Well, what’s next for both you and Viridis?
Matthew Primm: It seems like we’re expanding and doing so in a pretty, well, impressive manner that kind of parallels the industry’s trajectory. We’re really seeing an uptick in a lot of interest in the industry, because I think it’s becoming more real and safer as an investment to people that may not be as risk tolerant as other more intrepid investors or entrepreneurs. So what we’re gonna be doing is just rolling with the industry’s legal evolution and trying to make sure that we’re able to service our clients’ needs in accordance therewith, really. I’d like to see, well frankly I’d like to see us expand even further, hire more attorneys to allow us to serve what we anticipate will be an influx of new clients.