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Federal Prosecutors Launch Probe Into California Marijuana Companies

15 Feb Federal Prosecutors Launch Probe Into California Marijuana Companies

One of the reasons why it is so important for cannabis businesses to work with cannabis attorneys is because of how complex cannabis laws and regulations are, and the fact that federal and state laws regarding its sale and use are in conflict. This is highlighted by recent actions that were taken by federal prosecutors with the Eastern District of California when they launched a probe into 30 California cannabis companies, seeking documents via subpoena linked to a company called Ghost Management Group LLC, which owns another company, Weedmaps, a technology company that allows consumers to find and rate a number of other companies that sell and deliver marijuana. While the initial focus of the investigation remains unclear, included in the demand are records related to communications and payments to federal, local, and state candidates for office, elected officials, and employees.

While federal law prohibits the possession and sale of marijuana, if companies are in compliance with state laws concerning marijuana, Congress essentially blocks funding for any Justice Department prosecutions of these companies. As a result, prosecutors appear to be seeking information largely concerning whether these companies are complying with California state cannabis regulations. Two of the companies’ prosecutors specifically sought documents for include CannaCraft (manufacturer) and Terra Tech Corp./Onyx Group Holdings (retailer).

What the Subpoena Demanded

According to the latest research, although sales of regulated recreational cannabis began two years ago, approximately 70% of retail sales continue to be captured by the illegal market, which is leading to an overall drastic price reduction. The subpoena also demands any records related to several agricultural chemicals and pesticides, such as hyroxycarbouran and pyrethrins, as the U.S. Attorney of California’s Eastern District has commented on a number of illegal growing sites using banned toxins in their productions. In addition, the subpoena requests information related to a promise made by Weedmaps to no longer include and advertise for dispensaries that were operating illegally.

Employment Law Issues Still Need to be Addressed; AB 2355 Introduced

Meanwhile, California still has not addressed legal issues concerning the link between cannabis and employment issues, and cannabis use is still serving as an obstacle in terms of employment here in the state, as a number of job applicants still disqualify to get hired after failing related tests. As a result, legislators have introduced AB 2355, which would make it unlawful for employers to refuse to hire or discriminate against someone due to their use of medical cannabis. It would also grant someone the same reasonable accommodation rights to use medical cannabis while employed that other employees already have when it comes to other medications.

Contact Our California Cannabis Lawyers With Any Questions

Heerde Blum LLP has advised a number of businesses and entrepreneurs that both work in the cannabis industry and contract with cannabis businesses. If you are already operating in the industry or intend to operate here in California, our attorneys are ready to counsel you on these important legal issues. Contact our office today at (310) 620-7172 or info@heerdeblum.com to find out more.