Medical Marijuana and Health Care Providers
Table of Contents
- Well howdy everyone we've done this a couple of times when there is breaking...
- Individuals who now if they get thrown under the bus by organizations all right...
- Unrealistic position for the department to take and it got a lot of political...
- Operations since Canada has legalized recreationally the giant market has...
- You what kind of enforcement activity have you seen in this area the AG issued this...
- Care providers and inpatient providers are storing medicine for their patients...
00:00
well howdy everyone we've done this a
couple of times when there is breaking
news so rather than doing our stupid
jokes during the soundcheck we're going
to talk about some substance so it was a
big week last week actually three things
happened President Trump talked about
surprise emergency room bills new
guidance came out about a collocation of
space and the provider based settings
and that will be the topic of our whole
next webinar in June and then some
guidance came out from the Department of
Justice about the False Claims Act so
I'm going to start by just explaining
00:30
quickly what happened and then Kevin and
I are going to talk a little bit about
our take on it so there is a manual the
commercial litigation manual that the
Department of Justice uses as a
mechanism to communicate its policy
preferences to US attorneys and
assistant US attorneys who conduct
investigations so there is a section
that deals with False Claims Act cases
and they added some language in to that
basically instructing US attorneys that
01:03
in the event that an organization makes
a voluntary disclosure of a problem or
in the course of an investigation it
cooperates or it makes certain remedial
actions the government should give the
organization a break on the False Claims
Act penalties and it lists sort of ten
different activities are there are
constitute forms of cooperation there
are things like identifying the people
01:34
who were involved in the improper
conduct you know preserving and
collecting the relevant documents making
people available for meetings and
interviews and examinations disclosing
facts that you've learned to the
government and that sort of thing so
there are 10 things concrete actions you
can take and then it also discusses
remedial measures so for example if you
conduct a root cause analysis to figure
out why a problem happened and take
steps to correct it that is that's been
02:04
a route that's helpful and gets you
credit under this policy yeah I'm gonna
jump in really quick there's a link to
this document on the invite to the
webinar
correct that is an excellent point thank
you Kevin and it's actually not the it's
not the invite to the webinar it's that
we sent out an alert on Monday that has
it so a little blurred so anybody who
has RSVP'd should have access to the can
just click on that link and pull up the
policy right away I think it links to
the to the DOJ commercial litigation
policy but if you scroll down this
section I think it's a hotlink should
take you right to the point okay
02:35
very good and so so that's what the
policy is so and I guess my first
question for you Kevin is this a good
thing or is this a bad thing I think
it's a good thing I think it's a
positive development to have all this in
writing because it's going to give
lawyers who are advocating to the
Department of Justice on behalf of their
clients new and more robust arguments to
make that based on their cooperation the
government should give them a break on
the multiplier that might be applied to
any settlement amount as well as the
03:06
application of penalties well so how
does the multiplier work so typically
when you settle a case with Department
of Justice if you have damages you need
to pay back based on false claims the
department will be asking for you to not
only pay back the monies that it
believes were wrongly taken by the
organization but also to pay a
multiplier on top of that and typically
those multipliers were somewhere in the
2 to 2.5 range this document lays out
that if you cooperate with the
03:38
government and provide assistance and
investigation promptly disclosed and do
all the things we're talking about many
of the things you do normally in the
context of settlement negotiations with
the government you can get a break on
your multiplier all the way down to a
1.0 multiplier basically you're paying
back the money to the government that
they think shouldn't have been paid out
in the first place and that's where the
damages end that'd be a pretty
significant benefit to a company that
was negotiating a settlement and and I
wrote this little blurb on Monday and I
wasn't crystal clear because they also
04:07
do include in that 1.0 the lost interest
the cost of the investigation and any
money that's going to a relator in a
False Claims Act case and so it's it's I
wasn't clear about that I wasn't just
your actual damage and sort of your
actual damages plus that amount but
that's wildly different from what we've
heard before I know I was just at a
we're an organization had voluntarily
disclosed something I would normally
have just taken to the contractor
because I think that's usually the best
way to go but for unique reasons they
wanted to do it through the False Claims
Act disclosure process and we were told
04:40
the lowest the government will go is 1.5
so your damages and an extra 50% and
under this guidance would they have more
flexibility yeah absolutely I mean I I
don't think have more flexibility I
think they've always had flexibility but
I think it's easier to argue that they
have flexibility now and there's more
pressure on them to demonstrate
flexibility because of this policy and
this this is on top of other related
guidance that's come out of the
Department of Justice suggesting that US
Attorneys offices need to take a more
active role in policing False Claims Act
05:12
cases looking closely at the merit of
those cases and working with companies
as opposed to taking a hassel adverse
approach to everybody every lawsuit that
comes across their desk
I think Kevin hinting it one really
important point here this is not a
requirement right this is not a promise
you can't sue based on this document
it's policy
and so I think Kevin's point is the
government always could have gone down
into 1.0 but as a matter of policy they
were sort of holding the line at 1.5 and
this suggests that that policy has has
05:43
loosened a bit now if there are
different approaches but in litigation
you know you're often dealing with two
things there's process and there's
substance in some litigators are fans of
saying we are going to focus on the
process we will make discovery difficult
and that has not historically been my
approach and you know I'm a fan of let
the facts speak for themselves we're not
going to fight over discovery we're
going to fight over the substance and
I'm curious Kevin as to your thoughts on
06:13
that and what this guidance
you know what the implications are for
that strategy with this guidance sure
and the guidance itself makes the point
that simply complying with subpoenas and
discovery requests as and considered
cooperation by the Department of Justice
but there are ways to engage in that
back and forth that occur whenever you
get a CID or the government contacts
your client they can make the process
easier for the government to understand
what in
the production of documents is relevant
what employees might have information
06:44
making people available is one of the
things is listed in this in this
guidance as a as a factor for
encouraging reduction of penalties and
and multipliers so it's not just
providing the government with
information but helping the government
understand what happened I think is
something that occurs pretty commonly in
my experience in these kinds of cases
and that you maybe you have to take a
position that you were wrong and what
you did or the youth that you you know
07:14
submitted false claims but the posture
that at least in the beginning of the
process you're working with the
government to determine what happened I
think that's what the government is
looking for more folks to do that and
I'm a big fan of the strategy of
friendly but firm which is there's no
reason to be antagonistic or jerky that
also doesn't mean you roll over with one
big exception if you think you were
wrong I actually am kind of a fan of
rolling over that but if you think what
you did was all right I think it's good
to hold the line but you hold it in a
07:45
really respectful way and if the
government disagrees with you here this
I think creates the flexibility that
whatever is the amount you pay shrinks
so Kevin do you think is there an
organization you're out there listening
to this right now you're not in the
middle of a False Claims Act case do you
do anything differently because of this
guidance today I don't think this will
change my approach to how I analyze
responding to see ideas and working with
the government I think the way this she
will change my practice is that it gives
additional ammunition when talking to
08:17
the government but present that I'm
saying that's much for your practice but
for the clients who are right now should
they you know do you need to go out and
do something differently today because
of this guy no no I think this is just
another tool in the toolbox whenever
you're confronted with the CID and it
should spur conversations with your
lawyer if your lawyer is advocating a
specific approach with the federal
government and responds to a CID this is
definitely something that should be
discussed the potential to benefit from
this new policy now there is one other
kind of cool thing and this isn't
exactly new but there's a hint that if
08:49
you've got an effective compliance plan
that can be a factor all
so in lowering your penalties and that I
guess that is a little new generally
what I've heard from the OIG for example
is that you better have a compliance
plan and the failure to have a
compliance plan would be a factor in the
government deciding they're going to
impose a CIA on you but there hasn't
been much of a sense that in the False
Claims Act world you get a discount now
that's what I've heard in speeches I
will tell you from personal experience
that when attorneys believe that your
09:20
organization is really trying to do the
right thing I've seen vastly more
flexibility I am a big believer that
almost everyone I've ever dealt with in
the government is fair and rational and
they're exceptions but by and large
they're pretty fair and rational and if
they sense that you're trying to do the
right thing they generally don't throw
the book at you you know the exceptions
are memorable but they seem to be pretty
rare right and I think the the my tape
my big takeaway from this memo is not
09:51
just that there's new ammunition and new
opportunities to the benefit client in
the situation where you're cooperating
and providing information the Department
of Justice it's that the trend from the
day when the Yates memo issued four
years ago has been towards increased
collegiality and working with companies
that are under investigation as opposed
to taking a hard line again I mean
representing I should start in a second
but if you want to describe the aides
member real quick sure so they I mean
the Yates memo was a memo that came out
and explained that companies need to be
10:22
providing information the government the
names of individuals who might be
personally liable for False Claims Act
violations and and essentially taking a
harder line on individual liability
under the False Claims Act part of the
mitigates a memo provided that sorry my
phone is going for a nadir I mean hide
that away part of the Yates memo
suggesting that cooperation be available
in kind of a generalized sense this is
10:52
guidance it's way more specific but it
did also indicate that a company seeing
the cooperate needed to provide all
relevant facts and essentially set up an
all-or-nothing type cooperation
arrangement that has become relaxed over
time and I think that demonstrates the
not taking a softer line but taking a
more pragmatic approach to how it
handles these cases and one that more
accurately corresponds with the reality
of company's liability and behavior so I
think the bottom line there's good news
for everyone except possibly the
11:24
individuals who now if they get thrown
under the bus by organizations all right
I want to talk about Kevin briefly and
say he is reads false claims acts for a
hobby and he knows a boatload about this
medical marijuana stuff and that's all
we need to do for introductions those
introductions aren't important Kevin if
you could explain what people need to
know about medical marijuana and the
healthcare provider all right thank you
David okay so there's a lot of people
have registered for the program I think
we have pretty good attendance I'm gonna
11:54
leave time at the end of my presentation
10 to 15 minutes depending on how things
go to take questions but this topic
especially I think really benefits from
discussion during the presentation so
please as you're listening if a question
occurs to you just submit it if it's
something I'm going to talk about later
on in the presentation I may hold on it
for a few minutes otherwise I'll address
it at the time but I like these these
presentations to be conversations to the
extent possible because I think it's
12:25
it's it's more fun that way more
entertaining and folks walk away with I
haven't learned more so without further
ado medical marijuana and health care
providers I'm going to start the
presentation with a discussion of where
things stand generally with regard to
the law around medical marijuana and the
conflict between state and federal law
as you'll probably figure out through
the course of this presentation really
the the analysis of all the legal issues
12:57
that arise around medical marijuana it
all comes back to how much risk the
client is willing to to take on to to
take a specific step because of the
conflict between state and federal law
and the essential foundation point from
which all the analysis stems which is
that medical
and recreational marijuana all marijuana
is a schedule one drug under federal law
it's federally illegal according to
13:28
federal government there's no currently
accepted medical use it can't be
prescribed it has a high potential for
abuse and it's essentially similar to
drugs like LSD and heroin in terms of
its value and potential damage to the
community so we'll talk generally as we
progress here about the state of the law
federally and at the state level and
then we'll talk more specifically about
provider issues but the understanding
14:01
where things sit in terms of the
conflict between state and federal law
is important for the kinds of analyses
that providers and physicians and
medical device companies and healthcare
companies everybody who intersects with
this industry needs to that's where
everyone needs to begin because it
really informs what level of risk you're
undertaking as you think through the
issues that crop up so current federal
law again it's illegal it's scheduled
14:32
one drug manufacturers sale and
distribution of medical marijuana
violates the Controlled Substances Act
CBD which is cannabidiol
it's another chemical that can be
derived from the cannabis plant is now
federally illegal the farm bill last
year which we'll talk about in a few
minutes legalized hemp and you can
derive CBD from hemp as long as it's got
less than 0.3 percent of psychoactive
ingredients that's typically THC it can
15:02
be it can be added to hamburgers as we
just recently learned in Carl's jr. head
it's CBD hamburger promotion so
everywhere you look now these days
there's CBD lattes CBD dietary
supplements and we'll talk about a lot
more in a few minutes but marijuana
itself and cannabis remains illegal CBD
is federally legal and actually the DEA
has rescheduled
cannabidiol as a Schedule v substance
state law
15:35
California was the first state to
legalize medical marijuana this is back
in 1996
since then we've got 33 states that have
legalized that either recreationally or
medically and that includes full
legalization in 10 states basically the
entire west coast of the United States
from Alaska through California to Hawaii
is as lil recreationally then you've got
increased legalization in the West
Oregon Colorado and Nevada and now
16:07
you're starting to see it out of an East
Coast Maine Massachusetts Vermont the
trend is for increased legalization
there has not been a state so far that
has rolled back its its legalization
regime
some places have progressed in fits and
starts but as of today there's no place
in legalized medically and then
rescinded that legislation or that
ballot initiative you'll see on this on
16:38
this slide I note that Vermont is the
first state to legalize legislatively
and that's an important marker the way
that medical marijuana legalization
occurred and the expansion of medical
marijuana occurred
it began with ballot measures in places
like California Washington Michigan in
those states because it was legalized
through ballot measures there tended to
not be a very robust regulatory
framework in place when legalization
17:09
occurred and and the legislators came in
after the fact and tried to put together
a regulatory framework after a critical
mass of states had legalized through
ballot measures states began to legalize
medical marijuana legislatively during
legislatives legalization of medical
marijuana legislators were able to spend
time creating regulatory schemes that
kept the industry under pretty good
control and provided some assurance to
the federal government that things were
17:40
not going to be crazy in these states
that that there was going to be some I
think it increased the trust with the
federal government
and the trend changed from ballot
measures to the legislative legalization
and that ended up I think reinforcing
the relaxation of federal prohibition
which we'll talk about in a second now
that we've entered the legislative
legalization phase of recreational
marijuana I think we're going to see the
same kind of trend occur that as states
begin to legalize legislatively it's
18:12
going to cause even greater relaxation
of the federal prohibition because the
the recreational legalization is going
to result in more robust regulatory
schemes on that on that front so
California in legalized medical
marijuana in 1996 and States followed
and the availability began to expand
over the next 15 years 20 years to the
18:44
point where people were beginning to
enter into businesses and the the
cultivation and distribution of medical
marijuana is becoming so widespread that
the Department of Justice felt that it
had to take a position on what kind of
activity under state medical marijuana
laws was going to catch its attention
and this led to the the issuing of
what's called the Ogden memo in October
of 2009 David Ogden was a Deputy
19:14
Attorney General and this memo provided
guidance to federal prosecutors out in
the States the US Attorneys offices
around the country that were in states
where marijuana has been legalized
medically and it essentially made the
point that prosecutors should not worry
about not focus on folks who may be
violating the Controlled Substances Act
but we're doing it in the context of
their own business or just patient
activity that was in compliance with the
19:47
state's medical marijuana laws and
specifically pointed out prosecuting
caregivers or individuals were
administering medical marijuana was not
a good use of resources and it listed
off some some
commercial enterprise characteristics
that it suggested should get the
attention of the local prosecutors
including the kinds of things that you
would think would get the attention of
local federal prosecutors selling
marijuana to minors evidence of other
20:19
illegal activity connected the medical
marijuana business those kinds of things
should trigger interest by the
prosecutor and may provide a rationale
for prosecuting despite the fact that
the guidance from the department was
going forward if people are in
compliance with state law let's not go
after them so when the igan memo came
out there was wide celebration in the
medical marijuana community because they
redness as basically legalizing
federally what they were doing it's okay
to open a business now it's okay to sell
20:50
medical marijuana now it's okay to grow
plants on your property now basically
the days of marijuana prohibition were
at an end in the eyes of many in the
industry and that led to even further
expansion further legalization states
continued to legalize and businesses
continue to grow to the point where in
Washington state they had passed the law
legislature passed a law that provided
for state-level regulation of grow
operations so state employees were now
21:21
going to go out and inspect farms that
were growing marijuana make sure was
being done in a safe and appropriate way
when that law passed the US attorney in
the Eastern District of Washington took
offense to it and sent a letter to the
governor indicating to her that that he
was going to prosecute state employees
for aiding and abetting violations of
the Controlled Substances Act that they
went out inspected facilities shortly
after this letter went out and there was
21:54
blowback in Washington state a new memo
came out of the Department of Justice
that kind of retrenched the department's
positions regarding medical marijuana
and it made a couple important points
that deflated the balloon of optimism
that came out of the Ogden memo and that
was the persons who are in the business
of cultivating selling
distributing marijuana are in violation
of the Controlled Substances Act
regardless of state law essentially just
because we issued the Ogden memo doesn't
mean you can start your business now
having a farm growing medical marijuana
22:25
and perhaps even more importantly it had
a shot over the bow of banks and
financial services providers and
indicated that those who engage in
transactions involved in the proceeds of
large scale cultivation and distribution
are violating federal money laundering
statutes in other words if you're a bank
taking money taking the proceeds of
commercial activity in this industry
you're committing money laundering and
we care about that after the Cole memo
22:56
came out there was substantial blowback
to the Department of Justice because a
significant industry had built up in the
years after the issuance of the Ogden
memo to serve medical marijuana patients
around the country and there was so much
money in play at this time that the Cole
memos position and this is a another
memo from the Department of Justice from
a Deputy Attorney General James Cole
that the Cole memo was kind of an
23:29
unrealistic position for the department
to take and it got a lot of political
heat and pressure around this
restatement of its priorities basically
Google's that we've been in business
we've been doing this for years and now
you're going to come in and tell us
where we're violating the law that's not
okay and the industry has built enough
political power that it was able to push
back and another coleman was issued two
years later oh wait a min a second when
we said we were actually going to
prosecute you if you ran a commercial
grow operation nevermind
24:00
we've decided that we're not interested
in going down that road we've decided
that we're not going to consider the
size or commercial nature of a marijuana
operation when we're deciding who to
prosecute it so simply because you've
started a big business started to grow
farm that doesn't mean that we're going
to come after you so we're seeing a
pattern develop you which is there's a
step towards legalization and
liberalisation and increased access
conservative forces and government try
24:31
to roll that back by making
pronouncements about how they're going
to increase enforcement of laws lawfully
operating and state lawful businesses
that creates its own political blowback
and then the government responds with
further liberalization and legalization
which is what happened with Cole - Cole
- also listed out some federal
prosecution priorities that were similar
to those in the Ogden memo and
importantly at the same time that the
Cole memo came out Treasury developed
25:02
some guidance which issued in February
2014 that essentially enabled banks to
take these funds that were coming from
commercial grow operations and other
marijuana industry activity without
concern for regulatory enforcement since
the Treasury guidance came out in favor
of 2014 there has been an increase in
the availability of financial services
there are still significant concern in
that industry about what kind of
regulatory risks they take by accepting
25:33
money from medical marijuana
recreational marijuana businesses but
the important point I think is that
treasurer was trying to create a market
for financial services trying to calm
fears that there was going to be
regulatory action against banks that
worked with this industry and trying to
increase the availability of businesses
to access financial services which is
directly contrary to what was laid out
in the first Cole memo which is an odd
26:04
position to take for a federal agency
when the activity that it's seeking to
promote is a violation of federal
criminal laws a speech from the director
of the Treasury Department's Financial
Crimes enforcement network which handles
suspicious activity reports and
regulations around money laundering and
those kinds of activities if a speech
shortly after the treasurer guidance
came out where she confirmed that the
intended effect of the guidance was to
26:36
facilitate access to financial services
so we started out
with the Ogden memo saying all right
we've looked at this as long as you're
legal in the state with state law we're
not going to interfere with you
conservative forces forced to roll back
with the first coal memo then there was
political blowback which led to the
second Cole memo and the Treasury
guidance which encouraged the expansion
of these businesses and that's how
things stood for about four years until
27:06
we got the sessions memo in January 2018
and this memo rolled back all the
previous guidance had been provided
about marijuana the IDA memo and both
coal memos and said free baldly that
marijuana is a dangerous drug marijuana
activity is a serious crime essentially
the things that people are doing all
over the country thanks the state
legalization is a serious crime in the
eyes of the Department of Justice and
we're sending all the effect all the
guidance effective immediately and
27:37
prosecutors are going back to where they
stood before the Ogden memo came out if
they are concerned about marijuana
activity or the fact that there's a
medical marijuana grow facility that's
got 5,000 plants in their jurisdiction
that are well within their rights under
the do J's policies to prosecute those
folks we're continuing with the trend
we've seen this attempted rollback of
DOJ policy and suggesting that what
28:08
robust enforcement climate was going to
emerge from the new administration met
with its own political blowback and now
we have multiple laws that have been
proposed and either made it through
committee or at least have co-sponsors
in Congress on the house and the Senate
side all of which are meant to address
the tension that comes from this state
federal conflict so you've got clinical
trial and research legislation related
28:39
to the VA and veterans access to medical
marijuana
you've got expanded research legislation
in general because there's one facility
in Mississippi that is permitted to grow
marijuana for research purposes
that's been the the set up for four
decades there's only been one place that
you could grow it and research was
highly restricted which prevented some
of the prevented physicians and pharma
companies and other interested folks
from exploring the potential therapeutic
29:12
or health benefits of the medical
cannabis medical marijuana that's
changing there's been legislation to
reschedule marijuana so it's no longer a
Schedule one drug there's a rescheduling
legislation that proposes adding a em to
the Bureau of Alcohol Tobacco and
Firearms so become the Bureau of Alcohol
Tobacco marijuana and Firearms there's a
state safe harbor Act there's a
legislation to restore the col2 memo and
there's a bill the one that's actually
29:42
most likely to get passed and enacted in
the next several months is the safe
banking bill which has been introduced
in the house and made it through the
House Financial Services Committee it's
been introduced in the Senate but the
chair of the Senate Financial Services
Committee is from is a senator from
Idaho which has not legalized medical or
recreational marijuana and so there's
less political pressure there I think to
advance is kind of measure but
essentially the safe banking bill
provides that banks can take money loan
30:15
money without worrying about regulatory
action that one seems like it has some
potential
there's just recently about 40 State
Attorney General's and American banking
associations submitted letters to
Congress saying please pass this bill to
help pay for some of these issues with
lack of financial services in addition
to that there is the Rohrbacher bloom
and our amendment which passed in 2014
to the budget bill and prohibits
30:48
expenditure of DOJ funds enforcement
against otherwise state legal marijuana
operations and there was a case out of
California that Marin Alliance case a
woman had been the subject of a civil
injunction back in 1998 precluding her
from opening a marijuana
sorry ever again because the DOJ took a
dim view of the way she'd run her
marijuana dispensary back then with an
injunction have been in place for four
decade decades and she sought to have
31:20
the injunction dissolved after the
Rohrbacher amendment passed at the time
was the hinky Rohrabacher amendment has
changed names a few times but it's not a
word Bakker bloom on our amendment
anyway she sought to dissolve the
injunction and rather than dissolve an
injunction the judge said well this
isn't give me grounds to make this go
away entirely but as of now the DOJ is
precluded by this this budget amendment
31:50
from enforcing the injunction which
essentially had the same effect as
dissolving the injunction at least on a
temporary basis there's been another
case midpoint management this is a
bankruptcy case where the court
considered the Rohrbacher Blumenau
amendment and in the context of whether
or not the debtors activities were legal
and determined that there could be
enforcement brought by the DOJ using its
asset forfeiture fund this money is
32:22
available at DOJ to commence and
prosecute forfeiture actions that don't
rely on the congressional appropriations
and so the court said well you do and
you can still come after you for
forfeiture based on those available
funds so that's where things stand
federally state legislation that's
coming up new hampshire looks like it's
going to fully legalize some time soon
other states that have a strong
potential for legalizing in 2019 the
other states where the legislature has
32:54
approved and it's just waiting for
signature by the governor or but I've
got at least close to that point New
Jersey Connecticut Illinois New York
Delaware Rhode Island so it's kind of
the East Coast expansion of legal
recreational marijuana and then we're
going to see more of that in 2019 and in
Minnesota we have bills related to
legalizing recreational neural
that are kind of percolating in the
system at this point they're stuck in
33:25
committee or have been killed in
committee the governor supports signing
a bill and I think that we'll see
legalized recreational marijuana here
within the next year or two it just
depends on when the Senate Minnesota
Senate decides to pass a bill eccentric
through the house right now in the
meantime in Minnesota we have increased
the scope of our qualifying conditions
typically the way that state-level
legalization of medical marijuana has
been implemented is either a doctor has
33:56
to certify you as being eligible or
diagnosed with a qualifying condition in
Minnesota where we have a qualifying
condition regime so you fill out a
application to participate in the
program the doctor has a sign it that
indicated you been diagnosed with one of
the qualifying conditions under the
statute since Minnesota legalized
medical marijuana a couple years ago the
number of qualifying conditions have
increased and now it includes autism
PTSD intractable pain Alzheimer's sleep
34:29
apnea and that trend is likely to
continue as well in 2018 the farm bill
was passed which legalized hemp as I was
talking about earlier in the
presentation and that led to the
widespread availability of CBD
cannabidiol which is a cannabis derived
compound but doesn't contain any
psychoactive ingredients notably the
farm bill preserves the FDA's authority
to regulate products that contain
cannabis or cannabis derived compounds
and the second I'm going to talk about
35:00
how the regulatory scheme appears to be
enveloping this this new industry the
trend has been an exponential increase
in the business of medical marijuana and
now recreational marijuana about ten
billion dollars last year in revenue
from legal cannabis operations about two
hundred and eleven thousand people
directly employed by the cannabis
industry in the United States major
corporations are purchasing grow
35:32
operations
since Canada has legalized
recreationally the giant market has
emerged there and in these these
companies are essentially positioning
themselves through their Canadian
operations to have nationwide US
operations whenever it becomes fully
legal here which I expect will probably
happen in the next five years something
I guess pharma companies are getting
involved G double W Pharmaceuticals is
when the first approved cannabis related
36:04
drugs there are ancillary businesses
accounting businesses greenhouse
businesses egg supply businesses
chemistry and lab equipment that's
unique to the industry security for the
grow operations the whole secondary
industry servicing cannabis has emerged
and there have been expansive there's
been an increase in the number of
publicly traded cannabis related
businesses and there are now dozens of
36:36
marijuana stocks available with market
cap of 200 million dollars plus and
several with market cap of a billion
dollars plus so when you see all these
trend lines and you see how the the
cannabis industry has expanded and the
political blowback to attempting to
enforce or restrict the availability of
medical and recreational cannabis has
played itself out it's pretty clear
where things are headed but all this is
important to keep in mind when you're
37:08
assessing your risk tolerance every
entity that deals with the issues that
come out of the federal prohibition on
distribution use and manufacture of
cannabis every company that has to deal
with those issues is going to have a
different risk tolerance but these
broader trends and issues are important
to keep in mind as you proceed so let's
see here I'm going to skip ahead at a
37:40
couple slides here on the litigation and
regulatory issues that have emerged that
are just further evidence that this is
becoming ensconce
part of our economy and not our black
market economy but our everyday economy
so let's talk about healthcare the FDA
is positioning itself to be the agency
that regulates cannabis it has issued
warning letters and attempted to impose
itself in the regulation of CBD based
38:09
food and cosmetic products as well as
pharmaceuticals it approved the first
CBD based antiepileptic drug in 2018
it's referred manufacturers to its
botanical drug development guidance and
implied that that relates to cannabis
related medicines even though growing
cannabis is illegal under federal law if
it has approved three cannabis related
drugs at the dialects Marinol and
38:41
syndra's epidural X is a CBD based drug
Marinol Andros our synthetic THC based
drug so there's no approved cannabis
related drug especially derived from
from actual THC or from the other kind
of annoyed compounds that are in
cannabis but the research on on those
those compounds is ongoing and I think
it's only a matter of time before we
start to see pretty robust cannabis
related pharmaceutical industry the FDA
has stated that it creates products
39:11
containing cannabis or cannabis drive
compounds as does any other FDA related
project products essentially again it's
it's laying its takes here that staking
out a territory I should say from a
regulatory perspective that it's going
to be the agency that controls industry
ones that emerges and it's actually
holding a hearing on May 31st regarding
what its role should be in cannabis
39:41
regulation in CBD regulation I checked
the other day they're about 530 comments
and it's going to be interesting to to
follow what happens in the wake of that
that hearing but I think the way this is
playing out this is going to be similar
to the alcohol and to
industries that there's going to be some
state level regulation there's gonna be
FDA regulation and that's going to be
the agency that takes the primary role
in determining what's appropriate what's
40:12
not
CMS oddly has been basically silent on
this issue if you go to cms.gov and
search for medical marijuana or medical
cannabis you get four results they're
all kind of oblique references to
medical marijuana or will they do imply
these oblique references they do imply
that medical marijuana is something that
might be included in a surveyance or
about a patient's non dietary
supplements non-pharmaceutical you're
40:42
listing what a patient is taking for the
purposes of monitoring treatment that
you might include medical marijuana
those survey responses other than that
it said almost nothing Medicare
condition of participation is compliance
with all applicable federal laws and
that includes obviously not having
controlled substances schedule 1
controlled substances being distributed
on your property that said I have not
seen any enforcement action against a
41:11
hospital based on its the use or
administration of medical marijuana on
the site the one statement that I've
been able to track down is from an email
back in 2009 so 10 years ago where
California associate Association of
health facilities sends a letter to CMS
saying hey people are asking if they can
consume medical marijuana on-site at our
skilled nursing facilities and CMS
41:43
essentially said no federal law
prohibits a skilled nursing facility
from dispensing medical marijuana now
this was an email response to a letter
it's obviously that an official
pronouncement and again obviously people
are consuming medical marijuana at
health care facilities all over the
country every day that's something
that's occurring regularly and I haven't
seen any enforcement action yet there
are some
cific issues that are implicated by
42:15
physician involvement with medical
marijuana and medical cannabis the most
obvious and fundamental is that you put
your DEA prescribing license at risk by
administering Schedule one substance
DEA specifically prohibits you from
doing that
obviously marijuana can't be prescribed
as a Schedule one substance and the
state legal regimes for medical
marijuana sale and distribution all
involved certifying or qualifying
patients not actually prescribing it
it's not treated like a medicine so
42:47
prescribing is not really been an issue
but administering something that could
theoretically put a physician's license
at risk and again I'm not familiar with
any any enforcement action against
administration but theoretically it's
possible there was a case of a Ninth
Circuit came out of California the Ninth
Circuit cases 2002 related to license
revocation for discussing medical
43:17
marijuana this is an administration but
it was a doctor who was helping their
patients obtain marijuana and the court
held that there's a First Amendment
right for doctors to discuss medical
marijuana with their patients however it
noted that aiding and abetting and
conspired with a patient to get
marijuana could theoretically violate
the Controlled Substances Act
more recently Nevada Attorney General's
Office has opined on what involvement
43:52
doctors can have with the medical
marijuana industry and has indicated
that you could put your license at risk
at least in Nevada by becoming a
shareholder owner investor officer
employer managing member of a dispensary
or medical marijuana establishment not
sure what establishment means but I
would expect that extends to grow
operations manufacturers companies that
are creating edibles or distilling
product down
44:24
so that's another thing to be aware of
if you're a physician is that getting
financially involved within the industry
could implicate your license and then in
one of the kind of more interesting
developments the Massachusetts Board
engaged in an action versus a physician
there it is of his license eventually
got pulled but primarily because he had
been discussing and certifying patients
as eligible for medical marijuana
without really knowing anything about
their history and he was one of the
44:56
highest certain numbers of
certifications in the state for a
physician and he wasn't looking at
medical records consulting with other
caregivers and was essentially just
certifying apparently based on the
business imperative of certifying as
many people as possible but in the
course of issuing his opinion the board
also looked at whether or not he had
violated his standard of care with
regard to a specific patient who was
pregnant he had provided certification
to this this patient and the board
45:28
opinion which is really interesting and
I encourage you to look it up if you're
at all interested in this walk through a
whole series of considerations regarding
what the standard of care would be in
for a certifying physician haven't seen
this question really addressed anywhere
else and it included things like if you
don't certify the patient and they
procure the marijuana illegally is there
something about the quality of legal
versus illegal marijuana that would
increase your responsibilities and as a
45:59
standard of care require that you
prescribe if it sounds like the
patient's going to obtain the marijuana
illegally or if the patient is already
smoking what are the risks of buying
illegal marijuana should that factor
that your standard of care is a
certifying position if the patient tells
you they're going to go out and get it
anyways and that may put them at some
physical risk is that something they
should be considered should the
physician be recommending edibles as
opposed to smoked marijuana as part of
the standard of care very interesting
oh I see you have a question coming in
46:30
across the wire somebody has asked I
think it was regretted
last slide we talked about licensee of
the board violates a CSA by becoming a
shareholder owner investor officer etc
of a marijuana dispensary and tamanna AG
opinion had asked does that include
stock ownership as part of a physician's
portfolio it's a very good question and
it would seem that the AG opinion here
is suggesting more direct involvement
47:04
than simply having it as part of your
portfolio or if you have I've van guy of
Vanguard and fidelity Vanguard fund is
my fund include marijuana stocks on or
maybe it might is that enough to
implicate you I don't know it's a good
question most of these most of the
questions that come out of this bizarre
dichotomy between state and federal law
really have no good answer other than
what's the what's your risk tolerance
like and what's the chances that
something is actually going to happen to
47:35
you
what kind of enforcement activity have
you seen in this area the AG issued this
opinion in response to a physician
question it wasn't in response to
enforcement action but I haven't seen
any kind of enforcement in this area I
guess the question is what's your what's
your level of risk tolerance and how
profitable is the stock because that
might adjust your your decision making
48:03
as well alright so standard of care for
physicians in certifying medical
marijuana professional associations have
taken pretty liberal positions the AMA
supports free and unfettered exchange of
information on treatment alternatives
generally supportive of at least
discussing the potential use of medical
marijuana and I'll say in the last five
years as I've been talking about this
issue I think I have seen a growing
acceptance of the potential health
benefits of medical marijuana in the
48:36
medical community
I think that's people are still waiting
to see is it actually helping people or
is it just kind of another herbal
supplement with no real clearly defined
benefits but research is starting to
come out and suggest that
absol positively impacts I think we're
missing more more wide support from the
physicians associations the pharmacists
association supports pharmacists
involvement were permitted by state law
and the occupational health nurses and
occupational medicine practitioners
49:06
recommended policies to guide decisions
on marijuana use to be distributed to
all workers again suggesting support for
the potential that medical marijuana may
play in the patient's life so nobody's
come out and said this is a travesty
don't use it don't do it the trend has
been towards professional acceptance and
growing professional acceptance and I
have another question coming across when
49:37
across the table let's see here somebody
I think commented on my comment
indicating or asking wouldn't it be
considered an investor if you had stock
in your portfolio I think technically it
could be depending on how narrowly the
AG's office was going to define it the
question would be what's the risk of
enforcement against your licensing you
have a stock portfolio
that includes 500 stocks and you happen
to have 100 shares of Cronos which is a
grow operation is that going to lead to
you getting disciplined by your board of
medical practice and is that a different
50:12
kind of risk analysis than if you're the
third person and a three-person LLC
you're just a passive investor in the
organization the company but there's
only five or six ministers I think those
from a risk tolerance perspective would
would would suggest different analyses
here's another question we are in a tree
good thing this as tri-state area with
all three states having different laws
receiveed et cetera
there are patients need to change how
they discuss these marijuana options
with their there are physicians need to
50:44
change how they discuss these marijuana
options with their patients or how they
note the conversation and their notes so
I think you know Konan V Walters and
then just sort of the general
enforcement history around this issue
would suggest that simply talking about
marijuana what's your patience is not
going to get you into trouble
even if you're in a state where medical
marijuana is illegal if a patient came
in and said hey for the medical
marijuana is legal in California ever
51:15
heard about it did it benefit my
condition you know I've seen some
research on this issue and that and the
research suggested it does benefit your
condition that's not going to get you in
trouble at the same time having lots of
conversations with patients about
medical marijuana may get the attention
of local law enforcement or may bring
unwanted scrutiny on the clinic or the
hospital and again this is just kind of
51:46
a risk tolerance question you know are
you how upset are patients going to be
how big of a problem is it going to be
to not discuss these issues with the
patients and what's your concern that
the local board or the local law
enforcement agencies are going to look
askance if it turns out that you've been
talking about this with a significant
number of patients so I guess the answer
is possibly yes it depends on what kind
of discussions are taking place we have
52:17
another question in states with
permitting medical marijuana what should
physicians consider for a patient
requesting certification when the
patient is a student receiving federal
student loans I haven't heard any I
haven't heard anything about federal
student loans being rescinded because of
medical marijuana certification and I
think that's a decision that's really up
to the individual patient as long as
they're aware the extent to which being
52:48
registered in a medical marijuana
program may impact their ability to
continue to receive federal student
loans I don't see that it's the
physicians decision to make a decision
one way or the other might be something
to discuss and again I haven't I'm not
familiar with any patients who have had
their loans impacted by participating in
a program and to be honest I'm not sure
I know of a federal loan prohibition or
a federal loan provision that
53:17
would be impacted by participation in
the program maybe there is some
certification that you're in compliance
with all federal laws and your federal
student loan applications I can't
remember I just signed him in the money
show that when I was in law school okay
on a question the states with legal
medical marijuana or hospitals including
including this on the home medication
list this is the question that comes up
all the time I think that was the
implication of the the internal working
53:48
documents you can find on CMS's website
about that actually use the words
medical marijuana is that they
anticipate at least that these medicines
might be listed on patient surveys like
this and on hold medication lists at
this point I think the risk level of
listing it on a home medication list is
fairly low but again it's solved by your
risk tolerance especially if the the
hospital's not administering the
54:18
medication if the medication is at the
patient's home and the only involvement
the provider has had is in certifying or
qualifying a patient I think the risk is
pretty low if you listed I'm home
medication list it's just indicated that
the patient's taking it and if their
state legal I think it's highly unlikely
that there's going to be any kind of
federal enforcement action as a matter
of fact kind of below the low quantity
of medical marijuana medical cannabis
that a person possesses individually for
54:51
their own consumption is unlikely to
trigger the application of federal law
anyways have you seen any actions
against licensed physicians who are
certified for and use medical marijuana
as required under state law I have not
but that's another consideration that
obviously physicians need to I was going
to talk about that a little bit later
but that's another thing that physicians
need to consider is is their use and and
55:21
procurement of medical marijuana going
to get them crosswise with their
licensing board I haven't seen any
advisory opinions about that either that
doesn't mean they're not out there
but maybe something worth inquiring with
you're born about here in Minnesota we
have protections for both patients and
caregivers who are involved with either
consuming or distributing medical
marijuana that I think would extend to
physicians but it's a state by state an
issue I think I better get to my next
55:53
slide before that quest next question
shows up this is good though I like all
these questions this is it's fun it
makes it more fun for me and I think
probably more interesting for you all
right I think get to the next slide yet
and we are here the next question would
be seen more in the social history
patient smoked marijuana okay this is a
comment to think about where would you
list the where would you list marijuana
on the whole medication list alright so
some Hospital organizations in states
56:24
that have legal medical marijuana have
issued template policies that may be
worth investigating if you're a if
you're a provider the Washington Health
Care Association created a short
template policy that supportive abuse
and provides use in facilities and
provides the kind of requirements you
would want to impose if you're made your
patients using in your facility
including making sure they have a
documented qualifying condition making
sure that an on staff provider is
getting their marijuana for them and
56:56
storing it and administering it if they
need help with administration and that
potentially you have edibles only policy
so that you're not actually smoking
marijuana in your hospital which seems
pretty wise states like Minnesota the
only medications that are lawful to
purchase are tinctures and and we don't
have smokeable marijuana as part of our
Medical Marijuana regime other states do
have kind of grow your own medical
marijuana programs and I would expect in
57:26
those states you might want to consider
having an edibles only policy in your
facility since you probably have a
non-smoking policy with regard to
tobacco throughout the entire facility
anyways Minnesota has its own template
policies that came out of our Hospital
Association and these provide more
flexibility than the
the Washington policy presumes that your
support that you're accepting of patient
use in your facility the Minnesota
Hospital Association template policies
which are available is Google and you
57:56
can find them they offer several
different options in terms of what kind
of policy you implement depending on the
risk tolerance of your facility no use
unsupervised use or supervised use Takai
three different variations on a policy
and each of the policies address patient
access to medicine how you document
what's being the qualifications of the
patient as well as what's being consumed
where it's stored who's administering it
all these implicit different regulatory
58:28
and legal risks for a facility so if
you're storing medical marijuana for
your patients on-site that's obviously
more rescues and having them bring it
from home or having a family member
bring it having a family member
administered or the patient self
administer is obviously less risky than
having someone on staff administer it
really comes down to what's your concern
about what's your risk tolerance based
on all the things we've talked about and
unfortunately not having much guidance
from CMS about what what they see is
58:59
acceptable and what troubles them okay
we have another question any guidance on
home care providers who receive Medicaid
Medicare funding assisting clients who
have medical marijuana administration or
pretermit and that's essentially what
we're talking about right now I guess
and there isn't really there's no
guidance from CMS about that other than
the emails snippet that I just showed
you from a decade ago that said CMS is
clearly aware that that providers home
59:33
care providers and inpatient providers
are storing medicine for their patients
acquiring medicine administering
medicines that affect Minnesota's law
provides that hospitals and facilities
can have designated care givers who can
service more than one patient so our law
presumes that providers are helping
patients obtained in the administer
medicine there's really no guidance
other than I haven't seen any regulatory
action against homecare providers I
01:00:06
think the risks increase the greater
number of patients whose service and the
less structure you have in terms of
who's getting what when and how the
medication is being procured states that
have legislatively legalized medical
marijuana with more strict regulatory
requirements if you're in compliance
with those I think you're less likely to
run afoul of any of the agencies if
you're in a state where it's essentially
a grow your own program then you're
probably more likely to run afoul or at
01:00:38
least your risks are increased but again
I haven't seen any enforcement actions
against homecare providers that doesn't
mean they haven't occurred this means I
haven't seen anything yet any positions
put forward by DHS with serving with
those with disabilities the Minnesota
Board of Nursing is just getting some
more questions here sorry since it's
State Pacific specific we'll other
states guidelines be acceptable not sure
I understand that question and what are
your thoughts regarding a physician
group developing a policy for physicians
01:01:10
regarding how or if they talk about
qualified patients for medical marijuana
okay so the question from Jeri
Williamson Jeri if you can kind of
reframe your question since its state
the specific just be a little more you
and more context but what you mean by it
is state specific I might be able to
answer that question with a grander the
first question we just got any positions
put forth by Minnesota DHHS with serving
those with disabilities well the statute
01:01:42
provides that healthcare providers can
qualify as designated caregivers under
the law under Minnesota law if you can't
take your own medicine you can designate
a caregiver and that gets a separate
application is submitted to the state
and you get registered as a caregiver
with the state which allows you to
transport marijuana if you get pulled
over the Highway Patrol and you've got
marijuana medical marijuana in your car
and you're a designated caregiver
you're good to go you're legal under
state law if you're not a designated
caregiver and your drive
around medical marijuana you can have
01:02:13
possession crime issues under Minnesota
state law but the statute provides that
health care providers can have
designated caregivers that cover more
than one patient so the statute actually
contemplates and authorizes that kind of
activity with regard to the the third
question what are your thoughts
regarding a physician group developing a
policy for physicians we're going to how
and if they talk about or qualify
patients for medical marijuana it really
depends on the state that you're in some
01:02:44
states like Minnesota they have a
carve-out that says hey if you don't
want to participate in this program you
don't have to participate in this
program some states don't have that kind
of carve out which suggests maybe
there's more of a expectation that
providers and physicians are going to
operate and work in the industry and
discuss this medicine with their
patients it really depends on what your
state statute looks like I think as a
general principle it's a good idea
because I think it's a good at it look
01:03:17
at what your state medical marijuana law
says find out what your physicians are
doing and make sure that whatever is
being done is in compliance with state
law find out what people's attitudes and
perspectives are with regard to
discussing the issue with their patients
there may not be consensus there
probably will be consensus from doctors
the doctor about exactly how helpful
this is and when it's appropriate but at
least if you know what's going on in the
clinic you can make sure it's the bottom
line that you're remaining compliant
01:03:48
with state law a lot of states have
advertising regulations and preclude
specific some states don't some states
do preclude specific kinds of
advertising and it's good to know if
your physicians are violating that or
not even in their in their online BIOS
or in descriptions of the kind of
services provided at a clinic you can
run a follow those advertising
regulations so it's important to find
out what folks are doing check your
state statute and make sure you're in
01:04:19
compliance of that statute
okay so we got a clarification from mr.
Williamson says since the laws of state
specific well other state guidelines be
acceptable I think that's what this
question is getting at is if you're in
California and using medical marijuana
but you're a Minnesotan and you're using
a pursuant to your Minnesota
certification what's going to control
your use and if you're a provider what's
going to control your working with that
patient so for instance if you're a
01:04:54
Minnesota provider in California patient
comes in are you governed by Minnesota
law or California law and essentially
the short answer is the state than
you're in that's going to control so for
instance if you are California patient
you can't come to Minnesota and get
medical marijuana here in a matter of
fact federal law precludes you from
bringing your marijuana across state
lines so there is a there has been an
issue with interstate travel and folks
from one jurisdiction traveling to
another with their medicine and issues
01:05:25
with folks who are California residents
going to a michigan provider is just
hypothetically speaking and asking to
get medical marijuana you're governed by
the state that you're in but
specifically with states where you have
to be participating in a in a registered
program you're not going to be able to
participate unless you're in complied to
state law so that was kind of a
convoluted answer to that question but
if you have a follow up based on what I
just said go ahead and submit it and
01:05:55
I'll see if I can help clarify another
question are we seeing any changes in
malpractice coverage for states that
have legalized American medical
marijuana I haven't haven't seen any but
that doesn't mean again that there
aren't any all these issues they change
every day and they're unique from
jurisdiction to jurisdiction I will say
generally speaking the insurance
industry has been pretty cautious in
terms of ensuring medical marijuana
businesses and operations there have
01:06:28
been circumstances where insurers have
sought to avoid coverage based on the
fact that marijuana is still a federally
prohibited
dunces Schedule one substance and been
ordered to provide coverage
despite the federal prohibition so this
is another area of the law that's
confused and kind of developing over
time with regard to malpractice coverage
specifically I don't know the answer to
that question but it's a good one maybe
that can be the subject of my follow-on
01:07:00
presentation all right so we are almost
at a time I just want to talk very
briefly about cannabis and employment
this is another issue that comes up a
lot with our health care clients is what
do I do if somebody comes in is applying
for a job who's participating in a
medical marijuana program or somebody
who's working at our hospital and
decides that they want to participate in
a medical marijuana program because they
qualify the laws around terminating
people for admitting that they are
01:07:34
participating in a marijuana program it
really kind of varies from state to
state just like every other aspect of
this issue some states offer explicit
protection for medical cannabis medical
marijuana patients some do not some
states have allowed woful termination
for for employees who have been taking
marijuana this coates case is kind of a
seminal case on a Colorado one of the
01:08:06
earlier employment cases on this issue
was not it wasn't a health care provider
dishnetwork but they permitted the
termination of somebody who was who was
taking medical marijuana this is prior
to recreational realization there the
trend is towards protecting medical
cannabis patients there are some unique
factors obviously there arise in the
healthcare industry specifically safety
01:08:34
if your cardiac surgeon is medical
marijuana patient how you going to know
if they're under the influence when they
come into work if their performance is
going to be compromised
what kind of malpractice risk liability
risk
to undertake by employing somebody like
that federal grant compliance there's a
drug-free workplace Act hasn't really
been enforced against employers but it
provides that contractors and grantees
have to make a good-faith effort to
01:09:07
maintain a drug-free workplace courts
have looked at whether or not the
drug-free workplace act alone
allows an employer to get out from
underneath the requirement to continue
employing somebody or accommodate
somebody who's a medical marijuana
patient it's been kind of mixed some of
these cases like the Smith case it's
said yes the drug-free workplace Act
gives you a rationale a reason to
terminate someone others have not most
recently there in the case out of the
01:09:39
District of Connecticut Federal District
of Connecticut and the Saginaw case that
case provided that the drug-free
workplace Act did not give you cover
that was just a few months ago so the
law continues to evolve in this area but
the general trend is even in the states
where there's no explicit protection of
the law to protect people and require
accommodations people who are taking
medical cannabis for medical marijuana
01:10:10
so we are now several minutes over our
allotted time
I'm happy to take another couple
questions as we as we close out I'll
stick around for a few more minutes the
bottom line is that things are
progressing in a way that's headed
towards full recreational legalization
over time there have been consistent
efforts to reschedule anything you're
going to succeed eventually there's
01:10:44
efforts to discourage prosecution of
people operating in compliance with
state law there's increased access Crees
States with no legalization exponential
expansion of business all these
pressures are going to force it
regulatory reevaluation of where things
stand with regard to medical marijuana
and I think it's going to be something
that's going to be positive because we
provide more guidance to two folks and
also going to remove some of the fear of
01:11:16
getting crosswise with the federal
prohibition so thank you for
participating in the in the webinar and
I look forward to speaking to you again
soon if you have any questions or
interesting the materials that I talked
about in the presentation feel free to
give me a call or shoot me No