DO THEY STAND A CHANCE?

No one to speak
Upon there behalf
Now tell me do they stand a chance? 
Where there's, more food
Than mouths to feed
Where you find those who
Claim to lead
Because of all their personal greed
They always want more than they need
They don't help those
Below the half
Instead they stand aside and laugh
As if it's all we'll ever ask
When will they make a change?
-Damian Marley

As we are currently celebrating the 5% unemployment rate, which is an achievement, there are lots of real economic issues that exist that people are simply ignoring because they are inconvenient truths.

When I was in Colorado last month, I discovered that Denver was booming due to the new cannabis economy.  Real estate, jobs, deal making, sales are all up. However, there is a very real part of the economy that is not feeling the "trickle on" effect.  Those are the homeless, the shelterless,and  many former military veterans. They all go without because so many others go on with more than the could possibly ever need.

I stayed at one of the nicer homes in the Denver area during my stay, and the comparison to the conditions of  the homeless living on the streets is in stark contrast to the notion that the U.S. is a first world country.  And it might be, but the U.S. has a "third world" living among and with us.  

As President Ronald Reagan used to say, it is a recession when your neighbor losses his job, but when you lose your job it is then a depression.  In the dark of night I did not take the time to individually speak with these people I was walking past.  Mind you, I wasn't scared or afraid, I just didn't know what to say or even how to offer help to so many that appeared foresaken and broken.  I was truly stunned to see such a sight again, as I had witnessed similar homelessness in NY during the mid 1990s.

So this growing "third world" population, and ignored group, will continues to seek refuge, will continues to seek shelter, will continue  top seek medical and psychiatric care, will continue to seek financial assistance, will plead there case to the government for reform and will just unfortunately continue, until they just can't any longer.

The homeless have no lobbyist.  They have no PAC.  They have no Super Pac. They have no voice to speak on their behalf. The homeless have no true voice in the political system - besides the occasional emotional charged scorn heaped on them from being lazy, shiftless or criminal.  Ghandi had stated that "The measure of a civilization is how it treats its weakest members."  

But for the grace of Jah, there goes I&I.  Do the homeless and poor stand a chance?  Do we as U.S. Citizens measure up to the ideals that our country was found upon?  Something to think about on this Veteran's Day.  Jah Bless our Military before, during and AFTER the battles are fought.

Please feel free to reach out to me at Gainsburg@bellsouth.net if you have any other legal issue involving the cannabis industry.  I am here to serve the cannabis and securities communities.

Lakeland marijuana tracking system maker sues Ft. Lauderdale rival over publicity materials, putdowns

A Lakeland company behind Colorado’s tracking system for marijuana plants has accused a competitor of deceptive business practices.

Lawyers for Franwell say BioTrackTHC, based in Ft. Lauderdale, lies in publicity material and lies about Franwell in the media and communications to state regulators.

The purpose, according to documents filed by Franwell in federal court May 11, is to interfere with the Lakeland company’s $1.5 million Colorado contract and to sway officials to choose BioTrack for a competitive contract in Jamaica.

The tussle reveals growing competition in America’s blooming marijuana industry and reminds businesses and investors they must especially vet claims for truth, as with any emerging industry.

Beside Franwell, Tampa Bay is home to a crop of entrepreneurs seeking land and market share opportunities even before Florida legalizes the smokable, edible plant parts. 

The state legalizing marijuana for at least medical purposes in the next couple of years is a forgone conclusion to these entrepreneurs.

Representatives from BioTrack, which made a similar system used by Washington state and New Mexico, deny Franwell's accusations.

"We believe the case is without merit, we strenuously deny the claims made against us and we shall vigorously defend ourselves in any court of competent jurisdiction," BioTrack general counsel Barry Gainsburg said in a statement May 15.

Franwell requests the court to stop BioTrack from calling its system patented, the largest of its kind, the “only true” one of its kind and the only one that can “prevent bad product from getting onto retail shelves.”

The Lakeland company wants the court to destroy BioTrack’s so-called false advertisements. BioTrack shouldn’t call its system patented if only components of the system are patented, Franwell lawyers argue in the court documents.

Franwell seeks punitive damages, plus money from BioTrack to pay for lost market share, sales, goodwill and profits while forcing the company to put more resources into promotion.

BioTrack CFO Patrick Vo and BioTrack CEO Steven Siegel are also named defendants in the lawsuit. Each man has made similar statements that Franwell disputes in publicity materials, on TV and in news articles.

YOUR STATE SAYS “YES” TO CANNABIS ... BUT YOUR COUNTRY SAYS “NO”

Currently there are twenty three states and the District of Columbia that have legal cannabis in some form. Four of those states have legalized cannabis for adult recreational use: Alaska, Colorado, Oregon and Washington, as well as the District of Columbus. The trend continues to grow for legalized cannabis, whether legislatively, such as in Vermont, or through ballot inanities or amendments that will appear on ballots in California, Florida and Massachusetts, to name a few, in the 2016 election cycle.

The cannabis industry continues to grow at an accelerating rate in the states which have legalized cannabis.  So, with that in mind, on a Federal level the Controlled Substance Act (“CSA”) still rules supreme on the federal level, and the untenable Schedule I classification of cannabis prohibits national legal rights to cannabis businesses. 

The federal cannabis prohibition prevents a legal cannabis state business from deducting normal and ordinary business expenses from their gross income via IRS Section 280 (e).   Or, in other words, the federal government does not allow for business deductions for income that is derived from illegal activities because of cannabis’ federal Schedule I classification.

The federal cannabis prohibition prevents an insolvent cannabis business from seeking federal bankruptcy protection, although some limited state options may be available.  Because bankruptcy is a federal process, the courts have ruled the violation of the CSA by distributing cannabis makes cannabis-related companies ineligible for bankruptcy. In the recent Arenases case, the court stated that "possessing, growing and dispensing marijuana and assisting others to do that are federal offenses. [...] Can a debtor in the marijuana business obtain relief in the federal bankruptcy court? No.”  A very clear federal answer.

For trademarks involving cannabis related items, once again on a federal level the US Patent and Trademark Office (“PTO”) heavily scrutinizes all applications referencing the cannabis industry and it is reluctant to grant such. The Lanham Act—the controlling statute on trademarks in the United States—has been interpreted by the US PTO and courts to only allow federal registrations for trademarks used lawfully in commerce. Once again because cannabis remains a Schedule I substance under the Federal CSA —which prohibits the manufacture, distribution, possession and sale of and other substances which are deemed to be “highly addictive and having no proven medicinal benefit”—cannabis businesses are technically violating federal law, even if a state has legalized recreational and medical cannabis use due to the US Constitution’s Supremacy clause. Thus, under the Lanham Act, the manufacture, distribution, possession and sale of cannabis does not qualify federally as lawful use and  an applicant will be prohibited from obtaining a federal registration.

One of the most problematic issues to a US PTO Examiner is when an applicant’s website has a link or click through to a site which appears to be for the purchase of cannabis.  This direct link situation has been identified by US PTO Examiners as a potential violation of the CSA.  Again, under the CSA it is unlawful to have materials which feature cannabis for sale, distribution or dissemination. 

During the federal trademark application process, the applicant will have to answer five (5) important relevant questions:

1)      Does or will applicant’s identified services provide for or enable users of the services or website to directly purchase, trade, exchange, barter or sell cannabis, marijuana, hemp, marijuana-based or hemp-based preparations, or marijuana or hemp-based extracts or derivatives, synthetic marijuana, or any other illegal controlled substances?

2)      Will applicant’s services identified as “inventory monitoring and management for herbal products” require applicant to physically possess, disseminate or distribute cannabis, marijuana, hemp, marijuana-based or hemp-based preparations, or marijuana or hemp-based extracts or derivatives, synthetic marijuana, or any other illegal controlled substances?

3)      Can the applicant identify or define each and every type of “herbal product” as used in applicant’s identification of services.

4)      Does the term “herbal products” include any products whatsoever that contain cannabis, marijuana, hemp, marijuana-based or hemp-based preparations, or marijuana or hemp-based extracts or derivatives, synthetic marijuana, or any other illegal controlled substances?

5)      Are the applicant’s services lawful pursuant to the Controlled Substances Act?

If the applicant can correctly address these five important questions than a federal trademark may be possible to obtain, especially if you the applicant were operating an ancillary cannabis business which does not violate any of the above referenced criteria.

So, in conclusion it is very easy to see the real world problems and issues that must be addressed by the cannabis industry so long as the federal government continues its national prohibition, while states continue the path to cannabis legalization.  One day (soon) when cannabis no longer is stigmatized with a Federal CSA Schedule I classification, than the federal rights guaranteed to most will also be extended to legitimate cannabis business industry participants.  Hopefully, one day soon.

Barry Gainsburg, PA provides legal and consulting services to the cannabis and securities industries.  Mr. Gainsburg can be contacted at gainsburg@bellsouth.net

WHY DO I HAVE TO VOTE FOR THE LESSER EVIL, RATHER THAN FOR A CANDIDATE I REALLY CARE ABOUT?

After watching the recent Republican and Democratic debates, I grow more frustrated at the prospect of spending another Presidential Election cycle voting for what I perceive to be the lest of the available evils, instead of a candidate that I truly feel passionate about.  I am frustrated that the candidate I find myself identifying with has very little chance of securing the Party's nomination even though I find him to be authentic, genuine and correct on most issues.  Yet it is his integrity and bluntness which will eventually knock him out of the running. And no I'm not talking about "the Donald".

Don't get me wrong.  I think that outsider candidates like Donald Trump serve a very important purpose.  He is a proxy in the Republican Party of anger and angst that is directed at the entire system.  And Donald Trump is his own man. He has taken noble stances against the hedge fund industry and the influence of campaign donations by essentially telling the debate stage that he has bought and sold just about each and everyone of them.  A clear example of access and policy subject to purchase.  Although I respect Donald Trump's  performance, I believe he is one of the greatest snake oil salesman of his time.  Donald Trump seems concerned about the economic and political policies of one vested interest group - Trump, Inc.

Now, on the other side of the aisle, I think Sen. Bernie Sanders, and his Democratic -Socialist stance is just the tonic that the U.S. is in need of.  As an Independent, Sen. Sanders caucuses with the Democratic Party, but he is his own person.  Not necessarily an appealing trait to establishment party officials and hacks.  I would really like to vote for him in the general election, but I don't think I will ever get that opportunity.  I believe the Democratic Party establishment has too much invested in Hillary Clinton, a politician if there has ever been one, to allow Bernie Sanders to become the parties standard torch bearer in the general election.  But that is exactly who is speaking to the core base of not just the Democratic Party, but also to much of the Republican Party.

So, here are the issues that I think are most important, at least to I, in the upcoming election cycle - 

1.   Federal Repeal of Cannabis Prohibition - This is so simple, even Smokin' Barry Obama could do this right now by issuing an executive order reclassifying cannabis from Schedule I Substance under the CSA.  Perhaps, this will be Obama's lasting legacy after the 2016 election since candidates on both sides of the aisle, surprisingly Hillary Clinton, seem reluctant to embrace the growing repeal of the federal prohibition.  Sen. Sanders says he supports the repeal of the federal prohibition.

This is an issue that should be co-opted or adopted by the Republican Party based on assertion of the 10th Amendment's State Rights clause.  Arguments for cannabis use fall right in line with arguments against big government and less intrusion into personal liberties.  

On this front, it seems that only Sen. Rand Paul understands the importance of this issue on a federal basis. Libertarian Justice Breena put it best when he stated "I find that our state statute violates the Federal and state constitutions in that it is an impermissible intrusion on the fundamental rights to liberty and the pursuit of happiness...Big Brother [the government] cannot, in the name of Public Health, dictate to anyone what he can eat or drink or smoke in the PRIVACY of his own home."  Well said. 

2.  Saving the Middle Class from Income Inequality - If there is no middle class, then there is no society.  A well functioning society cannot function within the dichotomy of only rich and poor.  The US is oligarchy of the rich.    It has been reported that the top wealthiest 1% of the US possess 40% of the nation’s wealth; the bottom 80% own 7%; similarly, but later, the media reported, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent". The gap between the top 10% and the middle class is over 1,000%; that increases another 1000% for the top 1%. The average employee "needs to work more than a month to earn what the CEO earns in one hour." Although different from income inequality, the two are related.

Empirically speaking, one can see the rapid decline in the forward progress in the middle class in the early 1980s with the moving of industrial and manufacturing jobs oversees, the rapid decline in Union support and attacks by the Republican Party, cuts and radical reforms in social welfare programs, massive dislocations of wealth and elimination of jobs based on technological advances.  The only thing that the U.S. successfully exports today is Entertainment, including sports, and weapon systems.  These issues must be addressed if the US is to aspire to its ideas of being a classless society and allowing people to achieve the 'American Dream".

3.  Corporations are not People. Enacting legislation addressing the Supreme's Court trend of finding that Corporations are people with all associated rights of free speech and political activity. The next President will likely replace two of the current Supremes.  See bellow-

"Corporations are people, my friend...Of course they are... “Everything corporations earn ultimately goes to people. Where do you think it goes?"- Mitt Romney, Republican Presidential Candidate 2012.

vs.

"No, Governor Romney, corporations are not people. People have hearts. They have kids. They get jobs. They get sick. They thrive. They dance. They live. They love. And they die. And that matters. That matters.That matters because we don’t run this country for corporations, we run it for people." Sen. Elizabeth Warren (D- Mass)

'Nuff said.

4.  Prison Reform - This ties back with the repeal of cannabis prohibition and the granting of expungements or the commuting of non-violent drug offenses. Prisons were never meant to be an income generating business.  However, with both the Federal and State governments contracting out prisons to "for profit corporations", it is easy to tell what stymies the progress of prison reform - the love of money, not rehabilitating the "criminal" but rather exploiting the criminal justice system for profit.

5. Middle East Policy - It is simply time for a two (2) state solution to be implemented between Israel and Palestine.  I completely understand the Israeli's concern with existence from existential threats, however there comes a time to be accountable.  The Jewish people have been slaves in their history and forced to wander the globe seeking protection from prosecution and annihilation.    However, the current Israeli government policy towards the Palestinian people is akin to that of South Africa during its days of Apartheid.  It is difficult for the US, on a foreign policy basis, to claim it seeks for freedom, human rights and democracy in the region when it is "forced" to accept the current Israeli government's reluctance to move discussions forward. But, rather the Israeli government opts for the status quo and making provocative moves like continued settlement building on the West Bank.

As many call for time to address the situation, I would like to quote Rev. Martin Luther King, "We know through painful experience that freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed. Frankly, I have never yet engaged in a direct-action movement that was "well timed" according to the timetable of those who have not suffered unduly from the disease of segregation. For years now I have heard the word "wait." It rings in the ear of every Negro with a piercing familiarity. This "wait" has almost always meant "never." It has been a tranquilizing thalidomide, relieving the emotional stress for a moment, only to give birth to an ill-formed infant of frustration. We must come to see with the distinguished jurist of yesterday that "justice too long delayed is justice denied."  There comes a time when the cup of endurance runs over and men are no longer willing to be plunged into an abyss of injustice where they experience the bleakness of corroding despair. I hope, sirs, you can understand our legitimate and unavoidable impatience."

Now the Palestinians also need to concede that the new borders will not resemble the pre-1967 boundaries.  When the Arab nations declared a war on the State of Israel, and Israel defended itself and annexed territory, that is the consequence of war.  Ask the Mexicans if they will be getting California or Arizona back from the U.S. anytime soon. Not going to happen.

7. Gun Control - I like to call this "Gun Management" rather than gun control.  I think we can all agree that the US was safer when there was the Semi-Automatic Assault Riffle Ban.  That Ban expired with little stomach to renew it.  This Ban should be re-instituted because it helped manage guns.  

No one should prohibit anyone from owning a gun under the 2nd amendment for hunting or protection - although I believe the 2nd Amendment really speaks only to a State Militia's protecting the citizenry from federal tyranny. But we have registrations and licenses for fishing, driving, cars, boats, warranties, marriages, but for Jah's sake I can't understand why there is not a federal mandatory gun and training registration requirement.

If you really wanted to take the Second Amendment to the irrational extreme, we should all be allowed to posses a tactical nuclear weapon in the backyard for protection. Obviously, this wouldn't be safe, but neither is allowing children in school or people attending a movie to be subject to random massacre by individuals who should never be in possession of a gun in the first place.  Just like drowning, these type of deaths are, or at least should be, prevented. 

7. Compromise - I don't recall when the word "Compromise" became such a dirty, nasty word.  Under the heading it is better to get half a loaf then no loaf at all, the US government continues to operate at the extremes.  The vast majority of Americans seek neither extreme but a compromise to allow the government to do its job - govern.  Lack of legislation, is not legislation.  It is an abdication of responsibility - and power abhors a vacuum.

There is a lot of room to negotiate for the benefit of all US citizens rather than a policy of unified resistance. The only way for the country to move forward is to allow once again for civil discussion of different ideas without demonizing one another.    If "Mom" and "Dad" governed a family at these type of extremes, divorce would be a 100% statistic.  A family could just not function.  Neither can a country.

So no matter what your political affiliation or point of view, I hope you take the time to carefully consider what is at stake in the next election and be motivated to do something to help effectuate the change you seek.  Just remember, if you don't vote, you are part of the problem, not the solution.

Please feel free to reach out to me at Gainsburg@bellsouth.net if you have any other legal issue involving the cannabis industry.  I am here to serve the cannabis and securities communities.

SCIENTOLOGISTS ARE CORRECT... AND MARS HAS WATER

Bill Maher had Neil deGrasse Tyson on the latest episode of Real Time. My wife and I enjoy watching the program and sometimes it leads to some interesting debates. However, after watching the passionate Tyson speak of life on Mars, the wife and I came to the same conclusion. Laugh all you want but the Scientologists may have gotten it right.

I know you are asking yourself what the (insert profanity of choice) is he thinking?  But please give me a moment to explain. Tyson explained that Mars' habitat was ripe for life with running water prior to our rotating home. With life on Mars existing there Tyson postulates that there were tardigrade or "water bears", which are water living microbe animals. During this time an impact occurred with the surface of Mars that created space debris, perhaps an asteroid in size, with these water bears embedded in the displaced matter.

So eventually some of the Mars debris lands on its neighbor planet, Earth. These amazing microbes can withstand radiation, can survive extreme temperatures, can survive without food for more than ten years, and can also be re-hydrated after 10 years of water deprivation. Luckily, these are just the perfect characteristics for interstellar space travel. As Maher said cockroaches have nothing on those water bears.

So the scientific conclusion, according to Tyson, is that life on Earth, is seeded by life on Mars. How mind blowing is that when you really ponder its implications?  I'll give you a moment to ponder...ok.

Now I need you to refocus please.

So my wife then says to me that the Scientologists are right. I respond by saying "What in Jah's name are you talking about?" My wife retorts, "The Scientologists are right. They believe life life on Earth originated from extraterrestrial cultures and I believe Mars would qualify."  Notice that my wife is up on the political times and didn't use the term "alien" but instead used "extraterrestrial ".  Not looking for any of those type debates. Anyway, What could I say?  As she is generally right (I think I'll get brownie points for that) I was left to agree. The Big 3 Religions really don't subscribe to the life on Earth comes from life on Mars playbook.

To reinforce her well made point (again racking up points), my wife explained to me that the fact that the Scientologists are right on our "origins" islike the cosmic equivalent of having billions of monkeys with typewriters and one of them produces Shakespeare. Unexpected indeed.

We discussed how ironic it was that the Scientologists got it correct. Will Scientologists argue that the Big 3 Religions don't deserve tax exempt status ?Should Tyson be recognized as a Scientologist? Will Tom Cruise and John Travolta star in a new Scientology produced action comedy movie "Look Who's Right Now:  Mission Improbable 12" ?

After a few laughs, we decided to shut the TV off and go to bed. And I said my prayers like I always do.

Now I drop me on my bed, I pray to the Church of Scientology to help my aching Martian head,  If I shall dehydrate while I'm sleepy, I pray that Tom Cruise will bring water to me.

Corporations Are NOT People

Corporations are not people. People have hearts, they have kids, they get jobs, they get sick, they cry, they dance. They live, they love, and they die. And that matters. That matters because we don't run this country for corporations, we run it for people. - Senator Elizabeth Warren (D - Mass.)

 

                This past week I watched TED 2 and it made me think (imagine that) about what makes one a person.  Morgan Freeman’s character focuses on two fundamental requirements – (i) being self-aware and (ii) demonstrating empathy.  I shall refer to these requirements as the Freeman Test.

 

                Recently the U.S. Supreme Court has extended rights such as freedom of speech as decided in Citizens United, as well as freedom of religion as decided in Hobby Lobby to corporate entities.  Those on the political right see this as a logical extension of rights, while many others in the political center and left are appalled at these type decisions and the effect they have on the democratic process.

 

                Generally, I speak about issues regarding the cannabis industry, and if you are kind enough to permit me I will try and tie the current topic to the Cannabis Industry.

 

                A corporation is deemed for legal purposes to be a fictitious person recognized by the state.  You can birth a corporation at any time, no nine months required, with the simple filing of required organizational documents and filing fee with the state.   No more, no less.

 

                Turning to the Freeman Test, I don’t believe there can be much of an argument that a corporation through its directors, officers and employees is highly self-aware of its condition.  Obviously there is conflicting awareness, but nevertheless a company has all the tools necessary to understand and address issues concerning its own perpetual existence. 

 

                Now, with respect to the second part of the Freeman Test – does a company possess empathy – the analysis becomes slightly more complex.  Any High School course on economics will teach us that the ultimate purpose of a corporation is to “maximize profits”.  Corporations are not created to love, they are not created to nurture, they are not created to be concerned about the environment, and they are not created to be concerned about the community. 

 

                 As a foundation of the capitalistic system a company’s sole purpose and intent is to maximize shareholder value and profit.  In fact, the profit motive is such a strong corporate objective that we have collectively, as a society, enacted laws to help restrain (anti-trust), regulate and limit corporate activities.

 

                Individual employees, officers and board members of a company may be great humanitarians and may be empathetic but this does not speak for an entire corporation.   Again, the corporation is a simply a legal fiction.

 

                A corporation has no children, no spouse, no parents.  A corporation has no need to eat healthy food or to keep the environment safe (besides for regulatory fines and lawsuits).  A corporation does not worry how it will educate its children or how an individual employee will achieve personal fulfillment.  A corporation does not have a religious or spiritual pedigree. A corporation does not love.  A corporation does not feel heartbreak.

 

                This is very different from a “person” who has dreams, aspirations, thoughts, hopes, desires, feelings, and inherent inalienable rights such as free speech and religious worship.  People love.  Factors, other than profit maximization, ultimately differentiate people from corporations.

 

                So in trying to tie this together, the ability for an individual to partake in cannabis use for medical or recreational purposes is viewed as an individual right.  A right of freedom.  A right of love.  A right of empathy and compassion. There are those who whole-heartedly embrace rights for corporations, but fail to see that the granting and extension of personal freedoms to individuals should be of a higher concern.  People suffer from pain.  People suffer from depression. People seek to engage in spiritual and religious fulfillment. Corporations don’t – although individual members may.

 

                In conclusion, the growing support of the cannabis legalization movement, is to some extent a rejection of the “corporations are people” mantra.  Rather, the cannabis movement speaks to the fact that individuals are people, with various personal needs and desires.  These are the needs that require acknowledgment, empathy and compassion from the State.   By allowing corporations to dictate the cannabis industry regulations to just maximize profit, without concern for the market they are intending to serve, just goes to prove that “corporations are not people”.

EB-5 Visa: US Citizenship for the Wealthy is Priceless... Well then Again

The EB-5 visa provides a method of obtaining a green card for foreign nationals who invest money in the United States. To obtain the visa, individuals must invest $1,000,000 (or at least $500,000 in a Targeted Employment Area - high unemployment or rural area), creating or preserving at least 10 jobs for U.S. workers excluding the investor and their immediate family. Initially, under the first EB-5 program, the foreign investor was required to create an entirely new commercial enterprise; however, under the Pilot Program investments can be made directly in a job-generating commercial enterprise (new, or existing - "Troubled Business"), or into a "Regional Center" - a 3rd party-managed investment vehicle (private or public), which assumes the responsibility of creating the requisite jobs. Regional Centers may charge an administration fee for managing the investor's investment.

After listening to the constant debate and attacks on US immigration policy, and after watching several Republican Party debates (I assure you only for entertainment value) I have some quick take thoughts in no particular order.

1.  Notice that the debate only centers on excluding poor immigrants.  

Namely, those that are leaving drug cartel and civil wars in South and Central America. One of the reasons for this situation, outside of the respective nations' internal issues,is the failed U.S. War on Drugs.  However, no one is willing to raise this issue publicly.  In fact, most candidates still stand guarded on even discussing cannabis legalization.  

So those poor immigrants who are trying to escape wars, drug lords, political persecution, or economic issues deserved to be fenced out. Additionally, children born in the US of these immigrant parents are also to be denied US citizenship.  

Doesn't sound like a open tent, nor does it sound to be the words of a god fearing Christian Evangelical  movement seeking to follow their savior's words and deeds.  Thanks for visiting Wally-World! Park is closed.

2.  Notice that the public debate never mentions rich immigrants.

Those that have significant wealth, opportunity, and connections are most welcomed here.  These are the "immigrants" we like.  They are generally European or Asian.  Although not stated outright, there is an underlying bias implied.

3.Congress is currently reviewing the EB-5 Visa program for wealthy foreigners.

The EB-5 immigrant investor program (remember poor folk don't have assets to invest) which allows foreigners to get green cards by investing at least $500,000 in US businesses with the condition that the investment creates at least 10 US jobs.

This program was created in 1990, under the Papa Bush administration, as a way to stimulate the economy, but it is expiring as of September 30, 2015.  I have not heard a word from any Republican criticizing this program as essentially a quid-pro-quo for handing out US Citizenship.

4. A report by the GAO finds that there is plenty of fraud in the process and that the DHS "faces significant challenges" in detecting fraud since it is difficult to identify the source of the funds foreign investors use and whether if they are from illicit sources such as money laundering or the illegal drug trade.

These are different from the normal allegations I have heard levied in the Republican party against immigrants accusing them of being murders, rapists, and worse.

Again, it's crickets I hear while I await for political anger directed towards a real world problem.

 

5. US Citizenship is priceless.  But there is a price tag.  

After investing in the EB-5 business which can be either $500,000 or $1 million dollars, the rest of the associated costs for support, employees, consulting, filings, etc will ring the tab up at about another 300-500K for our new foreign friend.  So its not about opportunity for all, or equal access, or even equal rights.  Its about one thing, and that's the green.  But unfortunately the wrong green.

In one sense the EB-5 program could help the cannabis industry, and other nascent industries, grow and prosper.  You could have foreign investors, such as Israelis, Europeans, South Americans, once properly vetted, who will invest in ancillary cannabis businesses such as technology, service providing, etc (until cannabis is rescheduled from a Schedule I substance under Federal law - and once that changes so will the investment opportunities) that will help fund the blossoming industry to the benefit of countless US citizens.

In a just world, these foreign investors would be forced to allocate a certain percentage of the required ten new jobs to those that are of the poorer financial ilk.  If you want the US to provide easy access for the rich to become citizens, perhaps requiring a debt of gratitude towards the less rich immigrant would be in order.  

Seems like the Christian (in its truest meaning) thing to do.  But also remember, poor immigrants don't have Super Pacs. lobbyists or large check books to gain "access" to the legislative process. So this is my own pipe dream for the time being.

12 Legal Considerations For Potential Cannabis Production

If you are reading this, you are possibly interested in either becoming a grower of cannabis (sometimes also referred to as a producers or cultivators) or you are already profiting from cannabis production. With the constantly changing political and legal environments surrounding medical marijuana, here are some legal issues to keep in mind as you consider expanding your business through cannabis cultivation.

First and foremost, the federal government treats cannabis as a Schedule I substance, which makes cultivating, distributing or possessing it illegal. A Schedule I substance is one defined as having no demonstrated medical benefit and being highly addictive, such as LSD and Heroin. So there is no coherent federal policy governing or regulating cannabis producers.

The Schedule I classification also impacts opportunities to obtain banking services since on a federal level the proceeds of the sale of cannabis are deemed to be criminal proceeds. Even state banking institutions, such as MBank and Four Corners, which had initiated banking for cannabis industry participants, were eventually forced to jettison that business line due to regulatory pressures.

However, on a positive note with respect to obtaining banking services, growers may be able to utilize some corporate structural advantages by forming a subsidiary of an existing parent grow company. On a federal basis, the taxation of cannabis-related profits is severely unfavorable due to cannabis being treated as proceeds of a criminal enterprise. So there will be accounting issues to be addressed, as well.

Now our attention turns to examining state legislation for prospective cannabis growers. Twenty-three states have legalized medical marijuana, and four states, as well as the District of Columbia, allow for recreational adult use. Each jurisdiction has its own regulations and requirements for licensure. Not only that, but there may also be local ordinances to comply with. Based on your proposed growing location, the applicable rules and regulations can vary greatly. The regulations may also differ, based on whether the proposed growing operation is intended for medical or recreational production.

In the cannabis industry, regulation is a product of state and local agencies. As it would be impractical to discuss each states’ regulatory scheme, please be aware that state cannabis legislation is constantly being amended and is subject to further change at any time. Here are 12 of the key issues broadly found throughout the grower licensing process.

1. Location. In some cases you will need a location prior to application, so be sure to check local zoning laws. You will need either a cannabis-friendly landlord or the ability to purchase the property. as well as insurance from cannabis-friendly underwriters.

2. Indoor vs. Outdoor. Some states may require only inside growing, while others will be indifferent. There may be other regulatory differences based on selection. Production caps might be in place in order to try and stabilize price and avoid over-production being diverted to the black market.

3. Water. There may be riparian right issues, or in other words, watering restrictions and requirements.

4. Traceability. There may be a requirement for governmental seed to sale tracking, which would require compliance with numerous governmental reporting and tax requirements.

5. Business Structure. There may be requirements regarding vertical or horizontal integration. Must a grower be associated with a single dispensary, only affiliated dispensaries, or can a grower be free to distribute to multiple dispensaries?

6. Limits. Is there a cap on the amounts of plants a cannabis grower can produce?

7. Regulation. Are there testing requirements for molds, pesticides and other impurities?

8. Licensing. The cost of licensure can range from a few thousand dollars to hundreds of thousands of dollars. Are there caps on the number of state licenses issued?

9. Prerequisites. Are there any provisions, as in Florida, requiring a grower to be established for a substantial amount of years prior to licensure?

10. Security. What are the security requirements, if any? Consider the cost and additional maintenance of video cameras, alarms, surveillance, identification, access, etc.

11. Planning. Do you have a well thought out and written business plan?

12. Finance. If you are in need of financing, how will you will raise capital? Reg A? Reg D? Crowdfunding? A Simple Agreement for Future Equity (“SAFE”)?

These are not all the issues that a potential cannabis producer will have to consider, but it is a good foundation to earnestly begin the process of investigating the opportunity. Although there is a lot of complexity and there are several dynamic regulatory requirements, the growing of legal cannabis provides an excellent opportunity to a well-funded and forward-thinking organization. It is also important to conduct thorough due diligence and have a qualified consultant or attorney help you every step of the way to decide whether it makes sense to be, or not to be, a cannabis grower.

 

MORAL DUE DILIGENCE: WHAT IS IN THE PRIVATELY HELD CORPORATION’S CLOSET

Due diligence is an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for an acquisition.[1] The theory behind due diligence holds that performing this type of investigation contributes significantly to informed decision making by enhancing the amount and quality of information available to decision makers and by ensuring that this information is systematically used to deliberate in a reflexive manner on the decision at hand and all its costs, benefits, and risks. –Wikipedia

As the age old adage goes, an oral contract is only worth the paper it is written upon.  Even truer, is that a written contract is only as enforceable as the morality of the person executing it. 

Generally in business transactions, one is presented with a term sheet of the offering specifics, along with certain business, financial, and legal disclosures of past and existing conditions, along with contingent ones.  It is in these type circumstances that one is obliged to investigate the accuracy, completeness and nature of the disclosures. This is fairly complex in public company situations. It is even more complex and delicate in privately held company situations since the corporate governance rules required by the SEC are not in force.

So where does one start the due diligence process in the private corporation transaction scenario?  Many times this involves a smaller pre-IPO company seeking capital from outsiders to allow it to expand and grow its business since friends and family have already been tapped out.  There is a desire to move the company forward to the “next level”. There are no SEC filings to review and generally there is a lack of audited financials.  Many of these upstart companies have been operating on shoestrings and suspenders.

First, it is essential that you really know the management of the private company you are considering partnering with.  The success of these companies in its early stages is based on personalities of the founders.  Although this does not provide financial or legal disclosure, it provides in essence what is “moral disclosure”.

Who is a management?  We are looking at the company’s CEO, COO, CFO and the rest of the "C" suite.  What is their employment history?  Have they been consistently employed?  Have they jumped from job to job, and if so what are the reasons?  What is their educational background?  Does their resume check out?  What is the word from the street?  What is the employee turnover rate?  Does management take a well- reasoned long term approach or do they act capriciously and arbitrarily with their emotions controlling their decision process?  This is essentially a marriage.  You need to see your potential bride in the light of day warts and all so you can make an intelligent and well informed decision to jump into the fray.

With dreams of public offerings, does management measure up?  Is there anybody considered a bad actor under the SEC rules, meaning they have certain felony convictions or other orders entered against them.  It would as a simple matter of course, make sense to inquire if anybody on a company’s management team has been subject to a conviction or other disqualifying event.  Most would be reluctant to disclose these type of events but it is essential to conducting due diligence to know who your “partner” really is?  One of the simplest ways to begin this investigation at no cost is to use federal web sites such as the Federal Prison Inmate locator at http://www.bop.gov/inmateloc/ and enter the name.  Should anything be displayed you can continue your investigation by utilizing a background report, as well as asking the individual directly.  You can also look at individual state prison inmate locator sites as well.

You may also wish to check court dockets to see if the company has been involved in litigation, but you may also wish to check into the litigation history, if any, of the management team individually.  This can tell you if management is litigious in nature or whether they have tried avoided legal conflicts. Does management fulfill its commitments?  If you are investing a substantial amount into a venture, the last thing you would want to see is the company using your investment which was intended for business growth to instead be used to fund litigation.  Especially, if it is unnecessary litigation.

Additionally, you will want to know the relationship amongst the management team.  Have they worked together successfully or unsuccessfully before?  Are they related by family?  Marriage? Is there an undisclosed romantic, current or former, relationship amongst shareholders?  What special issues will this create when you become part of the company?

Is there good morale at the company or does management create a situation where everyone is just interested in saving their own hides?  Is management respectful to its employees?  Do employees feel they are part of the team?  Does management view you as a true partner with a voice to be carefully listened to or are you just the most recent (and perhaps only) funding option?

These are tough questions that need to be asked and sometimes the results of this moral due diligence will be surprising.  So in concluding, traditional due diligence with regard to financial, business and legal issues is nothing other than mandatory.  However, enhanced due diligence of a company’s management team on the other hand while not mandatory, is certainly priceless. 

Please feel free to reach out to me at Gainsburg@bellsouth.net if you are have legal issues involving the cannabis industry.  I am here to serve the cannabis community.